Save money with private health insurance…not exactly!


Well I thought I would be saving money by signing up for private health insurance. Unfortunately, that didn’t turn out to be the case. Thanks to the folks over at DividendsDownUnder for pointing me in the right direction.

The main issue was that I was treating the Medicare Levy and the Medicare Levy Surcharge as the same thing, when they are in fact two totally separate things. So we were not paying a high surcharge like I originally thought. In my previous post I stated that we were paying around $6500 in surcharge, however it is actually around $1840. Our income does not fall in the base tier (for families) according to this table, so I assumed both my husband and I would have to pay the surcharge, but in reality only my husband did. So it looks like they calculate the surcharge based on each individuals taxable income.


Medicare levy surcharge actually paid = $1840 (based on last years tax return for 2014-2015)

According to this graph we are supposed to get a discount on our private health insurance from the government. I don’t think the discount has already been applied to my premium, however I am not 100% sure.

So assuming the discount hasn’t been applied yet…

Annual cost of private insurance =  $2356 ($216.40 x 12 – discount)

Based on these figures we will be paying $516 more by having private health insurance. I did get one month free for the first year so the annual cost this year should be $2159.67 ($216.40 x 11 – discount), so for the first year we will be paying around $319 more.

These figures are all assuming that the surcharge remains around $1840 for us this financial year (2016-2017). I won’t know the actual value till July 2017. I only signed up for private insurance late last month, therefore we will definitely be paying the surcharge for last financial year (2015-2016).


So to summarise, there will actually be no savings for us 😦 That said we have decided to keep our private health insurance cover for now. With a baby on the way it just feels right to hold on to it. At the very least we save on the lifetime health cover loading.

Image: Webfornews


4 thoughts on “Save money with private health insurance…not exactly!

  1. Thanks so much for mentioning us in your post! I feel very honoured that you decided to give us the credit there.

    Also massive respect to your commitment to update us readers on the change in saving/realising how it changed things. I love that transparency and commitment.

    I think keeping your private health insurance is a good choice (but cancelling would have been good too!) afterall, health insurance is about piece of mind, and that 1 year waiting period kind of sucks.. Just reassess in a year to make sure you’re still getting the best deal (could always cancel the “extras” and keep hospital if you wanted to save more too!).



    • Hi Jasmin,
      No worries and thanks so much for your kind words! I think we will keep the private health insurance for the long term, but I will probably reassess in a year like you say. The extras was only an additional $20 which is why I included it but I might have to check out what other deals are out there when the time comes.

      Liked by 1 person

  2. Hi,

    From your previous article, it sounds like you signed up with Medibank’s corporate plan. Unfortunately, their basic corporate hospital product falls under the “Junk” category by famous recently in the press. it is considered ‘junk’ because it excludes “all other hospital/medicare services”. This means the policy only covers what is ticked in the brochures, which is not much at all besides accidents.

    For a few dollars more their retail basic hospital does cover “all other services” as does every HCF policy. Most Bupa policies are ok also.

    This is one of the tricks in the industry. As you have a baby, I recommend finding another policy. If it is the Medibank corporate basic policy you have taken, it is not suitable and is near useless.


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