Circumvent The Surcharge
Sydney Morning Herald
Tuesday July 1, 1997
ALTHOUGH the Medicare surcharge for high-income earners without private health insurance kicked in yesterday, it is not too late to get health insurance coverage and avoid the bulk of the surcharge which you'll be hit with at the end of the tax year.
The surcharge is an additional 1 per cent tax on top of the existing Medi-care levy. It applies to singles earning more than $50,000 and families earning more than $100,000 plus $1,500 for each child after the first.
Equally, if you are eligible for the low-income health insurance tax rebates and haven't done anything about it, now is the time to act.
Singles earning less than $35,000 and families earning less than $70,000 (plus $3,000 for each child after the first) are eligible for the rebate, which is up to $450 for families.
David Jones from MBF says health insurance cover incorporating an excess is suddenly proving attractive to those who are after the incentive and those who will be hit by the surcharge.
"A family [earning $100,000] who would have to pay the $1,000 Medicare surcharge can now get excess private cover for $670.20."
This is the prem-ium for MBF's Family Hospital Services cover with an excess of $2,000. The premium for singles is $335.10 with a $1,000 excess.
The excess is only paid once a year no matter how many times you go into hospital and, although the family cover excess is $2,000, it is only $1,000 per family member.
Jones cautions those looking for a cheap health insurance alternative to pay careful attention to what they are getting. "Some funds have brought in exclusion packages where members are not eligible for treatments such as hip replacements and major eye surgery.
"Years from now, we don't want to have a member sitting in a hospital bed reading the fine print and realising he isn't covered."
Meanwhile, a spokesperson from NIB warns people to look closely at excess conditions. NIB's excess is only payable the first time you go into hospital in a calendar year. "Only a few funds offer it as a one-off payment each year," he says.
NIB offers its top cover, NIB Gold with a $1,000 excess, at $1,580.80 for families. All up, there are five excess options available as well as a no-excess option.
Over at Manchester Unity, Neil Smith offers top hospital cover with a $1,000 excess for singles for $580. Like MBF and NIB, this excess is only paid once a year no matter how many times the member goes into hospital.
The premium for families is $1,120 and a $2,000 excess applies, but it is only $1,000 for one family member.
If this level of excess doesn't appeal, HCF's top singles cover with a $500 excess will set you back $509.60 and the excess is only paid once a year. The cover for families is $1,019.20 with a $1,000 excess ($500 per family member).
Like many policies, it doesn't cover treatments such as cosmetic surgery and assisted reproductive surgery.
But National Mutual has found that people don't want to pay an excess on health insurance at all. "Our research found that families on a budget not only wanted a lower-priced product but didn't want to pay an excess because [the money] is too hard to find."
It has introduced a new family cover aimed at people wanting to take advantage of the rebate, called Family Essentials cover.
The premium is $1,324, reduced to $874 if the full $450 rebate is applied. It covers hospital and general dental but no other extras.
In an interesting twist, it covers parents fully for public hospitals but only partially in private hospitals, while children are fully covered in a public or a private hospitals.
It also offers family hospital economy cover for $1,095. This cover costs $849 for couples, with the main difference being the exclusion of maternity benefits.
Excess: A set amount of costs you must pay before claiming on insurance.
© 1997 Sydney Morning Herald