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Australian Government private health insurance rebate

Is cost standing in the way of taking out health insurance? Find out if you're eligible for the private health insurance rebate.

Introduced to make private health insurance more affordable for all Australians, the rebate can be taken either as a premium reduction or as a tax offset. All you need to access it is to be eligible for Medicare, have a complying health insurance product (either hospital cover, extras cover or both) and have an income that falls beneath the maximum rebate threshold.

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Instead of wasting your time crunching numbers why not let the comparison engine do it for you. Just click the More options button at the bottom of the form and select the income* and age group you fall under. Once you fill out the rest of your details and hit Search Policies, the prices of the policies shown will reflect the rebate amount you're entitled to.

*Please note that the rebate is calculated by your income for Medicare Levy Surcharge purposes, not your taxable income. Therefore it can also take into account items like fringe benefits and super contributions. This is discussed in further detail below.

What are the health insurance rebate tiers?

The Australian Government applies an income test to determine if you are eligible for the rebate, with the current thresholds indexed and locked in until 30 June 2021. The rebate rates are also adjusted every year based on changes to the cost of living and the cost of the average health insurance premium.

Single parents and couples (including de facto couples) fall under the the family thresholds. The rebate levels shown below are applicable from 1 April 2017 to 31 March 2018:

Income thresholdsAge groupRebate amount
Singles. $90,000 or less
Families. $180,000 or less
  • 65 or younger
  • 65 to 69
  • 70 or older
  • 25.934%
  • 30.256%
  • 34.579%
Singles. $90,001 to $105,000
Families. $180,001 to $210,000
  • 65 or younger
  • 65 to 69
  • 70 or older
  • 17.289%
  • 21.612%
  • 25.934%
Singles. $105,001 to $140,000
Families. $210,001 to $280,000
  • 65 or younger
  • 65 to 69
  • 70 or older
  • 8.644%
  • 12.966%
  • 17.289%

What to know about the private health insurance rebate thresholds

  • Your income for the rebate is not your taxable income, but your income for Medicare levy surcharge purposes.
  • The family income threshold increases by $1,500 for every dependant child after the first.
  • The family threshold applies irrespective of whether family members are on the same or different health insurance policies
  • A family’s age is determined by the age of the oldest person. This means you may qualify for a larger rebate as a family if the oldest person is over 65 and you share a policy with them.
  • You can claim the rebate on any hospital, extras, combined or ambulance policy that's purchased from a registered Australian health fund.
  • It cannot be claimed if you hold overseas visitors or student cover unless you are from a country that Australia has a Reciprocal Health Care Agreement with.

What portion of my income determines my rebate?

The health insurance rebate determines which income threshold you fall under per the Medicare Levy Surcharge rules, which include your taxable income, fringe benefits, total net investment losses, reportable super contributions and exempt foreign employment income.

No, if you are paying a higher premium due to the LHC the health insurance rebate won't apply to the additional loading. It does apply to the standard cost of your policy though, so it's still worth claiming even if you are affected by the LHC.

Find out more about how the Medicare Levy Surcharge (MLS) calculates income.
Turned 31 recently? You may want to read up on the Lifetime Health Cover loading.

How do I claim the rebate?

  • Through your fund. You can claim the rebate as a premium reduction when you purchase cover. Just select the income and age group tier you expect to fall under when applying and the rebate should be applied automatically.
  • As a tax offset. Alternatively you can claim it back at tax time when you submit your return form online or via traditional mail. This option doesn’t require you to nominate a tier.

It's important to accurately estimate your appropriate tier when claiming your rebate because, while there is no penalty for picking the wrong one, it could result in the following:

  • Claiming too low. If you claim a lower rebate you'll receive an offset on your tax return to make up the difference.
  • Claiming too high. If you claim a higher rebate you'll have a liability on your tax return which you'll have to repay.

Tools to help you calculate your income and rebate

The Australian Taxation Office (ATO) provides special calculators to assist people in working out their income and rebate percentages. Once you've worked out your thresholds you can select them on our comparison engine and the policy costs are adjusted accordingly:

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Richard Laycock

Richard is the insurance editor at finder.com.au. He is on a mission to make insurance easier to understand.

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