Back in last year’s Federal Budget (remember how exciting that was?), one of the proposals announced was a change to the private health insurance scheme. Things will stay as they are for this current 2010 financial year; ie, singles earning over $73,000 and couples earning over $146,000 together (and add a little more for any dependants) will need private health insurance or risk paying an extra 1.5% in tax.

From 1st July onwards, there will be a new three-tiered system for taxpayers who don’t hold private health insurance with a minimum of hospital cover:

  • Individuals earning over $120,000 will then be subject to 1.5% in extra tax
  • Individuals earning between $90,000 and $125,000 will then only pay an extra 1.25% extra tax
  • Individuals earning between $75,000 and $90,000 will still only pay an extra 1% extra tax
  • Individuals earning under $75,000 will not have to pay the Medicare surcharge at all.

The thresholds for couples are double the individual rate; so, a wife earning $100,000 and a husband earning $40,000 will still fall under the threshold and both will avoid the extra tax. Dependants may also raise your threshold slightly.

There are also tweaks to the private health insurance rebates offered when you take out and renew the insurance. For most people earning over $75,000, these have been reduced and so you can expect your net premium to be higher next year.

So, if you were thinking about getting cover, you should probably do so before July ticks around again (and we both know that it will be here before you know it!). These changes aren’t breaking news, per se, but the legislation was finally approved late last week along with setting those thresholds in stone. So, it *will* definitely be happening now; and as always, just shout if you’re not quite sure where this will leave you standing.