It's important to have health insurance in case you have an unforeseen medical expense or trip to the hospital pop up. This is because, with insurance, you're not responsible for the total cost of your procedure or treatment. Instead, your cost is partially covered by your insurance provider.
If you've hit your maximum deductible for the year and have a specific type of health insurance, you may even have the majority of the cost covered with little to no copay. In Australia, it's even more important to have medical insurance, since you run the risk of receiving a surcharge if you don't. Here's what Australians need to know about different health insurance surcharges.
Also known as the MLS, the medicare levy surcharge is put on specific Australians based on a number of criteria relating to their medical insurance. The two factors that affect whether or not you will face the Medicare levy surcharge are your income level and the amount of private patient hospital coverage you currently have. The Medicare levy surcharge is not designed to discourage people from becoming insured. In actuality, its aim is to get more Australians enrolled in private patient coverage as a method of reducing costs for all.
So, how do you know if you're going to have to pay a surcharge under MLS or not? For starters, if you're single you won't need to worry about an MLS surcharge if you make less than $90,000 a year. If you're married and file your taxes jointly, that number increases to $180,000.
If your income does cross that threshold as a single or family, the amount of the surcharge you're levied with will range between a 1 and 1.5 percent tax on your taxable income. If you want to avoid paying this surcharge, you'll have to take a look into getting private patient coverage.
It's important to remember while you search for a private insurer what the penalty cost of the surcharge would be were you not to enroll. This is because if you make $91,000 of taxable income a year and would only pay a surcharge of $910 or 1 percent, it may make more sense to just pay the surcharge.
On the contrary, if you can find a private insurance provider that offers good coverage at a rate less than your surcharge would be, it makes more sense to go ahead and enroll in private insurance. Ultimately, this is a decision that you'll have to make for yourself or with your family, but keep in mind that running the math may lead you to make a different choice than you'd otherwise consider.
Another type of surcharge you may have to face in Australia relates to your spouse or partner. In situations where you both have employer-sponsored health coverage, you may be at risk of getting a surcharge if you each don't take your employer's coverage. For example, if your spouse chooses to use your PEBB plan instead of enrolling in the plan provided by their workplace, you may be charged a fee in order for them to join your insurance plan.
Generally speaking, this surcharge is about 50 dollars. Depending on the kinds of benefits that your insurance offers, this still may be a worthwhile surcharge to incur and pay. Ultimately, it depends on the difference in quality between your benefits and the benefits offered by your spouse or partner's workplace.
Clearly, it's important to have insurance for a number of reasons if you're living in Australia. From providing you with proper medical care to reducing the costs of treatment and avoiding surcharges, there are tons of benefits to getting insured whether you live in New South Wales, Sydney, or Perth. If you’re on the hunt to find better health funds for you or your family, compare health insurance with iSelect.