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What is the private health insurance rebate?

The private health insurance rebate is a government initiative to help Australians pay their health insurance premiums by subsidising a portion of their premiums. This government rebate can either be claimed through your tax return or in the form of a reduced policy premium.

The rebate was introduced as an incentive for people to take out private health insurance. The more people who have health insurance, the less pressure there is on our public healthcare system (Medicare). This will assist in, saving the government money and reduce lengthy public waiting lists.

Who is eligible for the private health insurance rebate?

The rebate you’re entitled to will depend on your age and you and your family’s taxable income. You must be eligible for Medicare (e.g. hold a blue or green Medicare card) to receive the rebate, in addition to holding any private health insurance policy.

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 6524.808%16.539%8.268%0.00%
65-6928.944%20.674%12.404%0.00%
70 and over33.079%24.808%16.539%0.00%
Retrieved from PrivateHealth.gov.au | Information current as of 17/09/2020
* For families with children, thresholds increase by $1,500 for each child after the first. Families include couples, de facto couples, and single parents.

For example, if you’re a 35-year-old woman with a family on an income of $200,000, you would qualify for the tier 1 rebate of 16.539%. Conversely, if you’re a 68-year-old single male on an income of $50,000, you’d instead attract the full rebate on the base tier for the 65-69 age bracket: 28.944%.

N.B. The income thresholds above will remain the same until the 30 June 2021.¹ The rebate percentages are adjusted on 1 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 for it to be deducted directly from your health insurance premium, which most Australians do. 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.

You also have the option 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 find you claimed the incorrect rebate, the Australian Tax Office (ATO) 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 your policy’s base premium (i.e. the price of your health insurance before LHC is applied).

What’s LHC loading?

LHC is a loading applied to your health insurance premiums if you haven’t taken out private hospital cover by the 1 July following your 31st birthday. If you decide to take out cover later in life, you will pay more in hospital insurance premiums as a result. Each year you’re not covered after this LHC date, you’ll attract a two per cent loading. It’s possible to attract a maximum loading of 70%.

For example, if you take out cover when you’re 32, and are born before the 1st of July, you’ll owe a four per cent loading on your private hospital insurance.

The loading is removed after you’re insured for 10 years continuously. We talk more about this in Compare the Market’s guide to LHC.

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

You must be eligible for Medicare (with either a blue or green Medicare card) and hold private health insurance through a registered Australian health fund to qualify for the rebate.

More FAQs 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 employer pays for my private health insurance. Am I still able to receive a rebate?

If your health insurance is paid by your employer, you’ll typically be able to claim the government rebate as a reduced premium.²

As an Australian living abroad, can I claim a rebate on health insurance I purchase 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?

Absolutely!

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 private health insurance rebate?

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

Sources
  1. PrivateHealth.gov.au – Australian Government private health insurance rebate. Accessed September 2020.
  2. Australian Taxation Office – Private health insurance rebate eligibility.

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