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The Federal parliament has passed legislation to raise the threshold at which the Medicare levy surcharge (MLS) comes into effect. The new MLS thresholds are $70,000 for singles and $140,000 for couples and families and will apply to income tax returns for the 2008/2009 financial year and all following years. These thresholds will be indexed against average wages in future.
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To help fund Medicare, Australian resident taxpayers are subject to a tax known as the Medicare Levy. In most cases, the Medicare Levy is calculated at 1.5% of your taxable income. However, this rate may vary depending on your personal circumstances.
If you are on a higher income and do not have an appropriate level of private Hospital cover for yourself and all of your dependants (including your spouse) during any period of the income year, you may have to pay the Medicare levy surcharge (MLS) for the period you were without cover.
The MLS is calculated at 1% of your taxable income and is in addition to the 1.5% Medicare Levy.
If you are single and your taxable income is more than $70,000 per annum ($140,000 for couples and families) you may be required to pay the MLS of 1% of your income as part of your annual tax bill. But you can be exempt from this extra expense simply by having private Hospital cover.
Click here to read more about Medicare Levy Surcharge.
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Yes, the family threshold is increasing from $100,000 to $140,000. However, if you have dependent children the threshold will increase by $1,500 per child after the first one. For example, if you have three dependent children in 2008/09, the threshold is $140,000 plus (2 x $1500) = $143,000.
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With the changes to the Medicare levy surcharge (MLS) you will not have to pay the extra surcharge until your taxable income reaches $70,000 for singles or $140,000 for couples and families. If you earn under these thresholds the MLS will not apply.
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It doesn’t, your cover remains the same.
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The legislation includes an amnesty clause meaning that people who dropped their hospital cover in anticipation of the changes to the MLS will not be liable for the surcharge between 1 July 08 – 31 December 08, provided that they rejoin an appropriate hospital cover by 31 December 2008 and are covered on 1 January 2009. If you have left private hospital cover in recent months in anticipation of changes to the levy, it may be worth reviewing your decision before December to check that the decision is still right for your circumstances.
At Australian Unity, we will of course welcome you back and offer you full continuity of membership provided that you back pay the premium (as far back as 1 July 2008).
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At this point we are assessing the impact of the proposed changes. However, private health insurance premiums are usually only increased once a year and generally come into effect on 1 April. Australian Unity works hard to ensure that any increases to premiums are the minimum necessary to meet the increasing costs of claims.At this point we are assessing the impact of the proposed changes. However, private health insurance premiums are usually only increased once a year and generally come into effect on 1 April. Australian Unity works hard to ensure that any increases to premiums are the minimum necessary to meet the increasing costs of claims.
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Lifetime Health Cover is a Federal Government initiative that started on 1 July 2000. It is designed to reward people for taking out hospital cover at an early age and maintaining that cover throughout their lifetime.
If you don’t have private hospital cover by 1 July following your 31st birthday, you will pay an additional 2% loading on your health insurance contributions each year you delay taking out hospital cover after the age of 30. The maximum loading a person can be required to pay is 70%, payable by people who first take out hospital cover for the very first time at age 65 or older.
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Any person who gave up their private health cover because of the proposed changes to the MLS is able to rejoin and back pay their premiums for the period of their absence (back to 1 July 2008 only). This will ensure continuity of cover. However, it is unclear whether the usual rules in relation to the application of LHC penalties will apply. We are currently seeking clarification from the Department of Health & Ageing in this regard and will update you when we have received a response.
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