How much tax will I save with private health insurance?

Three ways you can save paying tax by taking out private health insurance

There are 3 ways you can save paying tax by taking out private health insurance:

1. Claim the Private Health Insurance Rebate.
2. Receive a reduction in or exemption from paying the Medicare Levy.
3. Avoid paying the Medicare Levy Surcharge.

Private Health Insurance Rebate

If you earn under a certain income and take out private health insurance, you can claim the Private Health Insurance Rebate.

The Rebate operates as a discount you receive on the price of your private health insurance.

Depending on your income and age, the Rebate can be as much as 32.812%.

You can claim the Rebate in 2 ways:

Medicare Levy

The Medicare Levy is a 2% tax that most Australians pay on their taxable income.

The Australian Government uses the revenue to help fund Medicare.

Depending on your circumstances, you may get a reduction in or exemption from paying the Medicare Levy.

You may get a Medicare Levy Reduction if you earn below a certain income.

You may be entitled to a Medicare Levy Exemption if you:

• are a foreign resident temporarily working in Australia
• are not eligible for Medicare
• have certain medical requirements.

Medicare Levy Surcharge

If you earn over a certain income and do not have Hospital Cover, you may have to pay the Medicare Levy Surcharge.

You can avoid paying the Medicare Levy Surcharge by taking out Hospital Cover.

The Medicare Levy Surcharge is calculated at a rate of 1% to 1.5% of your income and the rate depends on how much you earn. You have to pay the Medicare Levy Surcharge on top of the Medicare Levy of 2% paid by most Australian taxpayers.