How private health insurance could help you save at tax time
Did you know having private hospital cover could help you save at tax time, depending on your income? To recognise efforts of Australians investing in their own health and wellbeing, the Federal Government offers tax concession incentives for those with private hospital cover who earn more than $90,000.
We break down how Australians could potentially receive a Medicare Levy Surcharge reduction and private health insurance rebate if they hold an appropriate level of private hospital cover and depending on their income – while also having greater choice of care and access to shorter hospital waiting times.
Medicare Levy Surcharge
Having a suitable level of private hospital cover means people don’t need to pay the Medicare Levy Surcharge (MLS), which can be up to 1.5% of your income.
Most Australian taxpayers help pay for Medicare through the Medicare Levy, but if they earn more than $90,000 as an individual or $180,000 as a couple or family in 2022/23, they may have to pay the MLS as well.
Those who had private hospital cover, even the most basic, during the full tax year won’t need to pay the MLS.
| Scenario | Tax with no Private Health Insurance | Coverage with hospital and extras cover |
| Single person, no children, earning $97,000 | Might be paying about $970 annually in tax without hospital cover | $1,026.71 per year (Basic accident only) |
| Couple, 2 children, earning $200,000 | Might be paying about $2000 annually in tax without hospital cover | $2,053.43 per year (Basic accident only) |
Calculate what you may be paying in tax with our online tax calculator.
*From 1 July 2023, the Medicare Levy Surcharge (MLS) income thresholds will change for the 2023-24 financial year to $93,000 or more for an individual or $186,000 or more for a family.
Lifetime health cover
It’s helpful to have private hospital cover before people turn 31. Each year someone is not covered, it will cost 2% more in premiums when they do get cover, and that continues to increase each year, up to 70%.
Getting private hospital cover sooner helps to avoid those 2% increments adding up.
Age-based discount
Bupa has an initiative that gives people aged under 31 a discount on private hospital cover. The discount is 2% for each year between 18 and 30, when they first purchase hospital cover. The maximum discount is 10% for those aged 18 to 25 years. Those who get health insurance from a young age can keep this 10% discount until their 41st birthday.
Private health insurance rebate
The Federal Government contributes towards your private health insurance premiums based on your income and age.
| Income for surcharge purposes | Rebate for 1 July 2022 – 31 June 2023 |
| $90,000 or less for a single person | 24.608% |
| $90,001 – $105,000 for a single person | 16.405% |
| $105,001 – $140,000 for a single person | 8.202% |
| $140,001 or more for a single person | Not eligible |
| $180,000 or less for a family | 24.608% |
| $180,001 – $210,000 for a family | 16.405% |
| $210,001 – $280,000 for a family | 8.202% |
Quotes attributable to Bupa Health Insurance Managing Director Chris Carroll:
“With Australians continuing to face ongoing costs of living challenges, private hospital cover could help them save at tax time, depending on their income, while helping to reduce out of pocket expenses and giving them choice of care when they need it.”
“The tax incentives encourage people to have private hospital cover to support their and their family’s health and wellbeing needs, while helping reduce stress on the public system.”
“At tax time, people might be rewarded for having private health insurance - the Private Health Insurance Rebate can be up to a third of their premium, depending on income, age, relationship and family situation.”
