Will Private Health Insurance Save Tax?

Can you save Tax with Private Health Insurance?

2020

You may have heard from your mates that you can save tax by getting private health insurance.  Well, this is correct but only in the following situations:

• If you are single and earn more than $90,000
• If you are part of a couple or a family and earn more than $180,000​

If one of the above applies to you, then you will end up paying at least an extra 1% of your income as Medicare Levy if you don’t have private hospital insurance.  This extra tax is known as the Medicare Levy Surcharge.

For example:

Jimmy is 35 years old, single, and does not have the appropriate level of private patient hospital cover. Jimmy’s taxable income is $90,000.  He also has reportable fringe benefits of $20,000.

When Jimmy does his tax return he has to pay extra Medicare Levy of $1,375.

If Jimmy had private hospital cover for the whole year than he would save $1,375 in tax.  If he can get a private hospital insurance policy costing less than $1,375 per year than he will come out in front dollar wise.

So next time one of your mates tells you that having health cover saves you tax you will know how it works.

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Note that the information provided is general in nature and subject to change, please contact one of our professionals who can evaluate your circumstances and provide more accurate advice to your current situation.