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16 April 2012
New private health insurance means test

Singles earning more than $129,001 and families earning more than $258,001 will lose access to their private health insurance rebate from the 2012-13 financial year onwards, under a means test that recently secured passage through the House of Representatives and which will be effective on July 1, 2012.

The measures - which still have to pass the Senate, expected to be a formality- also mean the Medicare surcharge for the groups above will increase from 1% to 1.5% if they do not take out private health insurance. That translates into $1,935pa for high-earning singles and $3,870pa for high-earning families.

At present, almost anyone aged less than 65 years old, regardless of how much they earn, can get a 30% refund from the federal government for the cost of their private health insurance. Those aged between 65 and 69 years old can receive a 35% refund and those aged over 70 years old can get 40% back.

The income test is based on the total sum of the taxable income, reportable fringe benefits, reportable super contributions and total net investment losses, less other taxed elements depending on a person's age and circumstances.

Below is a breakdown of the private health insurance tiers for 2012-13:

 Tier Income
 Private health insurance rebate
Medicare Levy surcharge
 Singles:  Families:  Below 65 yrs
65 to 69 yrs
70 yrs or over
 no tier
 $0 - $83,000 
 $0 - $166,000  30%  35% 40%
 nil
 1  $83,001 - $96,000
$166,001 - $192,000
 20%  25% 30%
 1%
 2  $96,001 - $129,000
$192,001 - $258,000
 10%  15%  20%  1.25%
 3  $129,001+ $258,001+  0%  0% 0%
1.5%
 
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This Newsletter, of necessity, has dealt with matters of a technical nature in general terms only. Clients should contact us for detailed information on any of the items in the Newsletter. No responsibility for loss occasioned to any person acting or refraining from acting in reliance upon any material in this Newsletter can be accepted by any member or employee of the firm.

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