Tax time: Pre-pay your health insurance before 30 June for huge savings

This is once again a post for Australian taxpayers.  If you are an Australian taxpayer you would have received a letter in the mail which outlines the changes to the health insurance regime.  It is possible to still receive the 30% health insurance rebate for the 2012 / 2013 tax year if you pay the premium by 30 June 2012.

Previously everyone was entitled to a 30% rebate on their health insurance.  After the most recently federal budget however (you can see my gripe here) this has changed with the rebate being abolished for 'high' income earners and reduced for middle income earners.  The changes can be seen in the attached table:

	Unchanged	Tier 1	Tier 2	Tier 3
Singles	$84,000 or less	$84,001-97,000	$97,001-130,000	$130,001 or more
Families	$168,000 or less	$168,001-194,000	$194,001-260,000	$260,001 or more
Rebate
Aged under 65	30%	20%	10%	0%
Aged 65-69	35%	25%	15%	0%
Aged 70 or over	40%	30%	20%	0%
Medicare levy surcharge
Rate	0.0%	1.0%	1.25%	1.5%

If you call into one of the categories where your rebate has been reduced it is possible to still get the rebate for the 2012 - 2013 tax year by pre-paying your health insurance premiums before June 30.  Note that the payment has to be received by your health insurer by then.  The Australian Tax Office has confirmed that you can do this so it is perfectly legal and will save most people a significant amount of money (~$300 - $400 on a regular single persons insurance premiums)

I would normally have to do a time value of money calculation to work out whether this would put me ahead however given that I am standing to lose the full rebate there is no way known I could make a 30% return in a year.  If you were only standing to lose 10% of the rebate (Tier 1) then this would be a borderline decision.  Tier 2 and above should almost always prepay and get the rebate.