As Australian women increasingly earn more on average, the financial benefit of having private health insurance at tax time ought to be a key consideration.
Despite this, research by website comparison services like iSelect estimates that almost half of Australian women don’t quite understand how private health insurance relates to their tax situation or how it can be of benefit to them.
Whether you have private health insurance or not, there a number of key things women should consider before June 30 to avoid getting stung financially down the track.
The first one is making the most of the Australian Tax Office’s free calculator which allows you to do the math to estimate the Medicare Levy Surcharge.
Here’s what else to think about at tax time.
Higher income earners and Medicare Levy Surcharge (MLS)
While the average full-time Australian woman earns about $75,000 a year, there are many on over $90,000. If this is you, and if you don’t have private hospital cover, then you can expect to pay a minimum of $900 at tax time due to the Medicare Levy Surcharge (MLS).
Because how much Medicare Levy Surcharge you pay at tax time depends on how much you earn, if you earn above $95,000 then taking out a basic hospital policy will generally cost less than paying the surcharge.
So if you’re earning above the surcharge income threshold and don’t have private hospital cover, this June is a good time to consider taking out cover to avoid paying more than you need to in tax next financial year.
The average full-time working woman’s wage has increase from $1189 per week in 2012 to $1455 a week as of this year.
Under 30s and Lifetime Health Cover (LHC) loading
Once you hit 31 years of age, if you don’t have hospital cover by 1st July of this year, you’ll pay more for your hospital premiums if you do decide to take it out down the track due. This is all thanks to Lifetime Health Cover (LHC) loading.
This pesky loading will add 2 per cent extra to your premiums that each year that you go without hospital cover. The longer you wait to take out cover, the more expensive it can become. For example, if you wait until you are 40 years of age to take out hospital cover, you’ll pay an extra 20 per cent. Wait until 60 years and its 40 per cent more.
So if you’ve recently blown out the candles on your 31st birthday cake and don’t have hospital cover, it might be time to pick up the phone and speak to a health insurance expert.
Don’t pay the ‘lazy tax’ on your health insurance
If you’re one of the 48 per cent of Australian women who do have hospital cover then June is the best time to make sure you’re not paying the ‘lazy tax’ on your premiums.
Between all the different roles women often juggle, it’s easy to ‘set and forget’ our health insurance because we simply don’t have the time to shop around.
But failing to shop around every few years may result in paying more than you need to for health insurance aka the ‘lazy tax’.
Many funds are offering deals and incentives to new customers if you switch before June 30 such as months free, waiving waiting periods and cashback or gift cards so now is the time to get cracking.
This Financy article has been published in partnership with iSelect.