Private health insurance tax guide

There are 3 ways you can pay less tax with private health insurance.

Who is this cover for?

Key takeaways

  • Having private health insurance can save you tax if you earn over $97,000 per year ($194,000 for couples).
  • Your age can impact how much you pay for health insurance but will not affect your income tax.
  • You may be eligible for the private health insurance rebate if you earn below a certain amount.

Private Health insurance and tax – at a glance

Here are the 3 main ways to use health insurance to save on your tax in Australia.

  • Piggybank and a coin

    Save up to 1.5% in tax

    Depending on your income, not having hospital cover can cost you 1%, 1.25% or 1.5% of your annual income. Don't get stung by the Medicare Levy Surcharge (MLS).

  • Bar graph with arrow showing an increase

    Stop your premium rising by 2%

    If you don't have hospital cover by 1 July after your 31st birthday, your health insurance premiums will go up by 2% per year because of the Lifetime Health Cover loading (LHC)

  • Curved arrow around a dollar sign

    Get a tax rebate of up to 32.8%

    Take out private health insurance and, depending on how much you earn, get nearly 33% of your premiums back thanks to the Private Health Insurance Rebate.

Compare health cover to avoid extra levies and taxes

Below are some basic policies from Finder partners with enough cover to avoid both the Lifetime Health Cover Loading and the Medicare Levy Surcharge. All prices are based on a single individual with less than $97,000 income and living in Sydney.

1 - 14 of 14
Name Product AUFHI-NEW Treatments Price Apply
Frank Health Insurance logo
  • Rehabilitation
  • Joint reconstructions
  • Dental surgery
  • Hernia and appendix
  • Eye excluding cataracts
  • Pain management
  • Gynaecology
  • Lung and chest
$77.65
per month
Go to Site
All treatments
Bupa HI Pty Ltd logo
  • Rehabilitation
  • Joint reconstructions
  • Dental surgery
  • Hernia and appendix
  • Eye excluding cataracts
  • Pain management
  • Gynaecology
  • Lung and chest
$77.92
per month
Go to Site
All treatments
Frank Entry Hospital (Basic+)
Basic Plus$750 excess
Frank Health Insurance logo
  • Rehabilitation
  • Joint reconstructions
  • Dental surgery
  • Hernia and appendix
  • Eye excluding cataracts
  • Pain management
  • Gynaecology
  • Lung and chest
  • +5 other treatments covered
$82.48
per month
Go to Site
All treatments
starter basic
Basic$750 excess
ahm health insurance logo
  • Rehabilitation
  • Joint reconstructions
  • Dental surgery
  • Hernia and appendix
  • Eye excluding cataracts
  • Pain management
  • Gynaecology
  • Lung and chest
$82.71
per month
Go to Site
All treatments
Bupa HI Pty Ltd logo
  • Rehabilitation
  • Joint reconstructions
  • Dental surgery
  • Hernia and appendix
  • Eye excluding cataracts
  • Pain management
  • Gynaecology
  • Lung and chest
$82.78
per month
Go to Site
All treatments
GMHBA Limited logo
  • Rehabilitation
  • Joint reconstructions
  • Dental surgery
  • Hernia and appendix
  • Eye excluding cataracts
  • Pain management
  • Gynaecology
  • Lung and chest
$83.95
per month
Go to Site
All treatments
Bupa HI Pty Ltd logo
  • Rehabilitation
  • Joint reconstructions
  • Dental surgery
  • Hernia and appendix
  • Eye excluding cataracts
  • Pain management
  • Gynaecology
  • Lung and chest
  • +8 other treatments covered
$84.51
per month
Go to Site
All treatments
GMHBA Limited logo
  • Rehabilitation
  • Joint reconstructions
  • Dental surgery
  • Hernia and appendix
  • Eye excluding cataracts
  • Pain management
  • Gynaecology
  • Lung and chest
  • +5 other treatments covered
$85.23
per month
Go to Site
All treatments
starter basic
Basic$500 excess
ahm health insurance logo
  • Rehabilitation
  • Joint reconstructions
  • Dental surgery
  • Hernia and appendix
  • Eye excluding cataracts
  • Pain management
  • Gynaecology
  • Lung and chest
$85.76
per month
Go to Site
All treatments
essentials basic plus
Basic Plus$750 excess
ahm health insurance logo
  • Rehabilitation
  • Joint reconstructions
  • Dental surgery
  • Hernia and appendix
  • Eye excluding cataracts
  • Pain management
  • Gynaecology
  • Lung and chest
  • +5 other treatments covered
$87.04
per month
Go to Site
All treatments
Qantas Insurance logo
  • Rehabilitation
  • Joint reconstructions
  • Dental surgery
  • Hernia and appendix
  • Eye excluding cataracts
  • Pain management
  • Gynaecology
  • Lung and chest
  • +7 other treatments covered
$89.42
per month
All treatments
Bupa HI Pty Ltd logo
  • Rehabilitation
  • Joint reconstructions
  • Dental surgery
  • Hernia and appendix
  • Eye excluding cataracts
  • Pain management
  • Gynaecology
  • Lung and chest
  • +8 other treatments covered
$89.53
per month
Go to Site
All treatments
Qantas Insurance logo
  • Rehabilitation
  • Joint reconstructions
  • Dental surgery
  • Hernia and appendix
  • Eye excluding cataracts
  • Pain management
  • Gynaecology
  • Lung and chest
  • +7 other treatments covered
$94.43
per month
All treatments
ahm health insurance logo
  • Rehabilitation
  • Joint reconstructions
  • Dental surgery
  • Hernia and appendix
  • Eye excluding cataracts
  • Pain management
  • Gynaecology
  • Lung and chest
  • +5 other treatments covered
$94.84
per month
Go to Site
All treatments
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3 ways private health insurance can help you save: more detail

number 1

The Medicare Levy Surcharge

Here's a more detailed breakdown of the Medicare Levy Surcharge and what you'll pay – according to new thresholds coming into force on 1 July 2024:

  • 1% for singles earning over $97,000 ($194,000 for families)
  • 1.25% for singles earning over $113,001 ($226,001 for families)
  • 1.5% for singles earning over $151,000 ($302,001 for families).

How do I avoid it?

Take out hospital cover through a registered Australian health fund. To meet the minimum requirements, you generally just need a basic hospital policy with a $750 excess or less if you're single, or $1,500 or less for all other policies. Remember that extras cover doesn't exempt you from the MLS and income thresholds for families increase by $1,500 per child after the first child.

How is it calculated?

The MLS takes into consideration:

  • Your taxable income
  • Your total reportable fringe benefits
  • Any amounts on which family trust distribution tax has been paid.

number 2

Lifetime Health Cover Loading

The Lifetime Health Cover Loading was set up to encourage young Australians to take out private health insurance earlier. It adds 2% to the cost of your health insurance premium for every year that you don't have hospital cover once you turn 31.

For example, if you don't buy a policy until you turn 36, you'll be hit with a 10% charge. This additional charge is payable for 10 years. The maximum loading is capped at 70%.

To avoid it, simply take out cover before your base day. This is the 1 July following your 31st birthday.

The LHC loading is not an income tax – the loading is added to your health insurance premiums, only if you ever decide to take out hospital insurance. If you never take out hospital insurance, you won't be impacted by the loading.

LHC exemptions

  • Australians who were born on or before 1 July 1934
  • Serving members of the Australian Defence Force (ADF)
  • Department of Veterans' Affairs (DVA) Gold Card holders
  • Learn more about LHC exemptions and special conditions.

number 3

Private health insurance rebate

The private health insurance rebate was introduced to make private health insurance more accessible to Australians. The rebate is calculated based on an individual or family's taxable income and the number of children they have. To be eligible:

  • You must fall under the age and income thresholds
  • You must be a green or blue Medicare cardholder
  • You can still claim the rebate with extras only cover.

How do I claim the rebate?

  • Through tax when you complete your annual return, or
  • As a premium reduction when you take out health insurance.

Private health insurance tax rebate levels – effective from 1 July 2024

Thresholds≤$97,000$97,001-113,000$113,001-151,000
< Age 65
24.608%16.405%8.202%
Age 65-69
28.710%20.507%12.303%
Age 70+
32.812%24.608%16.405%
Thresholds≤$194,000$194,001-226,000$226,001-302,000
< Age 65
24.608%16.405%8.202%
Age 65-69
28.710%20.507%12.303%
Age 70+
32.812%24.608%16.405%
Data source: PrivateHealth.gov.au. Rebate levels are effective from 1 July 2024.

Frequently asked questions

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Editor, Insurance

Gary Ross Hunter was an editor at Finder, specialising in insurance. He’s been writing about life, travel, home, car, pet and health insurance for over 6 years and regularly appears as an insurance expert in publications including The Sydney Morning Herald, The Guardian and news.com.au. Gary holds a Kaplan Tier 2 General Advice General Insurance certification which meets the requirements of ASIC Regulatory Guide 146 (RG146). See full bio

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James Martin was the insurance editor at Finder. He has written on a range of insurance and finance topics for over 7 years. James often shares his insurance expertise as a media spokesperson and has appeared on Prime 7 News, WIN News, Insurance News, 7NEWS and The Guardian. He holds a Tier 1 General Insurance (General Advice) certification and a Tier 1 Generic Knowledge certification, both of which meet the requirements of ASIC Regulatory Guide 146 (RG146). See full bio

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James has written 205 Finder guides across topics including:
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