ACCC warns consumers on potentially misleading claims about the tax benefits of obtaining private health insurance

The ACCC is concerned that some private health insurers and comparator websites may be misrepresenting the circumstances in which by purchasing a private health insurance policy prior to June 30 a consumer will reduce their tax burden, by avoiding the Medicare Levy Surcharge.

Only individuals with a taxable income above $90,000 and couples with a taxable income above $180,000 will avoid an additional tax, called the Medicare Levy Surcharge, by purchasing an appropriate level of private health insurance.  This means that the majority of Australian households do not pay the Medicare Levy Surcharge. These households will not save on tax by purchasing private health insurance.

“The ‘save on tax’ claims promoted by many private health insurance companies 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,” ACCC Chairman Rod Sims said.

“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.”

“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,” Mr Sims said.

“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.”

“Competition and consumer issues in the health and medical sectors are an enforcement priority for the ACCC,” Mr Sims said.

False or misleading representations about the benefits of or need for goods or services are prohibited by the ACL and attract a maximum penalty of up to $1.1 million per contravention.

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