Private health insurance rebate frequently asked questions

Australian Government Rebate on private health insurance rebate

Page last updated: 15 May 2015

Who is eligible for the private health insurance rebate?

A person may claim the private health insurance rebate if they:
  • are eligible for Medicare;
  • have a complying health insurance product (CHIP) that provides hospital treatment, general treatment (also known as ancillary or extras) cover or both; and
  • have an income for Medicare levy surcharge purposes below Tier 3 in the table below.

What is my private health insurance rebate?

The Australian Government provides an income tested rebate to help people meet the cost of private health insurance. The rebate you are eligible to receive will depend on your income tier and family composition.

From 1 July 2015 to 1 July 2018 a person's eligibility for the Rebate will be determined based on the following income tiers:
Base Tier
Tier 1
Tier 2
Tier 3
Singles
$90,000 or less$90,001 - 105,000$105,001 - 140,000$140,001 +
Families
$180,000 or less$180,001 - 210,000$210,001 - 280,000$280,001 +
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.

From 1 April 2014, the rebate will be annually adjusted. The rebates from 1 April 2014 to 31 March 2016 are shown in the table below.
Base Tier
Tier 1
Tier 2
Tier 3
Under 65
27.820%
18.547%
9.273%
0%
65-69
32.457%
23.184%
13.910%
0%
70+
37.094%
27.820%
18.547%
0%
Note: The Lifetime Health Cover (LHC) component of a premium is not eligible for the private health insurance rebate.

How can I calculate my expected income?

The tiers are based on your income for Medicare levy surcharge purposes. For more information, visit income for Medicare levy surcharge page or call 132 861.

To work out which tier you are in, use the Australian Taxation Office calculator.

How do I claim my rebate?

There are two ways to claim the rebate.

1. Premium reduction through your private health insurer

You can receive the rebate as a premium reduction through your private health insurer. This means you pay less upfront.

If you choose to receive your rebate as a premium reduction and expect to earn more than the Base Tier income threshold, you should contact your private health insurer and nominate the tier you expect to be in. They will adjust your rebate so you can avoid a potential tax liability.

2. Tax offset in your annual tax return

You can claim the rebate in your tax return as a refundable tax offset. This option does not require you to nominate a tier.

For more information about claiming your rebate as a tax offset, visit the ATO website or call 132 861.

My expected income has changed. Do I need to do anything?

If you claim the rebate as a premium reduction and your changed income results in a different rebate entitlement, you should contact your private health insurer and tell them which tier you expect to be in for the financial year. If you don't nominate a new tier you will continue to receive your level of rebate and may face a tax liability at the end of the financial year.

If you claim the rebate as a tax offset you do not need to do anything.

What happens if I nominate an incorrect tier?

If you choose to claim the rebate as a premium reduction, you should nominate a tier based on your expected income.

If you nominate a tier that results in a lower rebate than your income entitles you to, you will receive a tax offset through your tax return at the end of the financial year.

If you nominate a tier that results in a higher rebate than your income entitles you to, you will incur a tax liability through your tax return at the end of the financial year. This means you could have a tax debt. There are no additional penalties for estimating incorrectly.

Your private health insurer will give you a statement at the end of the financial year to help you complete your tax return.

How is the rebate adjusted?

Rebate levels are adjusted annually on 1 April based on the Rebate Adjustment Factor. The Rebate Adjustment Factor is determined using a formula which takes into account growth in the Consumer Price Index and the industry weighted average premium increase. More information about the Rebate Adjustment Factor is contained in the Private Health Insurance (Incentive) Rules.

Rebates that apply from 1 April 2016 were calculated by multiplying the previous year’s rebates by the Rebate Adjustment Factor.
1 April 2016
Base Tier
Under 65
26.791%
65-69
31.256%
70+
35.722%
Tier 1
Under 65
17.861%
65-69
22.326%
70+
26.791%
Tier 2
Under 65
8.930%
65-69
13.395%
70+
17.861%
Tier 3
Under 65
0%
65-69
0%
70+
0%

I have Lifetime Health Cover loading on my private hospital insurance policy. Can I claim the rebate on my Lifetime Health Cover loading?

No. The Australian Government Rebate on private health insurance does not apply to the Lifetime Health Cover component of a private hospital insurance premium

Can I claim the rebate if I only have private health insurance general treatment cover (also known as ancillary or extras)?

Yes. You will receive a rebate unless you earn more than the Tier 3 threshold (see table above).

I have children. Do I get any extra assistance?

If you have dependent children, the family thresholds apply (see table above).

If you have one dependent child, the threshold will not be affected. However for families with multiple children, the threshold will increase by $1,500 for each child after the first.

For example, a family with three children will have its income threshold increased by $3,000.

Family income includes the combined income of both adults. For single parents, only the adult’s income counts towards the threshold.

Income of dependent children is not included.

For more information about the definition of a spouse, dependent child or the family income test, visit the private health insurance definitions page.

Are de facto couples and single parents considered a family?

Yes. Single parents and couples (including de facto couples) are subject to the family tiers.

For more information about the definition of a family, visit the family income thresholds page.

For more information about the definition of a spouse, dependent child or the family income test, visit the private health insurance definitions page.

My spouse (or de facto) and I have separate policies, do family or single thresholds apply?

The family thresholds apply regardless of whether the individual family members are on the same or different private health insurance policies.

I don’t have private health insurance but my dependent child does. Can I still claim the rebate?

Yes. Providing you pay the dependent child’s private health insurance it does not matter if you are not personally covered by the policy.

The size of the rebate will depend on your income. If you are a Tier 3 family you will not receive a rebate.

My partner and I are considered a family. How is our family’s age determined?

The rebate is based on the oldest person covered by a policy. If you share a policy with somebody aged 65 or over a higher rebate may be applicable to that policy if you earn less than the Tier 3 income threshold (see table above).

Do older Australians get a higher rebate?

A higher rebate is available for Australians over the age of 65, depending on their age and income (see table above).

My employer pays my private health insurance. Who is entitled to the rebate?

Only the adult covered by the policy is entitled to claim the rebate.

If an incorrect rebate is claimed the balance will be corrected through your tax return.

I am from a country with a Reciprocal Health Care Agreement with Australia. If I am visiting and I purchase private health insurance, can I claim the rebate?

Yes. You can receive a rebate unless you earn more than the Tier 3 threshold (see table above).

Everyone who is eligible for Medicare and has a complying health insurance product is eligible for the rebate, subject to the income test.

I am an Australian citizen living overseas. Can I claim the rebate for the private health insurance I have purchased for use overseas?

No. An overseas insurance policy, or an insurance policy which covers things that happen outside Australia, will not be a complying health insurance product.

Where can I get more information about private health insurance?

For more information about private health insurance, visit the private health insurance website or call 1300 737 299.