Why you should prepay your private health insurance premium before June 30, 2012
From 1 July 2012, the Government will introduce three new ‘Private Health Insurance Incentives Tiers’, meaning the private health rebate you receive will be means tested. This has now been passed by the parliament, so we wanted to discuss how to minimise this impact on clients.
What does this mean to you?
Well, for singles earning $84,000 or less and families earning $168,000 or less, you will continue to receive the existing 30% rebate.
However, when you earn over $84,000 as a single, or $168,000 for the family, your rebate will reduce according to the following scale.
For Singles earning
- Under $84,000 – 30%
- $84,001-$97,000 – 20%
- $97,001 – $130,000 – 10%
- Over 130,001 – Nil
For Families earning
- Under $168,000 – 30%
- $168,001-$194,000 – 20%
- $194,001 – $260,000 – 10%
- Over 260,001 – Nil
What should you do?
While everyone’s circumstances will be different, consider the following example case study.
Henry is a medical registrar in his advanced training, and will earn about $150,000 in total this year. After he learns of this issue from Doctors Wealth, he contacts his private health provider and chooses to pre-pay his yearly Private Health premium before the end of June, at a total cost of $1,800. He is eligible for the full 30% private health rebate, meaning he receives $540 back in the current year. However, if Henry was to wait until any time after July 1st, 2012, this 30% rebate would not apply and he would not receive that $540 back (as his income is over $130,000).
By simply paying in June instead of July or after, he is $540 better off!
To discuss this with one of our specialist financial advisers, please ring (07) 32528810 or leave your details here.