By Michael Siwes
(Sydney Morning Herald)
As any small business owner knows, taking time out for you or your family can be hard enough. Taking unplanned time off due to ill health can be disastrous for your business. While most small business owners don’t think twice about key person insurance to protect cash flow in the event they are incapacitated, the benefits of ensuring you have your health insurance in order shouldn’t be underestimated.
Not only can you save on your tax bill, health insurance also gives you control to seek treatment at a good time for your business rather than face the uncertainty of treatment in the public system.
With the June 30 deadline imminent, there is still time to minimise your tax and ensure the health of you and your business for the next financial year.
Avoid unnecessary taxes and penalties
Successive federal governments have adopted a carrot and stick approach with the aim of encouraging Australians to take up private health insurance.
A Medicare Surcharge Levy ranging from 1 to 1.5 per cent of taxable income applies to high-income earners who don’t hold a minimum level of private hospital cover. As a small business owner you already pay enough tax. This is one tax that is avoidable and it can actually be cheaper to pay for cover than pay the tax.
If you earn more than $90,000 per annum and don’t have hospital cover next financial year, you will pay a Medicare Levy Surcharge of $900. Whereas you can get basic hospital cover for around $650, a saving of $250 a year. The more you earn the more you save, with savings of around $1,300 if you earn more than $140,000 a year.
It’s also important to consider the federal government’s Lifetime Health Cover Loading. It’s also important to be mindful of the federal government’s Lifetime Health Cover Loading. If you’re over 30 and don’t have private health insurance but decide to take it up, you will pay a 2 per cent loading on top of your premium for every year you are aged over 30.
Among the 36 health funds in Australia, and the hundreds of policies they offer, finding the right cover for your needs and budget can be difficult. Though with savings to be had of more than 40 percent it’s worth shopping around. A comparison of top hospital cover offered by the ten largest private health insurers shows that you can save from $267 to $848 a year by choosing the right cover.
If you pre-pay your private health insurance, you can lock in the cost of your premium thereby avoiding any potential price rises in the year ahead.
Make sure you have the right policy for your needs
Health insurance is designed to change with your age and stage in life. When you’re initially taking out a policy, think about how you currently look after your health. Do you see the physio on a regular basis? Do you have children who may need braces in the next couple of years? Or maybe you’re past that phase and have grown kids. You wouldn’t need things such as obstetrics included in your cover, but might like to consider including cardiac and hip replacement under your policy. The health and financial consequences of getting it wrong can be significant.
And don’t be put off if you already have an illness or injury. Many people aren’t aware that in Australia, a pre-existing medical condition does not preclude you from obtaining health insurance. Nor are you penalised financially – you will pay the same premium as everyone else. While standard waiting periods will still apply, you are likely to obtain the treatment you need privately well before you are seen by the public health system
So act now and avoid unnecessary taxes for the year ahead.
Michael Siwes is the general manager, health insurance, iSelect