Three Steps to Facing Means Testing Rebate of Private Health Insurance

Posted by Paul Estcott Conscious Living Thursday, July 19th, 2012

While the end of the fiscal year tends to be a complex time for all taxpayers, this year, Australians seem to have been hit harder than ever, on several levels, as the means testing rebate for people covered by private health insurance came into effect. While it’s been heavily under media scrutiny for well over a year, the means-test for private health insurance finally came into force starting July 1, and several private health care funds issued studies to assess the impact of this Government decision. All in all, irrespective of the source, the results seemed worrying to say the least. The means testing rebate will take its heaviest toll on higher income earners, who essentially no longer benefit from the 30% rebate. Recent polls have indicated that, this being the current scenario, some 30% of people affected by the means-test have already decided to give up their private health cover, either partially or completely. The question posed here is whether this move is worth taking—or much too risky overall. Read on, then decide for yourself.

First off, the means-testing rebate was agreed over between the Greens and the Government in February, according to ABC News, which, one may assume, has given those likely to be affected sufficient time to figure out what to do with respect to their health insurance status. If you are one of them, you have probably weighed the pros and cons of your current plan and attempted to figure out what your essential needs are. Aspects worth considering at this stage are your current income and marital standing, in comparison to when you first took out your private health insurance policy. What has stayed the same and what has changed in terms of medical needs in your life? Of course, you need to factor in accidents and unforeseeable events, but if you’re paying for a family of four, even if your young ones have long since flown the coop, then you ought to reconsider your policy.

Secondly, while the 2012-2013 fiscal year is already underway, you can still plan ahead for next year. If you’re a young earner of a high income who plans to start a family in 2013-2014, you would be well-advised to take this into account when deciding on your specific health care needs. Although, as stated above, health is also, to a large extent, an unpredictable matter, there are still many aspects you can foresee, such as mental healthcare costs or treatment of chronic diseases.

Last but not least, several private health care funds offered young people earning over $84,000, or young families who make more than a cumulated $168,000, the opportunity to benefit from a one-time only saving on their policy. This involved a pre-payment of the insurance cost, before the ending of the 2011-2012 fiscal year. You can always look into similar offers for the following year—call your health insurance agent or otherwise contact your health fund, in order to investigate this opportunity.

While the means-testing rebate is a controversial decision, it is under no circumstances reason enough to completely renounce private health insurance. If you’re thinking of opting out, consider the costs you might come to incur were you not insured and in need of healthcare—then reconsider your options.