Medicare & Tax - help me to understand!

[Isadora]

Currently I am trying to work out whether its worth while for us to get private health insurance. The past few years we have been stung with high fees at tax time due to paying the medicare levy surcharge. I dont understand, is there two seperate parts being the medicare levy & the medicare surcharge iykwim? DH doesnt want to get it as he thinks we will have to pay the medicare fees at tax time as well as our health insurance bill? However I read it as if you have private health you dont pay anything to do with medicare? Is this right? Does anyone know much about this subject & the cut offs with income etc? Any help appreciated as I dont understand what they are on about on the medicare website lol

[Liz]

There is 1.5% medicare levy, and if you don't have health insurance, you get hit with another 1% if you earn.. I think it's $70,000+ for a single. Not sure what it is for a family.

So that person earning $70,000 would be slugged an extra $700 tax in surcharge, which could just as easily have gone towards health insurance, and at least you can claim benefits with health insurance.

Will just go look up the thresholds

here's some info: http://www.privatehealth.gov.au/info...dicarelevy.htm

I recall when they upped the thresholds that a lot of people dropped out of their private health.. but you need to remember if you're over 30 that when you rejoin the premium will be higher the older you are.

ETA: just re-read your question. Yes, you'll always pay the 1.5% medicare levy, unless you are exempt. It's the surcharge you can avoid if you get hospital cover.

[Isadora]

Thanks Liz, that website link you provided helped alot too. However still a tad confused as to whether we are classed as a family, as DH does earn over the $70,000 as an individual & although I work p/time we dont make over $140,000 as a family. So would DH still pay the surcharge as an individual or would they class us as a family coming in under the threshold iykwim?

[Liz]

I would think you'd be under the family threshold. But if that's the case.. not sure why you've been paying surcharge? Altho I think it's only this current year that has the higher thresholds. i think it was $100,000 for families last year.

[Isadora]

Ohh ok that would have been why

[briggsy's girl]

you only need to have basic hospital cover - for DH and I even top level cover is about $80 a month, we get 30% of that rebated (standard thing) and if our income is over that limit mentioned, we don't have to pay the extra. you're going to pay the 1.5% or whatever it is regardless, so it's just the extra amount.

we pay our premiums fortnightly and honestly don't notice it. DH was 30 when we went into PHI so we pay more for that due to his age. we're under the family threshold now so we don't NEED to have PHI to avoid that premium, but the benefits we've had over the past few years (IVF, both had major dental surgery in private system etc) have far outweighed the costs to us. the dental surgeries we've had would have had to be either out of pocket entirely, or at least 18 month wait (as opposed to the 1 and 2 month waits we had...

[Isadora]

Hmm I've wanted health cover all along, but DH says no & now seeing as we dont earn over the $140,000 he definately wouldnt go for it. So we have to pay the normal 1.5%, if we earnt over the $140,000 we would pay the surcharge & therefore phi would be worthwhile. So I think I've got my head around it, bummer I want to get phi!