EOFY: What’s health insurance got to do with it?

EOFY health insurance

Times sure are tough out there for single parents right now. Trying to make ends meet as the cost-of-living increases is no easy feat. Haven’t we been through enough already over the last two years? We know the struggle is real when you’re trying to juggle work, kids and everything else in between!

The approaching end of financial year is likely the last thing on your mind. But if you’re able to spare just a few minutes, this month could be a great time to review your household bills and expenses, including private health insurance.

We know many single mums out there might be confused about how private health insurance relates to tax, so let’s break it down.

The Medicare Levy Surcharge (MLS)

June is a busy time for private health insurance because many Aussies are either prompted to sign up for or review their policy. This is a driven by a couple of things, and the Medicare Levy Surcharge (or MLS) is one of them.

If you’re a higher income earner (for single parents, that’s generally those with a taxable income above $180,000) you could be up for extra tax via the MLS in the new financial year if you don’t hold an appropriate level of hospital cover by June 30[1].

Considering that you could find approved private hospital cover for a similar price to the additional tax you may have to pay via the MLS, it’s worth considering getting approved private hospital cover this EOFY. Especially when private hospital cover may provide you with some benefit down the track if you were to experience a health issue.

Under 31? Think about Lifetime Health Cover (LHC) loading

This one for those single mums aged 31 or younger to really think about this EOFY.

Unlike the MLS, LHC loading is not a tax. It is government initiative designed to encourage younger Aussies to take out private hospital cover earlier in life.  So, for single mums who don’t hold eligible hospital cover by July 1 following their 31st birthday, you may pay more if you do decide to take out private hospital cover down the track. And because LHC compounds, the longer you wait to take out cover the more unaffordable it can become later in life[2]. And no one wants to be paying more than they need to be, especially during these financially challenging times!

What about health insurance premiums?

As if 2022 hasn’t thrown us enough curveballs already, private health insurance premiums are experiencing a shake-up this year.

For some policyholders, premiums went up on April 1 but some health funds decided to push back their annual increases until later this year to provide some financial relief for members.

So, if you hold private health insurance and you’re premium just increased, don’t simply accept the higher premium. Instead, use the EOFY as your cue to review your cover and see if you can save money or find better value by shopping around.

And if your premium isn’t due to go up until later in the year, don’t wait around for the price rise. Get ahead and consider reviewing your cover this EOFY.

If you can find a spare minute amongst the chaos that comes with being a single mum, it could be worth reviewing your household bills and expenses, including private health insurance, this EOFY.

And if you’re feeling a bit confused,  a comparison service such as  iSelect* has trained consultants who can try to help you understand how private health relates to MLS and LHC and compare your current policy against other options from iSelect’s range of policies and providers, to see if you could save money on your health insurance or see if there may be another policy better suited to your needs and budget.

Disclaimer:

*iSelect does not compare all health insurance providers or policies in the market. The availability of policies will change from time to time. Not all policies available from its providers are compared by iSelect and due to commercial arrangements, your stated needs and circumstances, not all policies compared by iSelect will be available to all customers. Some policies and special offers are available only from iSelect’s contact centre or website. To view iSelect range of providers, visit: www.iselect.com.au/partners.

[1] Source: https://www.privatehealth.gov.au/health_insurance/surcharges_incentives/medicare_levy.htm

[2] Source: https://www.privatehealth.gov.au/health_insurance/surcharges_incentives/lifetime_health_cover.htm

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