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Can getting health insurance before July save you money on tax?

July health insurance fi

There are 2 different ways health insurance can save you money if you take out cover before 1 July.

The EOFY is around the corner. Getting your finances in order isn't the most fun task, so we'll get straight to the point.

If either of these 2 situations apply to you, health insurance could be worth getting before 1 July.

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If you earn over 90K p.a.

There's a tax surcharge for anyone who earns $90,000 as a single person or $180,000 as a couple.

It's called the Medicare Levy Surcharge (MLS) and it's a tax of between 1% and 1.5% of your annual income, depending on how much you earn.

If you earn $90,000, you'll pay $75 more tax per month and as much as $181 if you earn $145,000 or more. That money goes towards the public healthcare system.

How to avoid the MLS

Get hospital insurance. There are policies available from $72 a month that let you avoid the MLS.

Tip: These policies don't cover you for much (the tax savings are arguably the main benefit) but a few, such as ahm, Bupa and Medibank, include ambulance cover. Unless you live in Tasmania or Queensland, Medicare doesn't pay for ambulance cover.


If you turned 31 recently

A 2% Lifetime Health Cover loading (LHC) is added to your health insurance premium for every year you don't have hospital cover over the age of 31.

That fee accumulates, so if you don't have hospital insurance until you're 40, you'll be hit with a 20% fee. It also stays in place until you've held hospital insurance for 10 years.

Remember, this is not a tax and it's not related to how much you earn – you will only pay the loading if you don't get private hospital insurance by July 1 and you are at least 31.

When does the loading apply?

Say you turned 31 in February 2022, your Lifetime Health Cover base day is 1 July 2022. If you didn't get hospital insurance until November, you would have to pay a 2% loading.

How to avoid the age loading

You guessed it – get private hospital insurance before July 1. Alternatively, decide here and now to never take out cover for the rest of your life.

Good to know: Sadly, extras policies (dental, optical, etc.) don't count. It needs to be a hospital insurance policy.

Need to change your answers?
Run the quiz again to change state and who needs cover.
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Turned 31 recently? Had a pay rise? Get hospital cover before July 1 and avoid the MLS and LHC.

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