Health Insurance

So I met with the health insurance representative on Friday and she will send me quotes next week for various plans. With a basic plan we will save money compared to the Medicare surcharge. At our income level the Medicare surcharge is 1.25% of income which would be about $3,125 per year. The basic insurance package for our couple would be about $2,200 per year. But there are lots of "extras" you can add on. A complicated topic is the Lifetime Health Cover policy. This was introduced in 2000 by the Australian government and is meant to encourage people to take out private health insurance at a young age to avoid the adverse selection problem. It means that the cost of your insurance premium rises by 2 percentage points for each year you are over 30 years old after 2000.... For me this means that as I had my 30th birthday in 1994, the penalty only started accruing after 2000 (I think). But then I was in the US for many years. Those years don't count towards the penalty. So, I figure the penalty for me is 12%. For immigrants the penalty only starts to be incurred from after they become eligible for Medicare (and are older than 30). So for Snork Maiden I reckon her penalty is 6%. Therefore, our combined penalty is 9%. The government also offers a tax rebate for having private health insurance. At our income level this is 10%. So the penalty and the rebate should roughly cancel out and can be ignored when looking at the costs of the different policies.

Explanation for non-Australians  - Australia has somewhat free public health care but their are tax incentives to get private health insurance. There is a surcharge which is 1-1.5% of your total income when your household income exceeds a certain level and you don't have insurance and there is a tax credit of 0-30% of the cost of health insurance, which is higher at lower income levels. There are also penalties for delaying getting health insurance after age 30 which are applied for the first ten years after you first buy private health insurance.