Australian Government Rebates on Private Health Insurance

The Rebate on Private Health Insurance is a Government initiative introduced to provide a financial incentive to
assist Australians in affording private health insurance.

1 July 2012 saw the introduction of means testing of the rebate. This resulted in the rebate entitlement being determined by both your income and your age. When you take out hospital, ancillary or dental insurance, you can receive the rebate as a reduction on your premiums or as a tax offset claimable on your income tax return.

 The percentage of rebate you are entitled to is reduced on a tiered basis depending on your level of income (based on the new income test) and the age of the oldest person on the policy.

A Member can choose to claim the appropriate rebate up front as premium reduction: however can also nominate to claim a lower rebate than their entitlement, or in fact no rebate at all, and reconcile this when lodging their tax return.

The Rebate on Private Health Insurance underwent further changes in April 2014. Rebate eligibility is now indexed by CPI. Essentially this means that the standard rebate amounts that have historically applied will be indexed each year using a ratio of the average industry premium increases and CPI.

* For the calculation of assessable income which is known as income for Medicare Levy Surcharge purposes, please seek the advice of your tax agent, financial advisor or contact the Australian Taxation Office (ATO) Help Line on 132 862 or visit their website at http://www.ato.gov.au/Calculators-and-tools/Income-for-Medicare-levy-surcharge/

Tiers:

 

 

Base Tier

Tier 1 Tier 2 Tier 3

Singles

$90,000 or less

$90,001 - $105,000 $105,001 - $140,000 $140,001 or more

Families

$180,000 or less

$180,001 - $210,000 $210,001 - $280,000 $280,001 or more


Rebate

< age 65

26.791%

17.861% 8.930% 0%

Age 65-69

31.256%

22.326%

13.395% 0%

Age 70+

35.722 %

26.791% 17.861% 0%

 

Medicare levy surcharge

All ages

0.0%

1.0% 1.25% 1.5%

NOTE: Single parents and couples (including de facto couples) are subject to the family tiers. For families with children, the thresholds are increased by $1,500 for each child after the first.

The rebate percentages for age and income are indexed on the 1st of April each year. The Lifetime Health Cover component of a premium is not eligible for the Rebate. 

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