Do I need health insurance to save on taxes?

Your result is

NO YES

Having health insurance doesn't save you money on taxes

Buying health insurance won't save you money on your taxes

Buying health insurance won't save you money on your taxes

Having private health insurance helps save you money on taxes

Buying private health insurance will save you money on taxes

That's because you're under 31 and earn under the tax threshold, which for you is $90,000.

Because of your age and income level, you're not financially better off with private hospital insurance.

You're under 31 and earn under the threshold, which for you is $90,000.

Because of your income level, you won't be hit with the Medicare levy surcharge at tax time. (Most people already pay a Medicare levy as part of their income tax - the surcharge is on top of this.)

But you're over 31...

... So if you don't already have insurance, you'll pay more for your policy the longer you wait to take it out.

If you don't think you'll ever take out health insurance (or you already have), you don't need to worry about this.

Of course, it's not all about your financial situation. Other factors like your health may also come into play.

Because of your income level, you won't be hit with the Medicare levy surcharge at tax time. (Most people already pay a Medicare levy as part of their income tax - the surcharge is on top of this.)

BUT it's not all about your financial situation. Other factors like your health may also come into play - so keeping private health insurance could still be a good idea for you.

Why? Your income is over your tax threshold of $90,000 so if you don't have private hospital cover, you'll fork out more of your salary to Medicare in the form of the Medicare levy surcharge - about $920 a year.

If you buy a private hospital policy, you won't have to pay the surcharge. And if you buy one that's cheaper than the surcharge, you'll save $$.

Why? Your income is over your tax threshold of $90,000. If you didn't have private hospital cover, you'd fork out more of your salary to Medicare in the form of the Medicare levy surcharge - about $920 a year.

By keeping your policy, you won't have to pay the surcharge at tax time. And if your policy's cheaper than the surcharge, you'll save $$.

Why? Your income is over your tax threshold of $90,000 so if you don't have private hospital cover, you'll fork out more of your salary to Medicare in the form of the Medicare levy surcharge - about $920 a year. If you buy a private hospital insurance policy, you won't have to pay that surcharge.

But you may not save overall

Why? If you buy a policy that's cheaper than the surcharge, you'll save $$. But because you're over 31, if you do take out hospital cover you'll pay the Lifetime Health Cover loading (see below). The price of your policy with this loading may be more than you save on taxes.

Why? Your income is over your tax threshold of $90,000 so if you don't have private hospital cover, you'll fork out more of your salary to Medicare in the form of the Medicare levy surcharge - about $920 a year.

By keeping your policy, you won't have to pay the surcharge at tax time. And if you buy one that's cheaper than the surcharge, you'll save $$.

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What happens when you turn 31?

More well-meaning family members will pester you about your life choices, and if you don't take out hospital insurance by the end of that financial year, you'll start accruing the Lifetime Health Cover Loading - meaning your premiums will be more expensive if you take out hospital insurance later in life.

Lifetime Health Cover loading

Because of your age you may face the Lifetime Health Cover loading - meaning your premiums will be more expensive if you take out hospital insurance later in life.

If I drop my insurance, will I have to pay more later on?

Not right now

While you're under 31 you can cancel your health insurance any time without penalty. If you decide to drop hospital cover after you turn 31, you can have 1094 days without cover before you start accruing the Lifetime Health Cover loading.

Any longer and it kicks in again

After that your premiums will be more expensive if you take it out again later on. The good news is the 1094 days don't have to be consecutive: it could be two months here, two years there. But watch out: it won't matter how long you've had hospital cover in the past - once you go past 1094 days without it, you face the loading.

Yes, but you can drop it for 1094 days

If you already have hospital cover and decide to drop it, you can have 1094 days without cover before you start accruing the Lifetime Health Cover loading.

Any longer and it kicks in again

After that your premiums will be more expensive if you take it out again later on. The good news is the 1094 days don't have to be consecutive: it could be two months here, two years there. But watch out: it won't matter how long you've had hospital cover in the past - once you go past 1094 days without it, you face the loading.

Not right now

While you're under 31 you can cancel your health insurance any time without penalty. If you decide to drop hospital cover after you turn 31, you can have 1094 days without cover before you start accruing the Lifetime Health Cover loading.

Any longer and it kicks in again

After that your premiums will be more expensive if you take it out again later on. The good news is the 1094 days don't have to be consecutive: it could be two months here, two years there. But watch out: it won't matter how long you've had hospital cover in the past - once you go past 1094 days without it, you face the loading.

Yes, but you can drop it for 1094 days

If you already have hospital cover and decide to drop it, you can have 1094 days without cover before you start accruing the Lifetime Health Cover loading.

But after that it kicks in again.

After that your premiums will be more expensive if you take it out again later on. The good news is the 1094 days don't have to be consecutive: it could be two months here, two years there. But watch out: it won't matter how long you've had hospital cover in the past - once you go past 1094 days without it, you face the loading.

What's the penalty if you take out insurance later?

If you're
years old...

You'll pay around an extra {$121} a year for a top (high cover) hospital policy. If you keep it for 10 years, the penalty is removed.

Don't forget

If you never take out hospital insurance, you'll never pay this penalty. If you've already held health insurance, lived overseas or are in the Australian Defence Force, things get more complicated.

Use this calculator to find your LHC loading amount.

Do I need cover for extras?

Hint: maybe not

Extras covers things outside hospital

Like optical, dental, orthodontics, physio, podiatry and psychology services. Some policies cover chiro, naturopathy - even remedial massages.

Think of extras cover as a set of discount vouchers...

...for various treatments. For example you might get $150 a year for optical treatment, or 60% off your dental bill, and so on.

You still face out-of-pocket costs

You'll still have to pay a little something out of your pocket for most treatments or services, on top of your regular premium payments.

Put your money aside instead?

Some people pay more in extras premiums than they get back in benefits. You might be better off putting the same amount aside instead of paying an insurer.

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We can help you decide what cover to buy. 100% independent, our advice is based on what's best for you.

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What about my health needs?

I want to find the best policy for me

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More information

The info above is just a quick guide. If you're still looking for more information on any of those topics, CHOICE has it. View our Health insurance page

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