Private health insurance
Private Health Insurance Rebate - indexing the Government’s contribution
Australian Government Rebate on private health insurance and premium increases
Private Health Insurance Rebate – indexing the Government’s contribution
From 1 April 2014, the Government’s contribution to private health insurance will be calculated using base premiums which will be indexed annually. The base premium will be equivalent to the commercial premium (approved by the Minister) on 1 April 2013, indexed annually from 1 April 2014 by the lesser of the Consumer Price Index (CPI) or the commercial premium increase.The changes mean that while the rebate percentage remains the same, the rebate rate will be calculated on a ‘base premium’.
A policy holder’s percentage rebate entitlement will still be dependent on their age and income.
In conjunction with this measure, the Government will streamline arrangements for the 2013 premium setting round. The Government will also undertake discussions with industry and consumer groups on options for further simplification of premium setting that will drive competition and continue to deliver strong consumer protection from 2014.
How the Measure will work:
The Government’s contribution to private health insurance will be calculated using base premiums as at 1 April 2013.Each year the base premium will be indexed by the lesser of CPI or the premium increase and the rebate will apply to the base premium.
Income thresholds and rebate rates will not be affected as a result of these changes.
For example, Jenny is 38 and has a single policy which cost $1,000 p.a. She has an annual income of $60,000 and is therefore entitled to a 30% rebate under existing income testing arrangements.
Assuming the cost of Jenny’s premium increased by 5% per year and CPI increases by 2.5% per year:
 | 2013 | 1 April 2014 |
|---|---|---|
| Base Premium to which the rebate will apply indexed at 2.5% (indicative CPI) | $1,000 | $1,025 |
| Commercial Premium indexed at 5% | $1,000 | $1,050 |
| Rebate on base premium (30%) | $300 | $307.50 |
| Rebate that would have applied to commercial premium | $300 | $315 |
| Difference in rebate that would have applied had the change not been made | $0 | $7.50 |
Emails can be sent to Private Health
or
Private Health Insurance Branch
Department of Health and Ageing
MDP 954
GPO Box 9848
CANBERRA ACT 2601
