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What is the private health insurance rebate?

The Australian Government Private Health Insurance rebate is a government initiative to help Australians pay their health insurance premiums. If you have private health insurance (hospital, extras or a combined policy), this rebate can either be claimed through your tax return or in the form of a reduced policy premium.

Why does the Australian Government have the rebate in place?

The more people who buy private health insurance, the less stress is put on our public healthcare system (Medicare). This saves the government money.

Who is eligible for the private health insurance rebate?

The amount of rebate you are entitled to depends on your taxable income, age, and relationship/parental status. You must be eligible for Medicare (e.g. hold a blue or green Medicare card) to receive the rebate, in addition to holding a private health insurance policy.

The income thresholds below will reportedly stay the same until the 30 June 2018, when they will be reviewed once again.

Private Health Insurance Rebate levels

Base TierTier 1Tier 2Tier 3
SinglesUnder $90,000$90,001-$105,000$105,001-$140,000$140,001 +
Families*Under $180,000$180,001-$210,000$210,001-$280,000$280,001 +
Under 6525.059%16.706%8.352%0.00%
70 and over33.413%25.059%16.706%0.00%
Retrieved from Commonwealth Ombudsman | Information current as of 24/05/2019
^ For families with children, thresholds increase by $1,500 for each child after the first.
Families include couples, de facto couples, and single parents.

How are the rebate percentages adjusted?

The rebate percentages are adjusted on the first of April every year using a formula called the Rebate Adjustment Factor. This formula considers increases in the Consumer Price Index and the average premium increase in the private health insurance industry.

Claiming the health insurance rebate

As previously mentioned, the health insurance rebate can be claimed in one of two ways.

The easiest way to claim your rebate is to ask for it to be deducted directly from your health insurance premium.  This is an option you can select on your health insurance policy application. Simply fill in your predicted income tier and you should receive your rebate automatically.

The alternative is to claim the rebate when you’re filing your annual tax return. If you’re unsure of which tier you fall into, this might be the most suitable method.

What if I nominate an incorrect income tier?

If you claim a rebate, but find you claimed the incorrect amount, the Australian Tax Office will simply correct the amount either overpaid or owing after your tax return has been completed. There is no penalty for making a rebate claim that turns out to have been incorrect.

Claiming in a lower tier

If you claimed in a lower income tier, you will have to pay back the difference during tax time, since you would have received a higher percentage rebate than you should have been receiving.

Claiming in a higher tier

If you claimed in a higher income tier, you should be able to receive the remaining balance of your rebate through your tax return, since you would have received a lower percentage rebate than you should have been receiving.

I currently pay Lifetime Health Cover (LHC) loading. Does this affect my rebate?

No. Your rebate is calculated as a percentage of the base premium of your policy, regardless of any LHC you might pay.

Sorry, I’ve forgotten. What’s LHC loading?

If you haven’t taken out private hospital cover by the 1 July, following your 31st birthday, you will pay more in health insurance premiums – a 2% loading for each year you don’t have cover past your 30th birthday – when you eventually take out cover. For example, if you take out cover when you’re 32, you’ll owe a 4% loading on your private hospital insurance. It’s possible to attract a maximum of 70% loading. We talk more about it here.

I’m an overseas visitor. Can I apply for the rebate?

You must be eligible for Medicare, and hold private health insurance through a registered Australian health fund to qualify for the rebate.

More FAQ about the Australian Government Rebate

How will having children affect my rebate?

The family tiers apply if you have dependent children, but these tiers will only consider the income of the adults. The income threshold won’t be affected if you have one child, however, every additional child will increase the threshold by $1,500. So if you have two children, the base tier will increase to $181,500 for your family, and other tiers will also adjust accordingly.

My private health insurance is paid by my employer. Am I still able to receive a rebate?

Yes – the person covered by the private health insurance policy is the only one allowed to claim the rebate.

As an Australian citizen living abroad, am I able to claim a rebate on the private health insurance policy I purchased overseas?

No – only policies from approved Australian providers are eligible for a rebate.

Are family income tiers applicable for single parents and de facto couples?

Yes, family income tiers are applicable for single parents and de facto couples.

My partner and I are in separate age tiers. How will this affect our rebate?

When it comes to family tiers, age is based on the oldest person covered. So if you are under 65, and you have a partner that’s between 65 and 69, you can claim rebates from the 65-69 tier.

My partner and I have separate policies, are we subject to single or family thresholds?

Even if you have separate policies, you will still be considered a family for income tier purposes.

My child has private health insurance but I don’t. Will I still be able to claim a rebate?

Yes – as long as you pay for your dependent child’s health cover, you can still receive a rebate. The same family income tiers will apply.

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