There are 3 ways you can pay less tax with private health insurance.
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Step 1/2 - About your cover
Which state do you live in?
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What's your age?
Depending on your age, you may be eligible for an
aged-based discount. This is used to estimate your
rebate.
Under 65
65 - 69
70 or older
What's your household's taxable income?
This is the combined income you and your spouse earn before tax. It's needed to calculate the correct Australian government rebate.
$93,000 and under
$93,001 to $108,000
$108,001 to $144,000
$144,001 and over
What kind of health insurance do you need?
Combined (Extras + Hospitals)
Extras
Hospital
What level of hospital coverage would you like?
You can change this at any time later.
Legend
Covered
Restricted cover, You may be partially covered for
this category.
Not covered. Optional for insurer to include.
*Prices updated December 2024, in line with Finder's database of health insurance policies. Prices reflect the cheapest available for a single individual with less than $97,000 income and living in Sydney with a $750 excess.
What extras cover do you need? (Optional)
Select as many as you want or move to the next step
Preventative & general dental
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Physiotherapy
Podiatry
Non-PBS pharmaceuticals
Chiropractic
Emergency ambulance
Remedial massage
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Here are the 3 main ways to use health insurance to save on your tax in Australia.
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).
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)
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.
Depending on your age, you may be eligible for an
aged-based discount. This is used to estimate your
rebate.
Under 65
65 - 69
70 or older
What's your household's taxable income?
This is the combined income you and your spouse earn before tax. It's needed to calculate the correct Australian government rebate.
$93,000 and under
$93,001 to $108,000
$108,001 to $144,000
$144,001 and over
What kind of health insurance do you need?
Combined (Extras + Hospitals)
Extras
Hospital
What level of hospital coverage would you like?
You can change this at any time later.
Legend
Covered
Restricted cover, You may be partially covered for
this category.
Not covered. Optional for insurer to include.
*Prices updated March 2024, in line with Finder's
database of health insurance policies. Prices are based
on a single individual with less than $93,000 income and
living in Sydney with a $750 excess.
What extras cover do you need? (Optional)
Select as many as you want or move to the next step
Preventative & general dental
Major dental & implants
Optical
Physiotherapy
Podiatry
Non-PBS pharmaceuticals
Chiropractic
Emergency ambulance
Remedial massage
Email me my results (optional)
To get a copy of your results for later, add your email below
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.
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%.
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
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:
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.
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.
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.
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.
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.
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
Gary Ross's expertise
Gary Ross has written 644 Finder guides across topics including:
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
James's expertise
James has written 204 Finder guides across topics including:
Are you over 31 years of age and don’t have private hospital cover? Then read this guide, because it could save you a LOT of money in the future.
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Depending on your age, you may be eligible for an
aged-based discount. This is used to estimate your
rebate.
Under 65
65 - 69
70 or older
What's your household's taxable income?
This is the combined income you and your spouse earn before tax. It's needed to calculate the correct Australian government rebate.
$93,000 and under
$93,001 to $108,000
$108,001 to $144,000
$144,001 and over
What kind of health insurance do you need?
Combined (Extras + Hospitals)
Extras
Hospital
What level of hospital coverage would you like?
You can change this at any time later.
Legend
Covered
Restricted cover, You may be partially covered for
this category.
Not covered. Optional for insurer to include.
*Prices updated March 2024, in line with Finder's
database of health insurance policies. Prices are based
on a single individual with less than $93,000 income and
living in Sydney with a $750 excess.
What extras cover do you need? (Optional)
Select as many as you want or move to the next step
Preventative & general dental
Major dental & implants
Optical
Physiotherapy
Podiatry
Non-PBS pharmaceuticals
Chiropractic
Emergency ambulance
Remedial massage
Email me my results (optional)
To get a copy of your results for later, add your email below
