2. Hospital insurance helps you avoid the Medicare Levy Surcharge
The Medicare Levy Surcharge (MLS) applies if you don’t have hospital insurance and your income for MLS purposes is more than $101,000 as an individual or $202,000 as a family1.
The surcharge exists to encourage people who can afford it to take out
hospital insurance, use private hospitals, and reduce some of the pressure on
the public system.
Avoiding the MLS is easy. Simply take out an appropriate level of
hospital insurance2. Just a heads up—if you only buy extras insurance, the MLS will still
apply.
If you do get hospital insurance to avoid the MLS, make sure you get a product
that covers what you need. Some products only cover the bare minimum, so you
might find that, while it helps you avoid the MLS, if you try to use it you
might not be covered.
Medicare Levy Surcharge FAQs
3. Getting hospital insurance earlier in life will save you money later
You’re probably vaguely aware of a turning 30 and health insurance
thing.
It’s called Lifetime Health Cover loading, and it’s an extra cost
added to the base price of hospital insurance. Like the MLS, it’s
designed to get you to buy hospital insurance.
If you’re 31 or older and you don’t
have hospital insurance, you’ll get hit by the loading if you buy
hospital insurance later in life.
When you do take it out, for every year you are over 30,
you’ll pay an extra 2 percent for your hospital insurance. The most you
can pay in loading is 70 percent.
For example, if you’re 40 and taking out hospital insurance for the
first time, you’ll pay 20 percent more than a 30-year-old you.
Most people think you need to get hospital insurance before you turn 30 to
avoid the loading, but you have more time than you think. The turning-30-thing
is actually a turning-31-thing.
To avoid the loading, you need to buy hospital insurance on or before 1 July following your 31st birthday. This is the case for most people, but there are exceptions.
Lifetime Health Cover loading FAQs
And that’s all you need to know! If you’re interested in learning more about choosing a health insurance
policy that suits your needs and budget, check out our helpful
article: How to choose the best health insurance for young singles.