PHI 22/14

This circular issued by the Private Health Insurance Branch contains information about the Private Health Insurance Rebate

Page last updated: 10 April 2014

Printable version of 22/14 (PDF 110 KB)

10 April 2014

Private Health Insurance Rebate – Rebate Adjustment Factor Effective 1 April 2014

Operation of the Rebate from 1 April 2014

From 1 April 2014, the Australian Government rebate on private health insurance is being indexed by a Rebate Adjustment Factor (RAF) representing the difference between the Consumer Price Index and the industry weighted average increase in premiums. The Rebate Adjustment Factor is enacted by the Private Health Insurance Legislation Amendment Act 2014 and set out in the Private Health Insurance (Incentives) Rules.

The CPI factor for 2014 is 1.0275.

Industry weighted average premium increase for 2014 (including rate protection) is 6.20%.

The RAF for 2014 is 0.968.

The Private Health Insurance Rebate Percentages for the adjustment year from 1 April 2014 are as follows:

Rebate

UnchangedTier 1Tier 2Tier 3
Singles≤$88,000$88,001 - 102,000$102,001 - 136,000≥ $136,001
Families≤$176,000$176,001 - 204,000$204,001 - 272,000≥ $272,001
< Age 6529.040%19.360%9.680%0%
Age 65-6933.880%24.200%14.520%0%
Age 70+38.720%29.040%19.360%0%

Medicare levy surcharge

UnchangedTier 1Tier 2Tier 3
Singles≤$88,000$88,001 - 102,000$102,001 - 136,000≥ $136,001
Families≤$176,000$176,001 - 204,000$204,001 - 272,000≥ $272,001
All ages0.0%1.0%1.25%1.5%
Note: The thresholds increase annually, based on growth in Average Weekly Ordinary Time Earnings. 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.

It should be noted that the income thresholds will be indexed from 1 July 2014.

Legislative Amendments

On 9 April 2014, the Private Health Insurance Legislation Amendment Act 2014 received Royal Assent. This Act repeals the Private Health Insurance Legislation Amendment (Base Premium) Act 2013. The Act can be found on the Australian Government ComLaw website. The Act simplifies the operation of the indexation arrangements for the rebate by introducing an industry level Rebate Adjustment Factor. The Act also clarifies the definition of a restricted access group in subsection 126-20(7) of the Private Health Insurance Act 2007.

Two additional legislative instruments have been made to support these changes.

The Private Health Insurance (Incentives) Amendment Rules 2014 (No.1) were registered on the Federal Register of Legislative Instruments on 10 April 2014. The Rules can be found on the Australian Government ComLaw website. The Rules amend the Private Health Insurance (Incentives) Rules 2012 (No. 2), which commenced on 4 July 2012. The Rules replace Part 2 Rule 5A to determine the Rebate Adjustment Factor for the purposes of Subsection 22-15. The Rebate Adjustment Factor will be used to adjust all rebate percentages on 1 April each year.

The Private Health Insurance (Complying Product) Amendment Rules 2014 (No. 4) were registered on the Federal Register of Legislative Instruments on 10 April 2014. The Rules can be found on the Australian Government ComLaw website.

Enquiries by insurers on the claiming of the Rebate should be referred to the Department of Human Services on 1300 554 463.

Enquiries by insurers on the MLS should be referred to the ATO helpline on 13 2861.

Other enquiries in relation to the information in this circular should be directed to Private Health.

This circular supersedes threshold information provided in PHI Circular 21/13 (released on
15 April 2013).

This circular updates information provided in Circular PHI 05/14 and PHI 12/14.

If you require further information please telephone: (02) 6289 9853/24 hr answering machine or email the enquiry to Private Health Insurance Branch.

For more information visit 2014 Private Health Insurance (PHI) Circulars.

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