The language of health insurance is so dense that it could do with its own glossary, which can make finding the right policy confusing and challenging. Here are three terms to understand about private health cover before you take the plunge.
Has a hefty load of healthcare lingo given you a sore head? Between levies, loadings and penalties, it's easy to feel jaded by the jargon. However, if you're entering your late 20s, the (somewhat uncomfortable) truth is that you're approaching the no-turning-back years that could affect the healthcare costs you'll pay for decades. It's worth thinking about your options, especially before tax time.
Lifetime health cover (LHC) loading encourages younger Australian adults to take out private hospital cover before 1 July in the year after they turn 31. After this point, they risk facing higher premiums for a decade under the government's LHC loading policy.
How much are we talking? If you don't have private hospital cover by 1 July following your 31st birthday you will be charged an extra 2% on top of your premium for every year you are over 30, and this will remain in place for 10 years. So, if you wait until you're 36 years old to take out eligible hospital cover for the first time, you'll pay an extra 12% for hospital cover per year, for 10 years. At 45, that figure will be 30%. Frank Health Insurance offers a simple guide to LHC, which is a good place to start if you're unsure how your age might affect future premium costs.
Health cover decisions can have tax implications. The Medicare levy surcharge (MLS) and the Medicare levy have recently been in the news. The Medicare levy is relatively straightforward: it's a 2% tax levied on your taxable income.
Most Australians pay it, though lower income earners can qualify for a levy reduction, or may not have to pay it at all. A single person earning less than $27,222, or a family earning less than $45,907 (this increases by $4,216 for each dependent child), don't have to pay the Medicare levy.
The Medicare levy surcharge increases the levy for higher earners. Singles earning more than $97,000 are subject to an additional 1% levy. This rises to 1.25% for incomes above $113,000, and 1.5% above $151,000. For families, the thresholds are $194,000, $226,000 and $302,000 (plus $1,500 for each dependent child after the first child). Note that the Medicare levy surcharge rates and income thresholds will change in July 2025.
With the end of the financial year approaching, now is an ideal time to discuss the tax implications of taking out private health cover with an expert. Frank Health Insurance's MLS guide, written by policy experts with industry knowledge, explains how taking out an appropriate level of private health cover may mean you don't have to pay the MLS - and can reduce your tax bill. Always discuss your personal financial situation with a qualified financial adviser.
The Pharmaceutical Benefits Scheme (PBS) is Australia's pricing system for prescription medications, covering everything from antibiotics and Ventolin to insulin and mental health medication. It's a public safety net designed to keep essential medicines affordable and accessible.
Under the PBS, the government covers most of the cost of essential medicines, so you pay a set co-payment only, which is commonly less than the full retail price. It works alongside Medicare and private health cover, with the goal of ensuring that no Australian is priced out of treatment. Without the PBS, a trip to the chemist would be much more expensive.