Consider Getting Private Health Hospital Cover Today to Reduce your 2025 FY Tax Liability
When you earn over certain income levels you pay extra tax when you do not have private health hospital cover.
This is in the form of the Medicare Levy Surcharge (MLS) and can be pretty hefty ranging from 1%-1.5% extra tax for singles earning over $97,000 per year and families earning over $194,000 per year.
If these income levels apply to you then it is not too late to act for the current 25 tax year. This is because the extra tax is calculated on a pro-rata basis meaning you will no longer be liable from the day you start having the appropriate level of hospital cover.
For example, a single person earning a salary of $140,000 is paying an extra $1,750 in tax per year if they do not have the appropriate level of hospital cover. Another example, is a family earning a combined salary of $240,000 is paying an extra $3,000 in tax per year if they do not have the appropriate level of hospital cover.
If the cost of having the insurance is less then the extra tax then these taxpayers are overall receiving a net positive benefit for having this cover.
To put it even more simply, the extra tax you pay is called the Medicare Levy Surcharge and when you have private health hospital cover you don't have to pay this. So opting to choose hospital cover that potentially costs less than the MLS you would have to pay is not only giving you hospital cover benefits, but reducing the total amount you would pay at the end of the financial year.
This benefit depends on the quote you are able to find for hospital cover and also the likelihood of personally requiring this insurance.
Something to keep in mind is that for a family unit, it is the entire family which needs to be covered to avoid the Medicare Levy Surcharge. This includes both partners and all dependents.
Also, the fact that you have extras for private health insurance purposes is irrelevant as the rule specifically applies to hospital cover.
Any questions, please reach our to our team today.