Find out if you're eligible for the private health insurance rebate.
The private health insurance rebate is a discount of around 35% off health insurance premiums. The percentage is based on your income, age and whether you're single or have a family. The rebate can be taken as a discount on your health insurance premiums, or as a refundable tax offset at the end of the financial year.
To get this discount, all you have to do is be eligible for Medicare, have an income below the maximum rebate threshold and have suitable private health insurance.
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*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.
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The Australian Government applies an income test to determine if you are eligible for the rebate. These will be changed over time. Single parents and couples (including de facto couples) fall under the family thresholds.
In addition to the health insurance rebate, there's Medicare Levy Surcharge (MLS) exemption. The MLS is extra tax payable for not holding private health insurance, so MLS exemption is a tax offset for having private health insurance. This means people who choose to use the public health system, even if they can afford private health insurance, are paying more in taxes to help fund Medicare.
For example, a single person under the age of 65 with eligible income of $100,000 a year would be in the Tier 1 threshold. Their Private Health Insurance Rebate would be 16.943% and their Medicare Levy Surcharge would be 1%.
This means they can get a 16.943% discount on health insurance premiums as well as a 1% tax offset, for having suitable private health insurance.
The income thresholds below are locked in until 30 June 2021, while the rebate amount is adjusted every year based on inflation and the average cost of health insurance. The rebate levels shown below are applicable from 1 April 2018 to 31 March 2019.
|Income thresholds||Age group||Rebate amount|
|Base tier - 0% Medicare Levy Surcharge|
Singles. $90,000 or less
|Tier 1 rebate - 1% Medicare Levy Surcharge|
Singles. $90,001 to $105,000
|Tier 2 rebate - 1.25% Medicare Levy Surcharge|
Singles. $105,001 to $140,000
A health insurance policy needs to meet certain standards to qualify for the Private Health Insurance Rebate, and for exemption from the Medicare Levy Surcharge (MLS). This is to prevent people from simply getting a cheap policy for the tax benefits, and to prevent insurers from getting the benefits of the rebate by selling high-excess policies that won't be used.
For both the rebate and the MLS exemption, you'll need to get health insurance with a registered Australian health insurance company. Overseas visitor health cover, and overseas student health cover are not eligible for either of these.
- The Private Health Insurance Rebate: This discount can be claimed on both hospital and extras policies. If you only have one, you might claim the rebate on that. If you have both, you can claim the rebate on premiums paid for both.
- MLS exemption: You must hold hospital health insurance to be exempt from this tax. The policy must cover some or all of the fees incurred for a hospital stay, and the excess payable must be no greater than $500 a year for singles, or $1,000 a year for families. The vast majority of hospital health insurance policies sold by registered Australian insurers are eligible for MLS exemption. The few that aren't will usually be clearly marked as such.
- Your income for the rebate is not just your taxable income. Instead it's your taxable income plus reportable fringe benefits, reportable superannuation contributions and net investment losses.
- The family income threshold increases by $1,500 for every dependent 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 only claim the rebate on policies purchased from registered Australian health funds.
- The private health insurance rebate does not apply to overseas visitor health cover
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.
- 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.
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:Back to top
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