Private Health Insurance Medicare Levy Surcharge

Lscrubs4567 on 01/11/2022 - 12:14

Hi

I am recently acting in a job role that is just over the threshold and I am required to get private insurance or pay the medicare levy surcharge.

Single, no kids.

Do I
1. Just pay the levy for this year as it's cheaper than most basic hospital cover
2. pay hospital cover only starting Nov 2022 and pay the levy surcharge for the last 5 months pro rata
3. pay hospital and extras cover and pay the surcharge pro rata

What private health insurers are you with…do you get an nice bonus offers/perks?

Thanks

Poll Options expired

  • 36
    Just pay the levy for this year as it's cheaper than most basic hospital cover
  • 1
    Pay hospital and extras cover and pay the surcharge pro rata
  • 4
    Pay hospital cover only starting Nov 2022 and pay the levy surcharge for the last 5 months pro rata
Health & Beauty

Comments

  • Unorthodox on 01/11/2022 - 12:20

    See if there are any offers for free Hospitals Cover for x weeks and use that to re-calc whether it's worthwhile. Often people just churn through these offers (and or gift card offers) if they're close to the threshold

  • dust on 01/11/2022 - 12:20
    +9

    do you get an nice bonus offers/perks?

    Pay for PHI, free data breach.

  • Drakesy on 01/11/2022 - 12:23
    +3

    Get the most basic hospital asap, if you're even slightly over the $90k threshold you'll be up for the full levy anyway, Notably the levy is only applied if your total income for the FY is over $90k. If you're on lets say $80k for the year and do 2 months of $100k acting then you won't hit the $90k fy threshold so i wouldn't bother.

    If your Private health is below $900 then you'll be coming out ahead.
    Even if it is a trash cover.

    • scrubs4567 on 01/11/2022 - 12:46

      My issue is that I might get extended in this acting gig so I'll likely to meet the threshold. The surcharge is 1% which will be like $950 for me. I don't see any hospital cover lower than that…maybe better off paying the levy?

      • Drakesy on 01/11/2022 - 12:53
        +1

        If you have a look around you should be able to find one.
        I took out a trash Qantas policy for $695 last year and that served me well.

        • scrubs4567 on 01/11/2022 - 13:29

          Nothing cheaper than $20 a week …they must have all increased their prices

  • djkelly69 on 01/11/2022 - 13:55

    Assuming:
    - you will be close to the threshold
    - are reasonably fit and healthy and unlikely to make any claim on your PH insurance
    - the surcharge and the cheapest PH cover are about the same amount,

    then as I see it your options are essentially either locking in the surcharge by paying for the cheap PH cover now and getting little to nothing in return, or waiting until tax time next year and seeing if you are liable, as well as having use of that money for ~1 year. You may be able to bring forward the purchase of some tax deductible items if you are quite close to the threshold at the end of the FY in order to try and get under the threshold.

    Personally I would wait and see, but obviously others may look at it differently.

    • scrubs4567 on 01/11/2022 - 14:42

      unfortunately salary sacrificing does not assist with this surcharge

      • djkelly69 on 01/11/2022 - 14:57
        -1

        No, but it is based on your taxable income. Deductions reduce your taxable income.

        • scrubs4567 on 01/11/2022 - 15:01

          I don't think it works like that because they also look at super and fringe benefits.

          https://community.ato.gov.au/s/question/a0J9s0000001Adu/p000…

          • djkelly69 on 01/11/2022 - 15:15

            @scrubs4567: Assessable income − allowable deductions = taxable income. The surcharge is calculated on your taxable income.

            And I am not sure where you are getting that they take super into account, because that is not what that link says and it is not something you need to use in tax calculations.

            • djkelly69 on 01/11/2022 - 15:23
              +1

              @djkelly69: Actually looking a bit deeper, income for MLS purposes is slightly different, and is calculated as taxable income (as defined above) plus:

              • reportable fringe benefits (shown on your payment summary or income statement)
              • reportable superannuation contributions (which is the sum of both your reportable employer superannuation contributions and your deductible personal superannuation contributions)
              • your net investment loss (which is the amount by which your financial investment deductions exceeded your financial investment income, plus the amount by which your rental property deductions exceeded your rental property income)
              • the amount on which family trust distribution tax has been paid.
          • scrubs4567 on 01/11/2022 - 15:20

            @scrubs4567: "Reducing your taxable income via a salary sacrifice arrangement may not have the same effect as taking a pay cut. This is because reportable fringe benefits and reportable super contributions (as well as a number of other items) also form part of the income for MLS purposes calculation"

              • djkelly69 on 01/11/2022 - 15:26

                @scrubs4567:

                A reportable super contribution is an extra superannuation payment requested by an employee and made by an employer, over and above the normal super guarantee (SG) contribution, which is 10.5% from 1 July 2022 and gradually rising to 12% by 1 July 2025.

                (emphasis added)

                So for most people income for MLS purposes will just be taxable income.

                Also just clarifying, tax deductions and salary sacrificing are not even close to the same thing.

                • scrubs4567 on 01/11/2022 - 19:54

                  @djkelly69: Thanks for clarifying so what would count for tax deductions? My understanding was that salary sacrificing would reduce taxable income….

                  • exceladdict on 02/11/2022 - 09:42
                    +1

                    @scrubs4567: If you work for an employer (charity, hospitals I think) where you can salary sacrifice but then it gets added back as a reportable fringe benefit, then yes it can have quite a big impact on your health insurance and HECS as they are calculated on taxable income + reportable fringe benefits.

                    However if you're just talking about deductions (work expenses, personal income protection insurance, union fees, increased super contributions, etc) that reduce your taxable income this could pull you under the threshold.

  • sjj89 on 01/11/2022 - 15:01

    How old are you?

    • scrubs4567 on 01/11/2022 - 15:02

      28

      • sjj89 on 02/11/2022 - 00:23

        Get on while you can still lock in your reduced % rate

  • NelgCip on 02/11/2022 - 08:08
    +1

    Choice had this website to check if you need a private health insurance https://www.doineedhealthinsurance.com.au/. Hope this can help.

  • screensaver on 02/11/2022 - 16:40

    get the cheapest bronze plus one with accident override eg hcf, medibank, qantas. as you get gold level in event of an accident or the cheap frank one that covers everything as a private patient in public hospital.,,.meaning it covers all categories

Login or Join to leave a comment
Login Join