Is health insurance tax deductible?

No. Health insurance isn't tax deductible but there are a bunch of ways you can pay less tax. For instance, you may be entitled to the private health insurance rebate or offset. This can knock as much as 32.8% off your premiums. In some cases, the insurer will lower your premiums based on what you earn. Otherwise, you can receive it as a refundable tax offset through your tax return.

What is the Medicare Levy?

The Medicare Levy is a 2% tax that the majority of Australians need to pay in addition to the tax they pay on their taxable income. The money raised from the Medicare Levy goes towards keeping Australia's public healthcare system open to everyone.

What is the Medicare Levy Surcharge?

The Medicare Levy Surcharge is a tax that only applies if you don't take out private health insurance, specifically hospital cover, and you earn over $97,000 a year. It can tax you 1%, 1.25% or 1.5% of your annual income, depending on how much you earn. It was put in place to encourage more Australians to go private to alleviate the strain on the public healthcare system.

What is the Lifetime Health Cover Loading?

The Lifetime Health Cover Loading is an additional 2% charge that is added to your premiums every year you don't take out hospital cover once you turn 31. To avoid it, take out basic hospital cover before then.

What is the private health insurance rebate?

The private health insurance rebate is a partial refund on your premiums that you get based on how much you earn. Single Australians are entitled to it if they earn under $151,000 a year or $302,000 if they hold insurance as a couple or family. The size of the rebate is also based on age.

Tax impacts of health insurance in Australia 2025

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

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.

3 ways private health insurance can help you save: more detail

Name	Treatments	Price	Apply
HCF Hospital Basic Plus $750 Excess Basic Plus$750 excess	Rehabilitation Joint reconstructions Dental surgery Hernia and appendix Eye excluding cataracts Pain management Gynaecology Lung and chest +4 other treatments covered	$78.78 per month	Go to Site All treatments Compare	loading Fetching your data...
starter basic Basic$750 excess	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 Compare	loading Fetching your data...
Basic Accident Hospital $750 Excess Basic$750 excess	Rehabilitation Joint reconstructions Dental surgery Hernia and appendix Eye excluding cataracts Pain management Gynaecology Lung and chest	$85.82 per month	Go to Site All treatments Compare	loading Fetching your data...
Frank Accident Boost Hospital (Basic) Basic$750 excess	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 Compare	loading Fetching your data...
Basic Accident Only Hospital $750 Excess Basic$750 excess	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 Compare	loading Fetching your data...
Frank Entry Hospital (Basic+) Basic Plus$750 excess	Rehabilitation Joint reconstructions Dental surgery Hernia and appendix Eye excluding cataracts Pain management Gynaecology Lung and chest +1 other treatments covered	$82.48 per month	Go to Site All treatments Compare	loading Fetching your data...
Basic Accident Only Hospital $500 Excess Basic$500 excess	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 Compare	loading Fetching your data...
HCF Hospital Basic Plus $500 Excess Basic Plus$500 excess	Rehabilitation Joint reconstructions Dental surgery Hernia and appendix Eye excluding cataracts Pain management Gynaecology Lung and chest +4 other treatments covered	$83.60 per month	Go to Site All treatments Compare	loading Fetching your data...
GMHBA Accident Only Hospital (Basic) Basic$750 excess	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 Compare	loading Fetching your data...
Basic Plus Starter Hospital $750 Excess Basic Plus$750 excess	Rehabilitation Joint reconstructions Dental surgery Hernia and appendix Eye excluding cataracts Pain management Gynaecology Lung and chest +3 other treatments covered	$84.51 per month	Go to Site All treatments Compare	loading Fetching your data...
GMHBA Basic Plus Starter Hospital Basic Plus$750 excess	Rehabilitation Joint reconstructions Dental surgery Hernia and appendix Eye excluding cataracts Pain management Gynaecology Lung and chest +1 other treatments covered	$85.23 per month	Go to Site All treatments Compare	loading Fetching your data...
starter basic Basic$500 excess	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 Compare	loading Fetching your data...
essentials basic plus Basic Plus$750 excess	Rehabilitation Joint reconstructions Dental surgery Hernia and appendix Eye excluding cataracts Pain management Gynaecology Lung and chest +2 other treatments covered	$87.04 per month	Go to Site All treatments Compare	loading Fetching your data...
Basic Essential Hospital Plus $750 Excess Basic Plus$750 excess	Rehabilitation Joint reconstructions Dental surgery Hernia and appendix Eye excluding cataracts Pain management Gynaecology Lung and chest +3 other treatments covered	$88.30 per month	Go to Site All treatments Compare	loading Fetching your data...
Qantas Basic Hospital $750 Excess Basic Plus$750 excess	Rehabilitation Joint reconstructions Dental surgery Hernia and appendix Eye excluding cataracts Pain management Gynaecology Lung and chest +3 other treatments covered	$89.42 per month	Go to Site All treatments Compare	loading Fetching your data...

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

Singles
Families

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.

Private health insurance tax guide

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

Key takeaways

Private Health insurance and tax – at a glance

Save up to 1.5% in tax

Stop your premium rising by 2%

Get a tax rebate of up to 32.8%

Compare health cover to avoid extra levies and taxes