What Does Private Health Insurance Cost?

Private health insurance is not cheap, and full cover for a family would cost as much as $3,000 to $4,000 a year. However, there are a number of ways of reducing these costs.

Firstly, the Commonwealth Government provides a rebate as a proportion of the total premiums paid for appropriate private health insurance. The proportion is 30% if the oldest person covered is less than 65 years of age, 35% if they are between 65 and 70 years of age, and 40% if they are over 70 years of age. This rebate is available even if you do not pay income tax. Your health insurer will claim the rebate on your behalf, and will bill you just the net amount. Your insurer will also adjust the rebate (thereby reducing your net premium) as you pass the age thresholds for the higher rebates.

Secondly, if you have a taxable income above a threshold amount - $70,000 a year for individuals and $140,000 a year for families - you must pay a 1% Medicare Levy Surcharge. However you can avoid this tax with suitable private hospital cover and, if you do so, the reduction in your tax is worth at least $700 a year for individuals and at least $1,400 a year for families.

These two Government incentives are added together. For example, if you are a single person under 65 years of age earning a taxable income of $110,000 a year, a premium of $2,000 a year for private health insurance will attract a rebate of $600 (ie 30% of the premium) and, if it includes suitable hospital cover, will eliminate your Medicare Levy Surcharge of $1,100 (ie 1% of $110,000), leaving a net cost to you of $300 a year.

Thirdly, if you are basically a healthy person and rarely go to hospital, then you can avoid cover which is too expensive for your needs and which you are unlikely to use, and you can reduce your premiums with deductibles, copayments and exclusions.

To compare private health insurance and find the best and cheapest option for you and your family you can go to www.ozecover.com.au. The service costs you nothing and its the only one that compares every health insurer and every product in Australia based on your answers to some simple questions.