Last Updated on 13 February 2020

Private Hospital Insurance to save tax? Minimal or full cover?


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Do You Earn Over $80,000?

If you earn over $80,000 for an individual, or $160,000 for couples and families (family threshold increases by $1,500 for each dependent child after the first), you are liable for a Medicare Levy Surcharge which is an extra 1% of tax. However, you can avoid this surcharge if you take out private hospital cover with an excess of $500 or less for singles, or $1000 or less for couples, per calendar year.

If you take out the minimum cover (around $50 a month), this will be less than the Surcharge. However, this does not include extras such as hip and knee joint replacement, eye surgery, dentist costs and heart surgery.

So, should you go for the more expensive option to cover the extras just in case accidents occur?  Well, this depends on various factors such as:

  • Age
  • Activities and Hobbies
  • Marital and Family status


The older you get, the more advisable it is to be covered for extras. At this stage, minimizing the Surcharge may or may not be at the top of the priority list anymore, depending on your annual income. However, there are different rates for insurance depending on your age. As the likelihood of a pay-out increases the older you get, the price increases accordingly, especially for the over 40s.


You should consider extra cover if you are an adrenaline junkie. You never know if things could take a bad turn when doing that jump on the slopes, or even when playing team sports such as football and hockey. A friend  recently had to fork out $5,000 for dental services when she broke her tooth – she tripped while walking on the footpath.

Some companies cover physiotherapy, chiropractic and natural therapy services too, depending on the cover. If you like reading and have to wear glasses or contact lenses, extra cover may be a good idea as optical fees may also be covered.

Marital status

Sometimes, it may be cheaper if you apply for insurance as a couple or a family through a packaged deal.  Some of the providers offer specials such as no excess for kids under 21 years of age.

As a tip, check with your current place of employment. They may have a special deal in place with an insurance provider for employees. If not, you may even suggest that the provider contact your workplace. It is a win-win situation – your workmates will all get a great rate and the provider gets more business!

Remember not to get too carried away

If you have no family history of heart disease and am under 40, heart cover may not be needed. If you are single and not planning for children in the near future, skip the antenatal and postnatal extras. It may be difficult to choose with so many options out there, so think about your goals in getting insurance first, before even looking at the choices.


Still have questions? Let's talk!

Confused? Not sure if this applies to your situation? Phone us on 1300 163 402 for some free, no obligation advice.


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