Wo r k i n g W i t h yo u to u n d e r s ta n d t h e c h a n g e s

changes to the Federal government rebate and the medicare levy surcharge

W e’re here to hel pFrom 1 July 2012 the Federal government will income test the Federal government rebate on private health insurance and will increase the Medicare levy surcharge for high income earners.

We encourage you to read on to make sure you understand what these changes may mean to you. if you’re affected by these changes, Bupa has a number of options for you to choose.

We’re committed to offering high-quality cover to meet your needs now and in the future, no matter what stage of life you’re at.

if you have any questions, or you would like to review your cover, we’re here to help. simply visit bupa.com.au, call us on 134 135 or drop by your local Bupa centre for more information.

a reduction in the amount of rebate you’re entitled to will affect singles earning above

$84K For singles earning $84k or below,

your rebate entitlement remains the same.

a reduction in the amount of rebate you’re entitled to will affect couples

and families earning above

$168KFor couples/families earning $168k or below, your rebate entitlement

remains the same.

on a family membership the amount you can earn before you are affected by the changes increases by $1,500

per child, after the first child.

the changes to the Federal governMent reBate and the Medicare levy surcharge

Couples/Families

Income up to $168,000 $168,001 – $194,000*

$194,001 – $260,000*

More than $260,000*

Rebate Tiers no change tier 1 tier 2 tier 3

PHI Rebate up to 65 years 30% 20% 10% 0%

65 – 69 years 35% 25% 15% 0%

70 years and over 40% 30% 20% 0%

Medicare Levy Surcharge 0% 1% 1.25% 1.50%

Singles

Income up to $84,000 $84,001 – $97,000

$97,001 – $130,000

More than $130,000

Rebate Tiers no change tier 1 tier 2 tier 3

PHI Rebate up to 65 years 30% 20% 10% 0% 65 – 69 years 35% 25% 15% 0% 70 years and over 40% 30% 20% 0% Medicare Levy Surcharge 0% 1% 1.25% 1.50%

indicates changes for higher income earners.

note: thresholds are effective 1 July 2012 and are indexed annually.*on a family membership this increases by $1,500 per child after the first child. the family thresholds apply to single parent families, couples including de facto couples. there are specific rules for calculating adjusted taxable income for Medicare levy surcharge and income testing purposes. For more information go to ato.gov.au

How will the Federal Government income test the Rebate?For singles with an adjusted taxable income of $84,000 and below, or couples/families with an adjusted taxable income of $168,000 and below, your rebate remains the same. the majority of our members will not be affected by these changes.

if your income is above these thresholds for the 2012/2013 financial year, your rebate entitlement will be reduced on a tiered basis. if you do not maintain your hospital cover you will be required to pay the Medicare levy surcharge.

the table below shows the Federal government rebate and Medicare levy surcharge income thresholds for the 2012/2013 financial year and the respective reduction in rebate and increase to the Medicare levy surcharge (Mls). The increase in MLS may be more than the cost of maintaining your hospital cover.

What do you need to do?

if you believe your income for the 2012/13 financial year is likely to fall into the thresholds that will be income tested, then you have a few options:

Option 1 – do nothing and continue to claim the rebate using your chosen method. any adjustment between the rebate you have claimed during the year and your rebate entitlement will be taken into account when you lodge your 2012/2013 tax return.

Option 2 – nominate a rebate tier via myBupa or via the nominate a rebate tier form. if at any time your circumstances change and you need to change your rebate tier you can do this by registering at myBupa.

if your health cover needs change we are more than happy to do a cover review. call us on 134 135 or drop by your local Bupa centre.

For further information visit bupa.com.au/rebatechanges

giv in g you peace oF M i n d

adaM First Joined

at age 30

Jenny First Joined

at age 40

0% LOadInG

+20%LOadInG

there are a number of good financial reasons for keeping your health cover but when it comes down to it, the peace of mind it gives you and your family is just as important.

It can save you moneythe Federal government’s lifetime health cover loading scheme will not change. this means if you hold hospital cover and joined before turning 31, you’re exempt from paying a 2% loading on top of the normal premium for each year you didn’t have hospital cover over age 31.

if you joined after turning 31, your premium increases by 2% (up to a maximum loading of 70% per year). this applies for 10 years straight. For couples the loadings are shared across both adults on the membership.

if you decide to drop your hospital cover, you may incur this loading if and when you return to private health insurance in the future.

Choice is a wonderful thingWith private health cover, you can generally choose your own doctor and where you’re treated without worrying about unknown treatment costs. and if you choose to be treated in a private hospital, you won’t have to worry about public hospital waiting lists.

you can also enjoy cover for a wide range of extras services generally not covered by Medicare such as dental, optical, physio, chiro, massage and more.

Who is eligible for the Federal Government Rebate?the rebate is available to any australian resident who is entitled to Medicare benefits and holds private health insurance – no matter the type or level of cover.

From 1 July 2012, the rebate will be income tested so your income will determine what level of the Federal government rebate you’ll be entitled to receive.

What is the Medicare Levy?the Medicare levy is paid by most australian taxpayers to fund Medicare. it’s calculated at 1.5% of your taxable income but this rate may vary depending on your circumstance.

For tax purposes, people who are not australian residents generally do not pay the Medicare levy as they are not entitled to Medicare benefits.

What is the Medicare Levy Surcharge?the Medicare levy surcharge (Mls) is an additional tax on top of the Medicare levy for australian taxpayers who do not have an appropriate level of private hospital cover and earn above an income threshold. For the 2011/2012 financial year this is $80,000 as a single or $160,000 as a couple/family. the thresholds are effective 1 July each year and are indexed annually.

What are the changes to the Medicare Levy Surcharge? starting 1 July 2012, the Mls base income thresholds will increase to $84,000 for singles and $168,000 for couples or families (thresholds increase by $1,500 per child after the first child) and two additional threshold tiers will exist. the Mls will be increased for the top two threshold tiers from 1% to 1.25% and 1.5% respectively.

if your income is over the above thresholds and you do not maintain your hospital cover, you will be liable for a higher levy as of 1 July 2012.

I’m affected by the change in Federal Government Rebate – what should I do?if you’re affected by these changes you don’t have to do anything. you can continue to claim the rebate using your chosen method.

if you receive less rebate than you’re entitled to, the australian taxation office will refund the difference owed to you. if you have claimed too much rebate, the australian taxation office will collect the liability as part of your 2012/2013 tax return.

if you continue to claim a 30% rebate, but you are only eligible for a lower rebate tier, you will need to repay the difference when you complete your 2012/2013 income tax return.  if you prefer not to incur this tax liability, you may nominate a lower rebate tier before June 30.  By doing this, the lower rebate tier will apply for the full 2012/2013 tax year and spread the increase in your payment amount over the year, so you won’t need to repay the difference in a single lump sum at the end.

you can nominate a rebate tier by registering at myBupa or by completing a nominating a rebate tier form.

If I claim the rebate as a premium reduction will this continue?if you currently receive the Federal government rebate as an up-front premium reduction, this can continue. the amount we receive on your behalf over and above your actual rebate entitlement will be taken into account when you lodge your 2012/2013 tax return. if you received a higher rebate than you are entitled to, you will need to pay back the difference to the government as part of your tax return.

If you claim the rebate as a Tax-offset in your annual tax return?if you don’t claim the Federal government rebate up front, you will be able to claim the correct level of rebate that you’re entitled to when you lodge your 2012/2013 tax return.

nominating to receive your entire rebate through your tax return eliminates the need to estimate your income or the chance you will incur a tax liability in relation to rebate if you receive a higher rebate than you are entitled to.

If you claim the rebate as a direct Payment available from Medicare australia officesif you don’t claim the Federal government rebate up front, you will be able to continue to claim the rebate as a direct payment through your local Medicare australia office. the amount you claim over and above your entitlement will be taken into account when you lodge your 2012/2013 tax return and you will need to pay back the difference to the government as part of your tax return.

We have ways for you to manage your Federal Government Rebate Tiers We have a number of ways you can select or change the rebate tier that applies to your policy. you can do this by:

° registering your details through myBupa ° calling us on 134 135 ° dropping by your local Bupa centre.

if your income or circumstances change throughout the financial year, we recommend you consider changing your Federal government rebate tier to avoid a tax liability in relation to the rebate.

If I don’t nominate a rebate tier, what will happen?if you currently receive the rebate as an up-front premium reduction and you don’t nominate a rebate tier, you will continue to receive your current rebate. the australian tax office will recover any amount you have received that is above your entitlement through your tax return.

do I need to tell Bupa about my income or my family’s income?no. if you wish to nominate a rebate tier you simply need to estimate your income to select a rebate tier. nomination of a rebate tier will not be taken by Bupa as an indication of your income. you can choose any tier you wish.

What happens if I nominate an incorrect rebate tier?it’s important to note there are no penalties for nominating an incorrect rebate tier.

When claiming the rebate as a premium reduction, you should consider nominating a tier based on your estimated income. if you nominate a tier that results in a lower rebate than your income entitles you to, you will receive a rebate ‘refund’ through your tax return for that year.

if you nominate a tier that results in a higher rebate than your income entitles you to, you will incur a tax liability through your tax return that year which will be recovered within your tax return.

If I nominate a new rebate tier, how quickly can this change be made?We have expanded myBupa to help you nominate a rebate tier. this is the quickest way for you to nominate your rebate tier.

If I nominate a new rebate tier, how can I find out my new payment?We will confirm your payment for you, either:

° in writing once your rebate tier nomination has been processed through myBupa, if you nominate a tier online or if you make your payment via direct debit

° in person when you visit a Bupa centre

° over the phone when you call us.

We’re always here to helpif you have any questions, you can call us at 134 135, visit us online at bupa.com.au or drop by your local Bupa centre where our friendly team will be happy to assist you.

More information about the income testing of the Federal government rebate on private health insurance is also available at health.gov.au

For more information about the Medicare levy surcharge and any tax implications visit ato.gov.au

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