Why you should lobby your MP over health insurance rebate cuts

Most of us have learnt the hard way that tax comes in many forms.

One impost the federal government has been trying to get through parliament for a couple of years centres on means testing the private health insurance rebate.

If it is ever passed, it will cut the rebate received by single Australians with incomes over $80,000 and for couples whose income is over $160,000.

While these thresholds seem reasonably generous, the sting is in the definition of income.

Rather than just using a person's normal taxable income, it includes all reportable fringe benefits, such as a salary-packaged car, any net investment losses (for example, those due to a negatively geared property). It also includes any amount you salary sacrifice into superannuation.

Singles under 65 whose income exceeds $80,000 but is less than $93,000 will have their rebate cut from 30% to 20%, as will couples earning over $160,000 but less than $186,000.

If your income is over $93,000 but less than $124,000 the rebate falls to 10% (and for couples on $186,000 to $248,000).

Once your income exceeds the upper levels of these thresholds you won't get any rebate at all.

While the government's latest effort to pass the legislation looks set to fail, those potentially affected would be advised to lobby their MP to get them to drop the proposal for good.

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