Budget 2009-10: Private Health Insurance Tiers

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It’s carrots and sticks now when it comes to private health insurance. Higher income earners will receive less Government payments for their private health insurance, but will face an increase in costs should they opt-out of their health cover.

From 1 July 2010, the Government will introduce three new ‘Private Health Insurance Tiers’ :

• Tier 1: for singles earning more than $75,001 (couples $150,001), the Private Health Insurance Rebate will be 20 per cent for those up to 65 years (25 per cent for those over 65, and 30 per cent for those over 70 years). The Surcharge for avoiding private health insurance will remain at one per cent.
• Tier 2: for singles earning more than $90,001 (couples $180,001), the Private Health Insurance Rebate will be 10 per cent, for those up to 65 years (15 per cent for those over 65, and 20 per cent for those over 70 years). The Surcharge for avoiding private health insurance will be increased to 1.25 per cent.
• Tier 3: for singles earning more than $120,001 (couples $240,001), no Private Health Insurance Rebate will be provided. The Surcharge for avoiding private health insurance will be increased to 1.5 per cent.

The Treasury expects that even with the lower rebates, 99.7% of people will remain in private health – if you’re in a higher income bracket, the tax penalty is quite harsh to avoid it!

Proposed changes will not become law until the Budget has been passed by the House of Representatives and the Senate, and signed by the Executive Council.

Tagged as: private health, private health rebate

Article by Christie Lewis

Christie is Practice Manager at Alan Lewis Accountants . Besides accounting, her passion is for all things small business (and blogging, of course). You can contact Christie directly at christie@lewistaxation.com.au.

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