Prepay your private health cover before 30 June to save
With private health insurance rebates becoming means tested from 1 July 2012, for some clients it may make sense to pre-pay, and enjoy a better rebate in the current financial year.
A common end-of-financial-year tax strategy is to pre-pay tax deductible or rebateable expenses (such as interest on investment loans, income protection premiums, or other business or work related expenses), in order to bring forward their tax saving. For those earning above the Medicare Levy Surcharge thresholds ($84,000 for singles, $168,000 for couples) it is well worth considering. The table below (from www.health.gov.au) summarises the changes.
Additionally for couples, currently any member of the couple can claim the rebate attributable to the policy that covers both of them. From 1 July 2012 entitlement to the rebate will be allocated equally between the couple.
 |
No change
|
Tier 1
|
Tier 2
|
Tier 3
|
|
Singles
|
$84,000 or less
|
$84,001 – 97,000
|
$97,001 – 130,000
|
$130,001 +
|
|
Families
|
$168,000 or less
|
$168,001 – 194,000
|
$194,001 – 260,000
|
$260,001 +
|
|
Under 65
|
30%
|
20%
|
10%
|
0%
|
|
65 – 69
|
35%
|
25%
|
15%
|
0%
|
|
70+
|
40%
|
30%
|
20%
|
0%
|
Note: Single parents and couples (including de facto couples) are subject to the family tiers. For families with children, the thresholds are increased by $1,500 for each child after the first.
For example, a family under 65 earning over $260,000 who might currently be paying say $2,500 pa (after applying the rebate) would find themselves paying $3,570 from July, a $1,070 difference.
To find out more about this, or other June financial strategies, please contact AGS Financial Group.
To find out if pre-payment for next financial year is an option for your policy, please contact your Private Health Insurance provider.
Published : 16 Jun 2012
