Pre-Pay to retain current health insurance rebate
7 June 2012
High income earners can avoid the new income-test on the private health insurance rebate for another year by paying premiums in advance for the 2012/13 year, before the new rules take effect from 1 July 2012.
Income-testing of the rebate means individuals on incomes of more than $84,000 and families with incomes over $168,000 will have their health insurance rebate progressively scaled back.
As earnings rise the 30% rebate falls to 20%, then 10%, before phasing out completely for singles on more than $130,000 a year and couples earning more than $260,000.
The ATO has confirmed taxpayers may claim the private health insurance tax rebate/offset in their 2011/12 tax return for premiums that provide insurance cover for a future income year. The premium must be paid by 30 June 2012; and the taxpayer must not have not already claimed the rebate as a premium reduction or from Medicare.
If you are affected by the new rules and would like to pre-pay your health insurance premium please contact your insurer as soon as possible.
The ATO advice is that a premium payment occurs when your insurer receives the amount. The time of physical receipt of the amount by your insurer is the relevant time, not the date the payment was made to the insurer or when the insurer allocate the amount to the a member's account.
Some funds are only accepting pre-payments made by 27 June 2012, so it is important to clarify the conditions regarding the pre-payment with your insurer.
If you would like further details, please contact your local Boyce Accountant.
Source: Changes to private health insurance rebate and medicare levy surcharge