ACCC warns against misleading claims by private health insurers

6 June 2016

The ACCC is concerned that some private health insurers and comparator websites are creating unrealistic expectations about the tax benefits flowing from taking up private health insurance.

The advertising campaigns of private health insurers seem to suggest that signing up to private health insurance prior to 30 June will net a customer a 'tax benefit' by avoiding the Medicare Levy Surcharge. The truth of the matter is that only individuals with a taxable income above $90,000 and couples with a taxable income above $180,000 will avoid the surcharge when they purchase an 'appropriate level' of private health insurance.  
In short, this means that the majority of Australian households that do not currently pay the Medicare Levy Surcharge will receive no tax benefit from purchasing private health insurance. It is worth noting that the Lifetime Health Cover, which adds 2% to premiums for every year a person over 30 delays taking out cover, applies irrespective of income levels.

When asked for comment, Dr Rick Olive, President of the Australian Dental Association said, "For a long time the ADA has questioned the conduct of private health insurers who are quickly inserting themselves as an unavoidable component of the Australian health system, at the expense of the tax payer and for their own profit. This is just another example of how these organisations walk a fine ethical line and show they are more interested in profits than health outcomes."
The ADA has recently made a submission concerning the lack of transparency around health insurance policies and outlining the dangers of allowing private health insurers to continue current practices, an argument reiterated by the ADA when it attended the ACCC's recent Private Health Insurance Forum in Canberra.
In response to 'save on tax' claims promoted by the private health insurance companies and comparator websites, the ACCC Chairman Rod Sims said, "They may result in consumers rushing to purchase private health insurance to avoid a tax that most consumers don’t have to pay,” 
He went on to stress that "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 saving may occur.” 

The ADA continues to lobby government and the ACCC to showcase the anticompetitive and unethical behaviour of private health insurers and the detrimental impact they have on consumers and the healthcare profession.