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1 July 2012 changes to the private health insurance rebate and Medicare levy surcharge

Australian Government Rebate on private health insurance

Private health insurance rebate

In the 2011-12 financial year, most Australians with private health insurance received a 30 per cent rebate from the Australian Government to help cover the cost of their premiums.

From 1 July 2012, the private health insurance rebate is income tested.

If you expect to earn more than $84,000 as a single, or more than $168,000 as a family in the 2012-13 financial year, your rebate will be affected.

Using the table below, work out your tier to see how the changes will affect you. To avoid a potential tax liability, contact your private health insurer and tell them which tier you are in. They will adjust your rebate for you.

Private health insurance rebate for the 2012-13 financial year

	No change	Tier 1	Tier 2	Tier 3
Singles	$84,000 or less	$84,001 - 97,000	$97,001 - 130,000	$130,001 +
Families	$168,000 or less	$168,001 - 194,000	$194,001 - 260,000	$260,001 +
Under 65	30%	20%	10%	0%
65 - 69	35%	25%	15%	0%
70+	40%	30%	20%	0%

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.

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

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

You may claim the rebate if you are eligible for Medicare and have private health insurance that covers hospital treatment, general treatment (also known as ancillary or extras) or both.
There are three ways you can claim your rebate:

• as a premium reduction through your private health insurer (you pay less upfront to your insurer). If you want to claim your rebate as a reduced premium, contact your insurer.
• as a direct payment from a Medicare office.
• as a tax offset when lodging your annual tax return. For more information about claiming your rebate as a tax offset, visit the tax offsets page or call 132 861.

If you choose to receive your rebate through your insurer or Medicare, you should nominate the tier you expect to be in to avoid a potential tax liability.

Medicare levy surcharge

The Medicare levy surcharge (MLS) income test changed on 1 July 2012.

If you are single, earn more than $84,000 and don’t have private health insurance hospital cover you will pay the MLS.

If you are a family, have a combined income of more than $168,000 and don’t have hospital cover for you, your partner, or your children – you will pay the MLS.

The MLS will also apply if you cancel your existing hospital cover. If you do not have hospital cover, use the table below to see how the changes affect you.

Medicare levy surcharge for the 2012-13 financial year

	No change	Tier 1	Tier 2	Tier 3
Singles	$84,000 or less	$84,001 - 97,000	$97,001 - 130,000	$130,001 +
Families	$168,000 or less	$168,001 - 194,000	$194,001 - 260,000	$260,001 +
All ages	0.0%	1.0%	1.25%	1.5%

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.

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

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

To see examples of the income test in action, view our fact sheet (PDF 173 KB).

If you have more questions about the private health insurance rebate and MLS changes, see the frequently asked questions.

If you have questions about what medical services you can access with private health insurance, see the private health insurance questions.

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