Australian Health Cover
Australia offers Medicare which is available to permanent Australian residents and temporary residents who come from those countries with Reciprocal Health Care Agreements (RHCA). It’s important to note that you must apply for Medicare while in Australia if you live in a country with a Reciprocal Health Care Agreement as it’s not automatically provided to an individual. Medicare provides free treatment as a public patient in a public hospital and free or low–cost treatment by practitioners such as doctors, specialists, participating optometrists and dentists (specified services only). Medicare is financed through personal income tax and an income–related levy so there can be tax implications for a temporary resident who applies for Medicare.
Why Have Australian Health Cover when Medicare Exists?
Taking out Australian health cover ensures you are able to receive medical treatment as a private patient in a private or public hospital. Additionally, Australian health insurance can extend to some services that Medicare does not cover (such as ambulance transport, optometry, and dental care). Australian health insurance funds such as IMAN Australian Health Plans offer hospital covers and ancillary covers to suit different health needs. Since there is a wide range of private health insurance covers, people need to be aware of the key elements below.
What is Lifetime Health Cover Loading?
Lifetime Health Cover Loading (LHC) is an initiative to encourage people to take out hospital insurance earlier in life. To avoid this loading, a person must purchase Australian domestic hospital cover from an Australian registered insurer such as nib before the loading deadline. The deadline is generally the 1st of July following the person’s 31st birthday.
If you do not take out private hospital cover before this date, then if you do so after this time, a loading of 2% per annum will apply on top of your health insurance premium. This loading can go up to 70% and the loading will be applied for 10 years. The premium only applies to hospital cover, not for extras cover. Therefore someone aged 40 will pay a loading of 20% on their premiums for hospital cover each year for 10 years.
New migrants to Australia who are already over the age of 31 upon arrival do not pay an increased cost if they purchase domestic Australian health cover within 12 months of being eligible for Medicare benefits. It is important to consider taking out hospital cover in the first year after registering for Medicare.
Medicare Levy Surcharge
The Medicare Levy Surcharge (MLS) is a Federal Government initiative to encourage higher income earners to take out Australian health cover. Under Australian Taxation Law, anyone who holds a Medicare Card or who is entitled to hold a Reciprocal Medicare card and does not have Australian domestic health insurance, may have to pay an additional 1% to 1.5% in tax if your income exceeds the MLS thresholds. For more information on MLS thresholds visit the Australian Taxation Office.
For information on how to avoid the Medicare Levy Surcharge, contact nib health funds limited or call on 13 14 63.
Medicare Tax Levy
Anyone who is a resident in Australia for tax purposes is required to pay a Medicare Levy of 1.5% of their taxable income. The levy is deducted by your employer and paid to the Australian Taxation Office (ATO).
You may be exempt from paying the Medicare Levy if you are a temporary resident not entitled to Medicare benefits. For information about recovering your Medicare Levy, visit the Australian Taxation Office.
Australian Government Private Health Insurance Rebate
The Australian Government Private Health Insurance Rebate (also known as the Federal Government Rebate) reduces the premiums for Australian private health insurance cover, including hospital and ancillary (extras). You could be eligible to claim this rebate if you are eligible for Medicare and have taken out an Australian domestic health insurance product.
You may be eligible to receive up to 40 cents back per dollar spent on private health insurance premiums depending on your age and income. The amount you receive as a rebate is means tested. For further information about the rebate, visit the Australian Taxation Office.