Since 2010 the government has steadily been reducing the private health insurance entitlement. Many taxpayers are now seeing an additional tax line in their income assessments titled Excess private health insurance entitlement. 

The reason for this is that in the "olden days" everyone received a tax rebate for 30% of their private health insurance premiums.  However, currently, the rebate eligibility is tiered according to family income phasing in at a family income starting at $180,000 and out at $280,001.  This means if the family income exceeds $280,000, with the oldest person covered being under age 65, the private health rebate is reduced to nil.  A link to the full details and definitions may be found here - click here for ATO current rates of eligibility.

Due to this we often get asked: "is it worth having private health insurance?"  This is, of course, a loaded question and must be reviewed by each individual and family as part of their personal situation for the following reasons:

1. Health & risk: each person and/or couple needs to assess their own health situation and the need for private health as personal insurances matter and we cannot advise in this area;
2. Medicate levy surcharge: This is the additional medicare levied on individuals that do not hold private health insurance and as income levels increase an additional medicare charge is levied as per the attached ATO rates - full details here. So whilst you may no longer be entitled to the full rebate if you do not hold private health insurance you may be hit with additional tax if you do not hold it; and
3. Lifetime health cover (LHC): Furthermore the ATO has brought in a new initiative LHC to encourage individuals to maintain their LHC by adding a loading to those that don't continue to hold it past age 30 - more on that may be found here.

This is a complex area and as your personal or family circumstances change, you will need to reassess what is most appropriate for you.  If your family income has gone above the threshold and you don't want to receive any nasty additional tax bills after the end of financial year, then one fo the options is to contact your health fund and advise them that you no longer qualify for the full 30% rebate and to discuss your options with them.