3 Must-Know Health Insurance Savings TipsBy Jessie Petterd, iSelect spokeswoman 

  • Money
  • 3 Must-Know Health Insurance Savings Tips

With the end of financial year just around the corner, a lot of us are now reaching for our “financially savvy parent hat” and determined to maximise our tax returns.

But while you’re digging up those old tax receipts from the past financial year, there’s one important thing to consider that a lot of Aussie parents might forget which is likely to lead to savings down the track: Private Health Insurance.

Whether you’re a policy holder or not, private hospital cover could have an impact on your tax return and overall household family budget next financial year. 

Higher income earners & Medicare Levy Surcharge (MLS)

Medicare Levy Surcharge is a phrase we hear a lot at tax time but according to new research by iSelect, most Aussies don’t actually understand how it works. And who can blame us… it’s quite confusing! 

However given you could be getting whacked with a minimum $900 extra in tax if you’re paying the MLS, it’s important you understand how it works.


If you earn more than $90,000 a year (or $180,000 for families) and don’t have private hospital cover then you’ll have to pay at a minimum of $900 when tax time comes around. That’s a lot of money that could be going towards better things like your mid-winter family escape! 

Because how much MLS you pay at tax time depends on how much you earn, if you earn above $95,000 then taking out a basic hospital policy will generally cost less than paying the MLS. 


So if you’re earning above the MLS income threshold and don’t have private hospital cover, this June is the perfect time to consider taking out cover to avoid being slapped with extra tax next financial year. 

Under 30s & Lifetime Health Cover (LHC) loading

Lifetime Health Cover loading is probably another one of those terms you’ve often heard about but have you ever sat down to consider whether or not it affects you and your family? We’ll make it easy for you.

If you don’t have hospital cover by 1st July following your 31st birthday, you’ll pay more for your hospital premiums if you do decide to take it out down the track due to Lifetime Health Cover (LHC) loading

LHC can translate to some pretty big dollars if you wait too long to take out cover, so it’s really important to think about both your current and future health needs now. In fact, LHC loading can add 2 per cent extra to your premiums for every year you go without hospital cover and that can go up to a maximum loading of 70 per cent! And the loading will push up your premium for 10 years.   

The longer you wait to take out cover, the more expensive it can become. So if you turned 31 during the past year (or are about to) and don’t have private health insurance, now is the time to think about taking out hospital cover to avoid paying higher premiums later in life.


Don’t pay the ‘lazy tax’ on your health insurance

We’re slammed with enough taxes, levys and surcharges so when it comes to this next tax, there’s no excuse for paying it. We’re talking about the ‘lazy tax’. 

The ‘lazy tax is the extra money you pay on your health policy simply because you haven’t bothered to review and shop around. Recent research by iSelect shows that the majority of Aussie with private cover are likely paying the ‘lazy tax’ on their health insurance because they haven’t taken the time to shop around. 

If you’re a policy holder, the end of financial year it’s a timely reminder to check you still have the right level of cover and are getting good value for money – if not, it’s a great time to shop around as funds are great offering deals and incentives to new customers such as months free, waiving waiting periods and cashback or gift cards.


We get it though, as a parent juggling a million and one things it is easy to fall victim to the lazy tax. That’s why there are services like iSelect that can help you compare your options and select a suitable option from our range of available policies. They can also help you understand how private health relates to tax and explain whether or not you’ll be impacted by either MLS or LHC. Leaving you more time to get back to more important things like booking in that mid-winter family escape (with the money you may end up saving!). 

iSelect does not compare all health insurance providers or policies in the market. The availability of policies will change from time to time. Not all policies available from its providers are compared by iSelect and due to commercial arrangements, your stated needs and circumstances, not all policies compared by iSelect will be available to all customers. Some policies and special offers are available only from iSelect’s call centre and others are available only from iSelect’s website.
Click here to view iSelect’s range of providers.

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