An Australian family paying $9,300 a year for private health insurance was asked to take a few minutes to potentially save thousands of dollars. More and more Australians are downgrade or abandon your health insurance cover completely as cost of living pressures hit budgets.

THE Barefoot Investor Scott Pape urged an Australian family to compare their private health insurance policy and consider switching to hospital-only coverage to reduce costs. Fiona told the financial expert she was considering dropping her $9,300-a-year health insurance policy for her family of four.

She asked Pope if health insurance was “necessary in Australia” given that we had “good public health care” and whether it would not be better to invest that money instead.

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Pope said private health insurance was “an absolute disgrace”, but urged the reader not to get rid of their family’s politics or they could face tax penalties. Indeed, Fiona would have a higher income and would not benefit from any discount.

“It’s incredibly complicated and increasingly unaffordable, which is why people are opting out of the system in droves. But not you,” Pape wrote in his weekly column.

“As a high-income person, the government has a gun to your head. If you don’t have private health insurance, they will send you a tax penalty called the “Medicare Levy Surcharge,” which will cost more than keeping quiet and just buying private health insurance.

THE Medicare Direct Debit Supplement applies to singles earning over $97,000 and families earning over $194,000 who do not have an appropriate level of hospital coverage.

If the surcharge applies to you, you will be charged 1, 1.25 or 1.5 percent of your income when you file your tax return. This is distinct from Health insurance levyor 2 percent of your taxable income.

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Pape said Fiona was “paying way too much” for her family’s health insurance.

He urged her to visit the government website privatehealth.gov.au and click “compare policies” and enter their policy identification number, which will appear on their statement.

Pape said it might be worth selecting “hospital-only coverage” because “most people don’t get a lot of value from additional coverages.”

“If in doubt, ask your fund for a statement of benefits. And if you’re done having kids, you can upgrade from Gold to Silver or Bronze and save thousands of dollars – just check the exclusions,” he said.

The story continues