The 3 Bills that propose to means test the 30% private health insurance rebate were passed by the House of Reps on Wed 15.2.2012, with 4 Government amendments by 71 votes to 70. They now move to the Senate.
The Bills are the Fairer Private Health Insurance Incentives Bill 2011, Fairer Private Health Insurance Incentives (Medicare Levy Surcharge) Bill 2011 and the Fairer Private Health Insurance Incentives (Medicare Levy Surcharge – Fringe Benefits) Bill 2011.
The changes as originally introduced were to apply from 1 January 2012, but the Government amendments mean they will apply from 1 July 2012. Individuals earning more than $83,000, or families earning more than $166,000, would start to lose the rebate in the 2012-13 financial year. In the 2012-13 financial year, the rebate would only cut out completely for singles once they were earning more than $129,000 a year and for families earning $258,000 or more.
To achieve the means testing, the Bills propose to introduce 3 new “Private health incentive tiers” with effect from 1 July 2012. If the legislation is passed, then from that date, individuals and families may not be eligible for the full 30% rebate for their private health insurance premiums. In conjunction with this, also from 1 July 2012, the rate of Medicare levy surcharge for individuals and families without private patient hospital cover may increase depending on their level of income.
The income test thresholds are based on the income for Medicare levy surcharge purposes. The income test used to determine a person’s liability for the Medicare levy surcharge includes the sum of a person’s:
- taxable income; plus
- reportable fringe benefits; plus
- total net investment losses; plus
- reportable super contributions,
Less:
- where the person is aged 55-59 years old, any taxed element of a lump sum superannuation benefit, other than a death benefit, which they received that does not exceed their low rate cap.
The Opposition Leader Mr Abbott on Wed 15.2.2012, indicated that, in government, the Coalition would restore the rebate.
[LTN 30, 15/2]