Is health insurance tax deductible?

Health insurance isn’t tax deductible - but it can be a tax offset. Here are 4 ways to pay less.

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Is health insurance tax deductible in Australia?

No, health insurance isn't tax deductible in Australia. However, you could get up to 33% of your premiums back with the private health insurance rebate, depending on how much you earn. There are also several other ways you can save on health insurance. We've nailed down the most important things you need to know to max your tax (return).

1. Get the private health insurance rebate

Health insurance may not be tax deductible, but you can get cash back in the form of the private health insurance rebate.

It's the government's way of rewarding you for buying private health cover. Every year you hold cover, you get a little bit back from the government – ideally leading to a juicy refund (or a smaller tax bill at the very least). If you earn under $140,000, you can get back up to 33% of what you spent on a health insurance policy.

If you're eligible, you can get it one of two ways: by getting a discount on your premium (often called the Australian Government Rebate when you sign up) or by claiming it back on your tax.

The best news is you can claim for any policy, whether that's extras cover, hospital cover or a combined package.

Get private health insurance: Compare from 30+ Australian funds

2. Turning 31? Avoid extra costs later in life

If you haven't yet got private health insurance and you turned 31 this year, you should seriously think about signing up.

If you don't sign up before 30 June, you'll start to walk into Lifetime Health Cover Loading land, and it's an expensive place to be. Once you turn 31, a 2% loading is added to your hospital cover costs for every year you go without cover.

If you're over 31 and on the fence about getting health insurance, it could be worth taking the jump sooner rather than later.

Let's put that in real terms. Say a health insurance policy is available for $600 per year – well if you only take out your first policy when you're 40, it's going to cost you 20% more than that: that's $720 per year.

Here are a few other examples of how the LHC could impact you:

AgeLoadingCost of coverYou've had cover since 31If this is your first hospital cover

Unless you're 100% sure you're never going to need any sort of private health cover, it's a wise move to take it out now.

Compare health cover to avoid the LHC

Below are some basic policies from Finder partners with enough cover to avoid the Lifetime Health Cover Loading.

Name Product Excess Price Per Month Hide CompareBox Hide More Info Button
Frank Entry Hospital (Basic+)
ahm starter basic
Medibank Basic Accident and Ambulance
Qantas Basic Hospital

Compare up to 4 providers

3. Earn more than 90k? Pay for something or pay for nothing

If you make more than $90,000 a year as an individual or $180,000 as a couple and you don't carry private cover, the taxman will come looking for the Medicare Levy Surcharge.

It's an additional 1-1.5% of your income that is tacked on to the 2% Medicare Levy that you're already being charged for your Medicare card (except for those on low incomes).

Why pay money only to get nothing in return? By taking out private health insurance you avoid that pesky surcharge entirely, and you can get excellent value in return, like not having to pay for an ambulance if you need it because Medicare won't cover ambulance costs.

4. Keep an eye on the dates

Get your taxes filed by 31 October to avoid any nasty surprises, and make sure they're in tip-top shape. To do that, you'll need your private health insurance statement which your insurer should send out around July.

Simply copy the details from that statement onto the private health insurance policy section of your tax return and voila! Hello rebate and R.I.P. Medicare Levy Surcharge.

Start comparing policies before 30 June if you're looking to avoid that LHC 2% yearly premium. If you're earning over $90,000, you just need to make sure you pick at least a hospital cover with an excess of less than $500 ($1,000 for couples). It starts from $17.79 a week, so it's not hard to get your money's worth.

Common questions about health insurance and tax

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