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Private health insurance

Many Australians choose to pay for private health insurance, which covers all or some of the costs of treatment for private patients in private or public hospitals. It may cover services that are not covered by Medicare, such as most dental care, most optical care, and ambulance services.

The costs and types of cover vary, so if you decide to get private health insurance, it is important to compare different funds and check the details carefully before you buy the policy.

The Australian Government offers financial incentives to encourage people to take out private health insurance. If you are considering taking out private health insurance you should be aware of:

The Private Health Insurance Rebate

You may be able to claim the Private Health Insurance Rebate if you are eligible for Medicare and have a complying health insurance policy that provides hospital treatment, general treatment (‘ancillary’ or ‘extras’) cover or both.

The Medicare Levy Surcharge

The Medicare Levy Surcharge is an additional one per cent tax paid by people who do not have private health insurance and whose income is above a certain amount (a ‘threshold’).

Lifetime Health Cover

This scheme encourages people to take out hospital cover at an early age. The Lifetime Health Cover deadline for new migrants to Australia is the later of these two dates:

o 1 July following your 31st birthday; or,
o if you are over the age of 31,the first anniversary of the day you register as eligible for full Medicare benefits.

If a person takes out hospital cover after their Lifetime Health Cover deadline they have to pay an extra 2% for each year they are aged over 30 when they first purchase hospital cover. For example, if someone buys private health insurance hospital cover for the first time at the age of 45, they will have to pay an extra 30% for their hospital cover. To avoid having to pay the Lifetime Health Cover loading, you must purchase hospital cover from an Australian registered health insurer before your Lifetime Health Cover deadline.

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