Changes to the Private Health Insurance Rebate and Medicare Levy Surcharge

Thursday, 16 February 2012- You may have seen or heard recent media coverage about the Australian Government's plans to means test the Private Health Insurance Rebate (PHIR). This information is to briefly let you know what this means for HCF members.

Currently, all HCF members benefit from either receiving a tax rebate each year, or having their premiums directly reduced by the rebate. The PHIR is currently 30% of premiums if you are under 65 years of age increasing up to a maximum of 40% of premiums if you are 70 years of age.

The means testing of the PHIR will begin reducing the PHIR for singles earning over $84,000 and families earning over $168,000.

It is expected the effective date of these changes will be 1 July 2012.

The table below provides more detail on the proposed changes:

Income thresholds for the 2013/14 year

Income

Type of member

No Tier

Tier 1

Tier 2

Tier 3

Singles

< $88,000

$88,001 - $102,000

$102,001 - $136,000

> $136,001

Families

< $176,000

$176,001 - $204,000

$204,001 - $272,000

> $272,001

AUSTRALIAN GOVERNMENT REBATE

AGE

NO CHANGE

TIER 1

TIER 2

TIER 3

UNDER 65

29.040%

19.360%

9.680%

0.000%

65 – 69

33.880%

24.200%

14.520%

0.000%

70+

38.720%

29.040%

19.360%

0.000%

Medicare Levy Surcharge

All ages

0.0%

1.0%

1.25%

1.5%

Note: It is expected the earning amounts will be adjusted for the new 2012 average weekly earnings (AWE). The new AWE is due out from the Australian Bureau of Statistics on the 23rd February2012.

In addition to the rebate changes, the Australian Government is also proposing to increase the Medicare Levy Surcharge for the same tiers, as summarised also in the table above.

The increase in the Medicare Levy surcharge may have added tax implications and will come into effect if an Australian taxpayer does not hold private health insurance. This will be in addition to the standard 1.5% Medicare Levy you currently pay.

These changes still need to pass through the Australian Federal Senate to become law.

We can appreciate this change may cause some of you to reconsider your current cover. Having and keeping your private health insurance helps you, and your family have better health choices. It gives you the ability to choose if you want health treatment privately, instead of publicly, lets you decide who will treat you, where and when. It helps you make the important decisions rather than others doing this for you.

HCF is a not-for-profit health fund. It works for the benefit of members, not shareholders. This helps us return more and do more for you, our members.

We will keep you updated with more information as it becomes available from the Australian Government.

Thank you for your HCF membership.

If you have any questions about the rebate? Email us