Private Health Insurance Rebate from 01 July 2012
The Government has recently passed legislation to effectively means test the Private Health Insurance tax offset from 1 July 2012. Broadly, the changes involve the following:
(a) The introduction of three new income tiers which will effectively means test eligibility for the private health insurance tax offset for:
– single individuals whose ‘income for surcharge purposes’ is at least $84,000; and
– couples/families with a combined ‘income for surcharge purposes’ of at least $168,000.
(b) An increase in the rate of Medicare levy surcharge (currently 1%) for individuals and families without appropriate private hospital cover and earning above a certain income level.
Therefore from 1 July 2012 individuals with private health insurance will need to estimate their annual income and claim the appropriate rebate amount. If that estimate proves to be incorrect, the member may need to repay any over claimed rebate or claim an additional rebate when they complete their tax return.
If you have claimed too much private health insurance rebate, either as a premium reduction or through Medicare, the ATO will recover the amount as a tax liability. This liability will be listed on your notice of assessment.
If you are unsure of or unable to accurately estimate your annual income, it may be prudent to overestimate your income and claim a lower rebate throughout the year. That way, you will most likely receive a payment or credit via the ATO for any unclaimed rebate instead of receiving a request to repay overpaid rebate when you lodge your tax return.
If you have not received your full rebate entitlement, the ATO will calculate the rebate you are due and refund this to you as a tax offset when you lodge your tax return. The tax offset will be listed on your notice of assessment.
Most people claim the health insurance rebate as a premium reduction. Under this option, the Federal Government will send the rebate directly to your health fund – so when you make your health insurance premium payments, you only have to pay the balance. For example, if you are entitled to a 30% Government rebate, your payments will actually represent 70% of the total premiums – and the Government will send the 30% rebate directly to your health fund.
If you choose to recover your Government health insurance rebate this way, you will claim a refundable tax offset at the end of the income year through your tax return. Your health fund will send you a health Insurance Statement during July which will provide the information you need to complete the relevant section of your tax assessment/return.
If you wish to claim the health insurance rebate as a cash or cheque payment from a Medicare office, you will need to produce proof of your health insurance membership and receipts for your premium payments as well as complete the appropriate Medicare claim form.
The new threshold limits are:
$0 – $84,000
$84,001 – $97,000
$97,001 – $130,000
$130,001 and above
$0 – $168,000
$168,001 – $194,000
$194,001 – $260,000
$260,001 and above
Private health insurance rebate
Aged under 65
Aged 70 or over
Medicare levy surcharge
Please note that in order for an individual to be exempt (or claim the reduced amount from tier 1, 2 or 3) from the Medicare levy surcharge the private health insurance must cover themselves and all of their dependants.