Health Insurance Rebate

Private Health Insurance Rebate

Prior to 1st July 2012 all permanent Australian residents received the Federal Government 30% Rebate on private health insurance premiums. Higher rebates applied to people over the age of 65. This was designed to make private health insurance affordable for all Australians.

From 1st July 2012 the Federal Government changed the laws to impose an eligibility test to qualify for a rebate based upon an individuals or family’s level of income called a means test. The eligibility for a rebate (if any) will be determined by policyholder’s income and age. Only individuals and families whose income exceeds the threshold set by the Government will be affected.

Further changes took effect from 1 April 2014 as to how the rebate is calculated. Rebate contributions now increase based on a weighted average ratio taking into account growth in the Consumer Price Index and the average premium increase for the health insurance industry.  This means the value of an individual’s rebate may reduce over time. If you would like to know more visit www.health.gov.au/privatehealth.

The Federal Government also introduced changes to the Medicare Levy Surcharge. This means that greater tax penalties may apply to those who do not have cover or drop their private hospital cover.

Private Health Insurance Rebate and Medicare Levy Surcharge effective 1 April 2019 to 31 March 2020

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. Rebate levels are adjusted annually on 1 April based on the Rebate Adjustment Factor.

How to calculate income for the purposes of determining a rebate tier

The rebate income test uses the same principle as when calculating income for MLS purposes. Income for surcharge purposes includes:
•    Taxable income (including the net amount on which family trust distribution tax has been paid. Excluding any assessable First Home Super Saver {FHSS} released amount for the income year under the FHSS scheme)
•    Exempt foreign employment income (if your taxable income is $1 or more)
•    Reportable fringe benefits amount, as reported on the payment summary
•    Total net investment loss (includes both net financial investment loss and net rental property loss)
•    Reportable super contributions (includes both reportable employer super contributions and deductible personal super contributions)
•    If you have a spouse, and they have not included on their taxable income their share of the net income of a trust where the trustee must pay tax (under section 98 of the Income Tax Assessment Act 1936)
•    Less -if aged 55-59 years old, any taxed element of a super lump sum (other than a death benefit) received that does not exceed your low  rate cap.

For more information, see income test information and calculators on the Australian Tax Office (ATO) website ato.gov.au or call the ATO on 13 28 61.

How to determine if your rebate tier is based on a family or a single

* Income of dependent children is not included for both family and single parents. Source: Fairer Private Health Insurance Incentives Bill 2011, Explanatory Memorandum.

How to claim the private health insurance Rebate

People can choose to receive the rebate in the method that suits them best. They can receive the rebate as;

• a premium reduction through their Health Fund*, or

• a refundable tax rebate in their annual income tax return

*It is up to the policyholder to inform their health fund of their nominated rebate tier. This can be done throughout the year or at tax time.  Where the tier on a policyholders health funds records does not accurately reflect theri rebate tier, the policyholder may be paying too much or too little of the required premium. If this occurs it will be reconciled when lodging their tax return in the form of a tax liability or a tax refund (if applicable).

The rebate is provided as a percentage of total premiums and therefore keeps pace with any future increases in individual funds or product premiums.

More information about the health insurance Rebate

How the health insurance rebate works
How to claim the health insurance rebate 
Frequently asked questions

You can discuss how this effects your cover with a HICA consultant by calling 1300 44 22 01 between 8:30am and 5:00pm EST, Monday to Friday or email us.

Further information can be found on the Department of Health and Ageing website health.gov.au as well as on the Medicare website medicareaustralia.gov.au. Details will also be available on the Australian Taxation Office website ato.gov.au, once legislation receives Royal Assent.

The information provided on this website does not constitute financial advice or tax advice.  If you require financial or tax advice about your specific situation, you should contact your financial advisor or a tax expert.

Previous Rebate Tiers

Private Health Insurance Rebate and Medicare Levy Surcharge effective 1 April 2018 to 31 March 2019

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. Rebate levels are adjusted annually on 1 April based on the Rebate Adjustment Factor.

Private Health Insurance Rebate and Medicare Levy Surcharge effective 1 April 2017 to 31 March 2018

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. Rebate levels are adjusted annually on 1 April based on the Rebate Adjustment Factor.

Private Health Insurance Rebate and Medicare Levy Surcharge effective 1 April 2016 to 31 March 2017

The incentive tier thresholds will be indexed annually to the Average Weekly Ordinary Time Earnings (AWOTE). The family income threshold increases by $1,500 for each dependent child after the first.

Private Health Insurance Rebate and Medicare Levy Surcharge effective 1 April 2015 to 31 March 2016

The incentive tier thresholds will be indexed annually to the Average Weekly Ordinary Time Earnings (AWOTE). The family income threshold increases by $1,500 for each dependent child after the first.

Private Health Insurance Rebate and Medicare Levy Surcharge thresholds for the 2014 - 15 financial year

The incentive tier thresholds will be indexed annually to the Average Weekly Ordinary Time Earnings (AWOTE). The family income threshold increases by $1,500 for each dependent child after the first.

Private Health Insurance Rebate and Medicare Levy Surcharge thresholds for the 2013 financial year

The incentive tier thresholds will be indexed annually to the Average Weekly Ordinary Time Earnings (AWOTE). The family income threshold increases by $1,500 for each dependent child after the first.