Do I need private health insurance for tax?
Do you still pay the Medicare Levy if you have private health insurance?
Yes. Having private health insurance doesn’t exempt you from paying the Medicare Levy, a tax that most Australians have to pay. The Medicare Levy is generally 2% of your annual taxable income, and it helps to fund the public healthcare system and make essential health care widely accessible.
The Medicare Levy Surcharge (MLS) is an additional tax of between 1-1.5% for higher income earners, which aims to encourage people to take out hospital cover and reduce pressure on the public healthcare system. The way to avoid the surcharge is to take out eligible hospital cover for you, your partner and any dependants for the full financial year.
Affordable Frank covers (add relevant covers to topic)
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Emergency ambulance
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Accident Protection
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Private Emergency Department Attendance Benefit
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Emergency ambulance
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Dental surgery
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Joint reconstructions
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Emergency ambulance
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Bone, joint & muscle
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Digestive system
* The price shown is per week and applies to a Single, aged 30, living in VIC. It excludes LHC loading and includes a Base Tier Government Rebate
| Extras services (when included on cover) |
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| All extras benefits except as specified below. Waiting Period: 2 Months |
| Optical, home and domestic aids and medical aids. Waiting Period: 6 months |
| Major dental services (including full & partial dentures, orthodontics, crown & bridgework, endodontic services such as root canal, gold fillings, indirect restorations, surgical extractions of a tooth/teeth including wisdom teeth). Waiting Period: 12 Months |
| Health appliances including nebuliser pump, blood glucose monitor, pressure garments, sleep apnoea monitor, extremity pump, hearing aids, orthopaedic appliances (GMHBA approved), prostheses (GMHBA approved non-surgical), tens monitor, podiatry surgical procedures and orthotic appliances (foot). Waiting Period: 12 Months |
| Hospital services (when included on cover) |
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| Accidents - bodily injuries resulting from accidents which occur after the date of joining GMHBA or upgrading to a higher cover. Waiting Period: No |
| Obstetrics and maternity. Waiting Period: 12 months |
| Pre-existing ailment, illness or condition (other than psychiatric, rehabilitation and palliative care). Waiting Period: 12 months |
| Any other benefit for hospital (or hospital substitution) treatment. Waiting Period: 2 months |
A pre-existing condition is one where signs or symptoms of your ailment, illness or condition, in the opinion of a medical practitioner appointed by GMHBA (not your own doctor), existed at any time during the six months preceding the day on which you purchased your hospital insurance or upgraded to a higher level of hospital cover and/or benefit entitlement.
A special waiting period applies to obtain benefits for hospital treatment for new members who have pre-existing conditions. The waiting period also applies to existing members who have recently upgraded their level of hospital cover. If the ailment, illness or condition is considered pre-existing:
New members
New members must wait 12 months for any hospital benefits (other than psychiatric, rehabilitation and palliative care).
Existing members (transferring or upgrading)
Members transferring/upgrading to a higher hospital cover must wait 12 months to get the higher hospital benefits (other than psychiatric, rehabilitation and palliative care).
Existing members (with at least 12 months membership)
Existing members with at least 12 months membership in total across their old and new cover are entitled to the lower benefits on their old cover.
Silver Hospital cover provides the same single room coverage as Gold Hospital, but co-payments of $100 per day up to a maximum of $700 per admission apply. Co-payments are not the same as hospital excess. Please note: Some private hospitals only have single rooms and co-payments will apply.
Co-payments do not apply.
Can I claim private health insurance on tax?
No, private health insurance can’t be claimed as a tax deduction! But eligible hospital cover can help you avoid paying the MLS (more tax) if you’re a higher income earner.
Do I need private health insurance for tax?
No, you don’t need private health insurance for tax purposes or to lodge your tax return. But if you don’t have private health insurance hospital cover it can impact how much tax you’ll need to pay if you’re a higher income earner and earn above the income threshold for the MLS.
The ATO looks at your annual taxable income and record of your private health insurance to determine if you’ll need to pay the MLS as well as your eligibility for the Australian Government Rebate on private health insurance.
Health funds are required to provide private health insurance tax information for their members directly to the ATO in July, so this is pre-filled in your tax return when you lodge online or through a registered tax agent. It includes details of your cover for the financial year, premiums paid and the rebate received by the fund.
How much tax do you save?
While you don't technically save money, you could avoid paying the MLS (an additional tax) by holding eligible hospital cover if you’re a higher income earner. You can use the Medicare Levy Surcharge calculator to find out how much you might have to pay if you don’t have an exemption.
You may also be eligible to receive the Australian Government Rebate on private health insurance (‘the rebate’) which is an income-tested incentive the Australian Government puts towards your health insurance premium (it applies to hospital and extras covers).
How much will my rebate amount be?
The rebate amount you may receive depends on your income tier and the age of the oldest person covered on the policy. You can claim the rebate either as:
- a reduction in the premiums you pay to your health insurer, or
- a lump‑sum entitlement when you lodge your tax return.
The rebate doesn’t apply to any Lifetime Health Cover (LHC) loading applicable on your hospital cover.
Do you pay the MLS if you have private health insurance?
If you earn above the base tier income threshold set by the Australian Government, you’ll need to hold eligible hospital cover for the full financial year to avoid the MLS.
You are not liable to pay the Medicare Levy Surcharge if:
- your income is below the Base Tier threshold for MLS, or
- you’re eligible for a Medicare Levy exemption.
If you’re a couple or a family, you’re assessed on the combined annual taxable income for your household and subject to the family tiers. All members of the family will need to have eligible hospital cover to be exempt from paying MLS. For families with children, the thresholds are increased by $1,500 for each child after the first.
The Australian Government reviews income tiers regularly and the thresholds are usually updated each year on 1 July.
Please note: for individual tax advice, please consult your tax professional, or the ATO website.
Frequently Asked Questions about tax and private health insurance
Most Australians pay the Medicare Levy, which is a 2% tax which helps fund the public healthcare system.
This is not to be confused with the Medicare Levy Surcharge (MLS) which is an additional tax for higher income earners who do not hold eligible hospital cover.
If you simply want to avoid the MLS, you’ll need hospital cover for you, your partner and dependants for the full financial year.
Any of Frank’s hospital covers will help you avoid the MLS.
Health insurance is not tax deductible, but you may be eligible for tax benefits through:
- The Australian Government Rebate on private health insurance, and
- Avoiding the Medicare Levy Surcharge with eligible hospital cover.
If you’re a higher income earner it could work out better for you to take out and hold hospital cover to avoid the Medicare Levy Surcharge. Keep in mind that Lifetime Health Cover (LHC) loading may apply to your premiums if you haven’t taken out hospital cover before 1 July after you turn 31.
For individual tax advice, please consult your tax professional, or the ATO website.
A tax claim code (A to F) is usually pre-filled on your tax return and tells the ATO how you should be assessed for MLS and the Australian Government Rebate on private health insurance based on your personal circumstances.
A tax claim code indicates:
- Your relationship status (single, partnered, with dependants)
- Who is claiming the rebate for the private health insurance policy
- Whether you were a spouse or dependant on someone else’s policy
If you’re registered to receive the Australian Government Rebate on private health insurance as a reduction on your premiums, your fund will provide information directly to the ATO about the rebate rate you’re currently claiming with them. The ATO will assess this against your declared annual taxable income. If you’re eligible for a higher or lower rebate tier, and a different percentage premium reduction, this amount will be adjusted as part of your tax return, and you may either end up paying more as tax or receive a refund. That’s why it’s important to let your fund know if your income changes throughout the financial year and if you need to nominate a new rebate tier.
If you haven’t opted in to receive the rebate as a premium reduction and you are eligible, it may be paid as a lump sum when you complete your tax return.
Freedom limit, flex it your way
Because sometimes your needs might change a little, you have a $500 freedom limit to claim on your 7 included extras services.
And the longer you're with us, the more you can claim.
Get an extra $50 to claim on your freedom limit each full calendar year, with a maximum of $200 after 4 years of continual cover.
Freedom limit, flex it your way
Because sometimes your needs might change a little, you have a $700 freedom limit to claim on your 11 included extras services.
Plus an additional Optical limit. You can claim 100% back on optical up to your $150 annual limit.
And the longer you're with us, the more you can claim.
Get an extra $100 to claim on your freedom limit (excludes optical) each full calendar year, with a maximum of $400 after 4 years of continual cover. Your loyalty benefit will be available on 1 January after you've completed one full membership year.
