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.