Private health insurance rebate

What is the private health insurance rebate?

The private health insurance rebate is a government contribution to help with the cost of private health insurance. In other words, it's a a discount on your health insurance premiums.

The Australian government offers this discount to encourage more people to get private health insurance, which takes pressure of the public system (Medicare).

Depending on your income, age, family status and eligibility, you could get almost a third off the price of your premium.

Finder survey: What percentage of Australians have private health insurance for tax reasons?

Private health insurance rebate tiers (2024)

Not everybody gets the same discount. There are tiers to determine how much the government will help out.

These rates have come into effect as of 1 July 2024. If you are a single parent or a couple (including de facto couples), use the family tiers. For families with children, the thresholds go up by $1,500 for each child after the first.

Who is eligible for the rebate?

You're eligible for the rebate if your taxable income is under $151,000 a year as a single or $302,000 as a couple or family (the threshold increases by $1,500 for every dependent child after the first). You also must:

• Be eligible for Medicare
• Hold a complying health insurance policy with an Australian-registered health insurer or
• Be a private health insurance beneficiary (for example, the dependent child of a policy-holder)
• Have an income that is less than the Tier 3 threshold

How do I get the private health insurance rebate?

If you're eligible for the private health insurance rebate, you can get it one of two ways:

Through premium reductions

Your private health insurer can apply the rebate to your health insurance premiums. To claim the rebate upfront, you'll have to contact your health fund to let them know your rebate tier. Your provider applies the rebate directly to lower the cost of your premium.

In your tax return

When you lodge your yearly tax return online, you can claim your rebate as a lump sum (after paying a standard insurance premium throughout the year). The ATO can apply the rebate automatically when you enter the relevant information from your private health insurance tax statement into your tax return.

Unlike the Medicare Levy Surcharge, you can claim the rebate for any insurance policy, whether that's extras cover, hospital cover or a combined package.

What happens if I choose the wrong income tier?

If you choose to claim the private health insurance rebate as a premium reduction, you'll be asked to select a tier based on your estimated income – usually you do this when you take out or renew a policy.

• If you select a higher tier than your actual income for the year, you should receive a tax offset through your income tax return for that financial year.
• If you select a lower tier than your actual income for the year, your income tax return for that financial year might come with a 'tax liability', meaning you owe money. There are no other consequences for incorrect estimates.

Frequently asked questions

• How is the health insurance rebate calculated?

  Your specific rebate is calculated based on your income, age, family status and eligibility.

• Is private health insurance worth it?

  Private health insurance is a personal decision. Benefits include being able to choose who treats you, and where. Waiting times are also typically shorter for private health insurance patients and many policies come with perks to encourage healthier lifestyles.

• When did the private health insurance rebate start?

  The private health insurance rebate was introduced on 1 January 1999. When it started, the rebate covered 30% of premiums for most Australians. This was changed when the government introduced means testing in 2012.

• Does the private health insurance rebate impact the Medicare Levy Surcharge?

  No, the private health insurance rebate does not affect the Medicare Levy Surcharge. The Medicare Levy Surcharge is an income tax for high earners that don't hold an adequate level of private hospital insurance. It does not affect your premiums at all.

• Can I get a rebate on the Lifetime Health Cover Loading?

  No, the government doesn't apply the rebate to the Lifetime Health Cover Loading – a penalty that applies to anyone who takes out private health insurance after their 31st birthday.

• Am I entitled to the rebate if I'm an overseas visitor?

  Overseas visitors aren't entitled to the private health insurance rebate. You need to be an Australian citizen or permanent resident to be eligible for the private health insurance rebate.

• Can I get the private health insurance rebate with extras cover?

  Yes, you can claim the private health insurance rebate for your extras premiums. Hospital, extras and combined hospital cover are all eligible.

Written by

Gary Ross Hunter

Journalist

Gary Ross Hunter has over 6 years of expertise writing about insurance, including life, health, home, and car insurance. Having reviewed hundreds of product disclosure statements and published over 800 articles, he loves simplifying complex insurance topics for everyday readers. Gary has contributed to major outlets like Yahoo Finance, The Sydney Morning Herald, and news.com.au, and holds a Bachelor of Arts (Honours) in English Literature from the University of Glasgow, along with a Tier 2 General Advice certification, ensuring his work adheres to ASIC’s RG146 standards. See full bio

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Gary Ross has written 626 Finder guides across topics including:

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