Health insurance hiccup: Almost 1 in 5 high-income earners don’t have cover
A significant number of high-income earners don't have health insurance, according to new research by Finder.
Finder's Consumer Sentiment Tracker revealed 19% of Australians earn on average $100K or more.
Of those earning above $100K, almost 1 in 5 (18%) do not have private health insurance.
That's equivalent to over 700,000 people who will be taxed an extra 1% to 1.5% under the Medicare levy surcharge (MLS) because they do not have private hospital insurance.
The research found 7% plan on getting private health insurance in the next 6 months, while 11% don't ever plan on taking out a policy.
Tim Bennett, health insurance expert at Finder, said Aussies can avoid the MLS by having an appropriate level of private hospital insurance.
"That means any hospital policy which has an excess of $750 or less for singles, or $1,500 or less for couples and families.
"Fortunately, you can often buy a hospital policy for less than the Medicare levy surcharge. That means you may actually save money by getting private hospital insurance."
Under Tier 1 of the MLS, those earning between $97,001 and $113,000 will owe between $970 and $1,130 for the 2024–25 income year.
Those who fall under Tier 2 will owe between $1,413 and $1,888, and Tier 3 will see Australians paying upwards of $2,265.
This figure is inclusive of super and fringe benefits, so even if your salary is $87K, you'd likely tip into Tier 1 when super is added as your total earnings would be over $97K.
Finder analysis revealed those earning $113K or more could save $299 per year by taking out a basic hospital policy, and those earning upwards of $151K could save $1,053.
The latest APRA data shows that 44.8% of the population is privately insured for hospital treatment in March 2024.
Bennett said whether or not taking out private health insurance to avoid the MLS is financially worthwhile depends heavily on individual circumstances.
"It hinges on your income level and the cost of the insurance policy.
"For higher-income earners, the MLS can become a substantial expense, potentially making a basic hospital cover policy a more affordable alternative.
"It's also important to factor in how old you are and whether you are approaching the age where the Lifetime Health Cover loading will begin to apply."
Bennett said when looking for a hospital policy to avoid the MLS, don't just pick the cheapest.
"Basic tier policies have no treatments fully covered. Instead, think about upgrading to a Basic Plus policy, for as little as an extra $5 a month.
"Even the most basic policy can provide some peace of mind if something unexpected were to occur.
"Regularly comparing policies ensures you are receiving the best value for your money, and as government policies and private health insurance rebates can change, annual reviews are crucial to make informed decisions."
APRA data shows that those in Western Australia (54.0%) and the ACT (53.7%) are the most likely to have hospital cover, compared to the Northern Territory (39.9%), Queensland (41.0%) and Tasmania (41.9%).
| Total Income (inclusive of super and fringe benefits) | Tier | MLS % | Annual MLS cost | Sample hospital cover cost | Potential saving |
| $97,000 or less | Base tier | 0% | $0 | $914 | -$914 |
| $97,001 | Tier 1 | 1% | $970 | $1,013 | -$43 |
| $113,001 | Tier 2 | 1.25% | $1,413 | $1,113 | $300 |
| $151,001 or more | Tier 3 | 1.50% | $2,265 | $1,212 | $1,053 |
| Source: Finder Prices are based on a single, 30 year-old with a $750 excess in NSW |  |
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