Australian Government Rebate on private health insurance

Private health insurance rebate

Page last updated: 17 February 2014

The Australian Government provides an income tested rebate to help people meet the cost of private health insurance.

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 (MLS) purposes below Tier 3 shown in the table below.
From 1 April 2014, a person’s rebate contribution from the Australian Government will be annually adjusted by a universal Rebate Adjustment Factor that applies to all rebates. The Rebate Adjustment Factor is calculated by the Government using a formula which takes into account growth in the Consumer Price Index and the industry weighted average premium increase.

All rebate percentages will be multiplied by an adjustment factor of 0.968. A person’s rebate entitlement will continue to be based on their age and income.

The Private Health Insurance Rebate Percentages from 1 April 2014 are as follows:

Private health insurance rebate effective from 1 April 2014.
Base Tier
Tier 1
Tier 2
Tier 3
Singles
$88,000 or less$88,001 - 102,000$102,001 - 136,000$136,001 +
Families
$176,000 or less$176,001 - 204,000$204,001 - 272,000$272,001 +
Under 65
29.040%19.360%9.680%0%
65 - 69
33.880%24.200%14.520%0%
70+
38.720%29.040%19.360%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. These thresholds increase annually, based on growth in the Average Weekly Ordinary Time Earnings. Income thresholds are indexed on 1 July.

The tiers are based on your income for Medicare levy surcharge purposes.

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

There are two 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 tax offset when lodging your annual tax return. For more information about claiming your rebate as a tax offset, visit the Australian Taxation Office or call 132 861.
If you choose to receive your rebate through your insurer you should nominate the tier you expect to be in to avoid a potential tax liability.

If you or your family don’t have hospital cover, or you choose not to maintain your cover, you may have to pay the Medicare levy surcharge.

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