How to get a better deal on your private health before June 30

How to get a better deal on your private health before June 30 | Beanstalk Mums

So it’s the end of financial year and that means our TV screens are inundated with ads for office suppliers, accountants, car runout deals and health insurance. Wait, health insurance? What on earth does health insurance have to do with June 30?

Well quite a bit actually but new research from private health insurance comparison service iSelect has revealed that the majority of Aussies are confused about how private health relates to tax.  So, we got iSelect’s Laura Crowden to give us the lowdown on what single mums need to know, and how to find a better deal before June 30.

HOW TO GET A BETTER DEAL ON YOUR PRIVATE HEALTH BEFORE JUNE 30

PRIVATE HEALTH INSURANCE & TAX

You may be aware of a vague link between private health insurance and tax but not sure exactly what it is. Well it’s all to do with something called the Medicare Levy Surcharge (MLS).  It’s separate to the Medicare Levy (which is paid by all taxpayers).

The way MLS works is if you earn over $90,000 and don’t have private hospital cover then you’ll have to pay a minimum $900 in extra tax. Exactly how much extra tax you have to pay depends on how much you earn but a good rule of thumb is that if you earn over $95,000 then it will probably work out cheaper to take out a basic hospital policy before June 30 instead of paying the extra tax next financial year.

THE LONGER YOU WAIT TO TAKE OUT COVER, THE MORE EXPENSIVE IT CAN BECOME

The government wants people to take out private cover because it reduces the burden on the public system. As well as encouraging higher income earners to take out cover via the MLS, they also penalise you if you wait too long to take out hospital cover through Lifetime Health Cover (LHC) loading. Unlike MLS, LHC isn’t a tax but the deadline is also June 30 so it’s no wonder people get confused.

Basically if you don’t have private hospital cover by July 1st following your 31st birthday, then you’ll have to pay higher premiums if you do decide to take it out down the track – 2% more for ever year you were without cover – and pay the loading for 10 years.  That means if you wait until you are 40 to take out cover for the first time, you’ll pay 20% more.

So if you are about to or have recently turned 31, it’s really important to think about whether or not to take out private cover, as if you don’t you may find it’s simply unaffordable when you really need it.

EOFY DEALS FOR HEALTH INSURANCE

Okay, what if you don’t earn over $90k and your 31st birthday has well and truly passed you by?  Well, even if you already have cover, the end of financial year is the perfect time to review your policy and make sure you are still getting a good deal. And when you are a single-person household, every dollar always counts.

This time of year, many funds are offering fantastic deals to attract new customers such as gift cards or cashback, months free, waiving waiting periods or even frequent flyer points.  So if you have been thinking about switching for a while, doing it before June 30 means you might get an added bonus thrown-in.

The one tax you can definitely avoid paying this EOFY is the lazy tax. A lot of Aussies end up paying the lazy tax when it comes to health insurance because they simply don’t have time to shop around (hello, single mums!). But there can be as much as $900 difference between policies offering the same level of cover so it’s definitely worth the effort.

INCREASE YOUR EXCESS AND SAVE

Back in April, the government made some massive changes to private health insurance including introducing new Gold, Silver, Bronze & Basic tiers to make it easier to understand and compare policies.

But there was also another change to help make private cover more affordable that could be very handy for single-income families. You are now able to increase the excess on your single parent policy from $500 up to $750 which will bring down your premium and reduce the amount you pay each month. If you think you are unlikely to be admitted to hospital then increasing your excess could see you save up to $200 a year. And remember, many funds waive excesses for kids going into hospital.

SAVE MONEY & TIME

Okay, so now you are thinking you should probably review your policy before EOFY but how the hell are you going to find the time? That’s where a comparison service like iSelect can do the hard work for you. In one simple phone call, they can help you choose a policy for the first time or compare your current policy against their range of providers to see if you can get better value.

A recent survey of iSelect customers found that of those who saved, over half saved anywhere between $300 and $1000 a year off their premiums. I don’t know about you, but half an hour or so on the phone to potentially save up to a thousand bucks sounds like time well spent. Now if only you could get iSelect to take care of the school lunches. And the washing. And do your grocery shopping …

ISELECT’S TOP 5 TIPS FOR GETTING BETTER VALUE ON YOUR PRIVATE HEALTH INSURANCE

  1. Opt for a higher excess & save – increasing your excess from $1000 to $1500 will save a family up to $350 a year on their premiums[1]
  2. Look for discounts & freebies – many funds offer discounts for paying via direct debit while others offer free dental check-ups or waive excesses for kids going into hospital
  3. Don’t set & forget – not regularly reviewing your policy means you could be paying for things you don’t use or not be covered for what you actually need.
  4. Waiting periods are protected – any hospital benefit waiting periods you have already served are protected by law as long as you switch to an equal or lower level of cover
  5. Review your extras – if you don’t use them, why pay for them? Consider a flexible extra product that  gives you a single annual limit which allows you to get more back on the services you use the most.

[1] Source: Increasing voluntary maximum excess levels – health.gov.au

How to get a better deal on your private health before June 30 | Beanstalk Mums Pinterest

Laura Crowden

Laura Crowden

Laura is the Corporate Affairs Manager at iSelect and is passionate about helping Aussie families reduce their household bills and expenses. Outside of work, she’s mum to a cheeky eighteen month-old boy and a disgruntled cat.

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