The Australian Medical Association Limited and state AMA entities comply with the Privacy Act 1988. Please refer to the AMA Privacy Policy to understand our commitment to you and information on how we store and protect your data.

×

Search

×
04 Jul 2016

Australia’s consumer watchdog has warned people not to be taken in by misleading claims about the tax benefits of taking out private health insurance.

The Australian Competition and Consumer Commission (ACCC) says it is concerned that some private health insurers and comparison websites may be misrepresenting the circumstances in which taking out private health insurance before June 30 will help people reduce their tax burden by avoiding the Medicare Levy Surcharge.

The ACCC says that, based on income, most Australian households are not required to pay the Medicare Levy Surcharge, and so will not save on tax by purchasing private health insurance.

Only individuals with a taxable income above $90,000 and couples with a taxable income above $180,000 will avoid the surcharge by taking out private health insurance. Households earning below that amount, which is the majority of Australian households, are not liable for the surcharge in the first place.

ACCC Chairman Rod Sims said the ‘save on tax’ claims promoted by many private health insurers and comparator websites may result in consumers rushing to purchase private health insurance to avoid a tax that most consumers don’t have to pay.

“The ACCC considers that these companies are potentially misleading consumers and gaining an unfair competitive advantage by making representations that leverage off many consumers’ lack of knowledge about the application of the Medicare Levy Surcharge,” Mr Sims said.

“Private health insurers should be upfront and clear with consumers about the benefits and conditions of their policies, including the circumstances in which any tax savings may occur.

“The ACCC is currently assessing some of the representations made by the health insurance industry and may take enforcement action against the more problematic claims or where businesses continue to make misleading ‘save on tax’ claims.”

Mr Sims said competition and consumer issues in the health and medical sectors were an enforcement priority for the ACCC.

The AMA has also taken action to monitor health insurance industry practice by launching the Private Health Insurance Report Card, designed to help people stay more informed about how the market operates and enable them to make better informed choices regarding their health cover.

The Report Card, which was released in March, addressed two of the biggest gripes of policyholders – gaps and shortcomings in cover, and out-of-pocket fees.

It set out the level of cover each of the nation’s 35 insurers provides and it details differences in the benefits paid by eight funds for 22 common procedures, including birth, hip and knee replacement, cataract surgery, coronary bypass, vasectomy, haemorrhoid treatment and breast biopsy.

The Report Card showed that the benefits paid by insurers varied considerably, and the AMA strongly recommended that patients seek an estimate from their doctor, and then talk with their insurer before treatment.

The AMA has also raised concerns about the operations of websites that compare health insurance policies, warning that they often earn exorbitant commissions from insurers, which could act as an incentive to get consumers to switch policies. It has called for a greater level of transparency and government scrutiny.

Debra Vermeer


Published: 04 Jul 2016