Changes to Private Health Insurance and Medicare Levy Surcharge

CHANGES TO THE PRIVATE HEALTH INSURANCE REBATE

The private health insurance rebate is an amount that the government contributes towards the cost of your private health insurance premiums. The majority of people with private health insurance claim the rebate as a reduction in the amount of premiums they pay to their private health insurers (known as premium reduction).

From 1 July 2012, your entitlement to the rebate will depend on your single or family income for surcharge purposes. This means that if you have a higher income, your rebate entitlement may be reduced, or you may not be entitled to receive any rebate at all. You will receive a statement from your private health insurer, which is required to complete your tax return.

You may now be eligible for a private health insurance rebate if you were covered by private health insurance regardless of who paid for the policy. If you are covered as a dependent child on a policy, you are not eligible for the rebate, but will not have to pay the Medicare levy surcharge.

You will be income tested on your share of the private health insurance policy. This may mean that your household will get more than one annual statement from your insurer for the one policy if there was more than one adult on the policy when the premiums were paid.

MEDICARE LEVY SURCHARGE THRESHOLDS

If you and all your dependants do not have an appropriate level of private patient hospital cover for the full year and your income is more than the relevant income test threshold, the Medicare levy surcharge may apply.

The Medicare levy surcharge is now determined by new income thresholds. There is no change to how the Medicare levy surcharge applies, or to any exemptions that may apply to your circumstances.

* The family threshold will increase by $1,500 for each dependent child after the first.

When you lodge your tax return, the ATO will test your income against the three new income thresholds to determine the level of rebate you are entitled to receive. Depending on how you claimed your rebate and the level of rebate you claimed, this may result in a tax debt or a tax offset.

* The family threshold will increase by $1,500 for each dependent child after the first.