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How the Health Insurance Rebate works

The Federal Government 30% Rebate on Private Health Insurance was introduced on 1 January 1999 and replaced the Private Health Insurance Incentives Scheme (PHIIS) which ended on 31 December 1998.

From 1 April 2005, legislation took effect that enhanced the amount offered under the Federal Government Rebate for older Australians. In effect, the value of the rebate was changed to be age dependent.   From 1 April 2005, the Private Health Insurance Rebate for a person aged 65 – 69 years increased from 30% to 35%, and the rebate for a person aged 70 years and over increased to 40%.

From 1 July 2012, the eligibility for a rebate (if any) was determined by policyholder’s income and age.  Individuals and families whose income exceeds the threshold set by the Government will receive a reduced rebate.  The current year income thresholds for Rebate Purposes are available from our Health Insurance Rebate webpage.

As of 1 July 2013, the legislation was again changed to remove the Rebate from the LHC component of hospital cover premiums.

On 1 April 2014 further changes were made to the way the Rebate was calculated. The level of rebate is now determined 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 your rebate may reduce over time.

The level of rebate on a policy is determined by the age of the oldest person covered under the policy and applies to the total premium of the policy.

The Act includes a savings provisions to ensure that a change in family circumstances will not lead to overpayments and a debt to the Commonwealth. Where a person is entitled to an increased rebate because someone else on the policy is 65 or older, he or she will continue to be entitled to the higher rebate if the older person leaves the policy, for example due to death, divorce or separation. This entitlement ceases if the person takes out a policy that covers another person who was not on the original policy (other than adding a dependent child). The savings provisions will not apply where its application would result in less rebate being payable.

The rebate is applicable to the cost of private health insurance premiums for hospital cover, ancillary cover and a combination of both. It is available irrespective of family type or income. There is no minimum premium amount. The rebate is available for all health insurance premiums paid to registered health funds, except for any Lifetime Health Cover Loading component of premiums.

The rebate can be claimed as a premium reduction from most registered Health Funds, or as a rebate on your tax return.