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For many Australians, tax time and health cover are closely linked. To avoid paying the Medicare Levy Surcharge, an individual generally needs to hold eligible private hospital cover for the full financial year. The surcharge is applied based on the number of days without cover, which means that if a person takes out or cancels hospital cover part way through the year, they may still pay the surcharge for the days they were not covered.

If an individual’s income is above the Medicare Levy Surcharge income threshold and they do not have eligible hospital cover, they may pay an additional tax of between 1 percent and 1.5 percent of their income. Taking out qualifying private hospital cover for the full financial year can help them avoid this surcharge. Depending on their situation, the cost of basic hospital cover can be similar to or less than the extra tax they would otherwise pay.

Each year, health funds provide policy holders with a tax statement that includes policy details, premiums and any Australian Government rebate received. These details are also lodged with the Australian Tax Office by health funds and are usually pre-filled in an online tax return when lodging through myTax or a registered tax agent. If they are not pre-filled, a member can enter the information from their statement manually. For specific tax or lodgment questions, please speak with the Australian Taxation Office or a registered tax agent.

Yes! The Lifetime Health Cover (LHC) loading is a charge applied to new policy holders that were not covered by an appropriate level of private hospital cover past the age of 31. It was introduced to encourage early adoption and maintenance of health insurance. All of Australian Unity’s hospital covers exempt members from paying the MLS.

Once you turn 31, you’ve got until the following 1 July to buy private hospital cover and avoid paying the LHC loading. For every year you delay, you may have to pay an additional 2% (up to a maximum of 70%) on top of the cost of your private hospital cover. The good news is that the loading doesn’t last a lifetime. Once you have held private hospital cover for 10 continuous years, the loading will be removed. For more information, visit Lifetime Health Cover Loading: What Is It? How Does It Work?

The Medicare Levy Surcharge generally applies if income for surcharge purposes is above certain thresholds and an individual does not have eligible private hospital cover. As a guide, from 1 July 2026, the surcharge may apply if a person is single and their annual income is above $105,000, or if they are part of a couple or family with a combined annual income above $210,000. The surcharge rate increases in tiers as income rises. For the latest thresholds and rates, it is important to check the Australian Taxation Office website or speak with a registered tax agent.

Couples and families often ask how hospital cover fits into their broader wellbeing and financial plans. If a combined family income is above the Medicare Levy Surcharge threshold and there is no eligible private hospital cover for every family member, the household may pay the surcharge. Taking out an appropriate family or couples hospital policy and maintaining it for the full financial year for all members of the household can help avoid the surcharge. This can be especially important if there are dependent children, as the income thresholds may change based on the number of dependents. For more information please speak to a registered tax agent or visit the ATO website.

The Australian Government private health insurance rebate is a government incentive to help Australians with the cost of private health insurance, and it is income tested, which means the level of rebate received may reduce or cease once income goes above certain thresholds. Different thresholds apply for singles and for couples or families. Rebate tiers are impacted both by income and age and are usually adjusted annually across the private health insurance sector for any payments made from 1 April. It is important to check the latest information on the Australian Taxation Office or PrivateHealth.gov.au websites. You can also speak with a registered tax agent for guidance.

The potential tax saving from an eligible private hospital cover depends on taxable income and rebate tier. For some people, the cost of basic hospital cover can be similar to or less than the additional tax they might pay without cover. For advice tailored to a person’s circumstances, it is important to speak with a registered tax agent.

Private health insurance can have lots of tax implications depending on personal circumstances. Many people also value the real healthcare benefits it offers while navigating health events. These benefits can include reduced waiting times for elective surgery (private vs public system), more choice of doctor, healthcare provider and hospital, along with access to private hospital facilities. Over time, purchasing and maintaining hospital cover from age 31 can also help avoid charges like the Lifetime Health Cover loading.