The Australian Government Rebate is a government initiative that reduces the cost of private health insurance.
The rebate is income tested and can be claimed on hospital and extras cover policies. Depending on your income and age, it reduces the amount you pay in premiums throughout the year.
This article explains how the rebate works, who can receive it, how it is calculated and how it can affect the cost of your private health insurance.
The Australian Government has announced proposed changes to the Private Health Insurance Rebate for Australians aged 65 and over. Read more about the proposed rebate changes for over 65s.
Key Points
- The Australian Government Rebate reduces the cost of private health insurance premiums.
- The rebate is income tested and the percentage you receive depends on your income and age.
- The rebate can be claimed on hospital and extras cover policies.
- Most people claim the rebate as a reduction on their premiums throughout the year, but some choose to claim it at tax time.
What is the Australian Government Rebate?
The Australian Government Rebate is a financial incentive designed to help reduce the cost of private health insurance.
The rebate is funded by the Australian Government and can be claimed on hospital and extras cover policies.
The amount a person receives depends on factors such as their income and age.
Most people choose to receive the rebate as a reduction on their premiums throughout the year, while others choose to claim it when lodging their tax return.
Who can receive the rebate?
The rebate is available to Australians who hold private health insurance with hospital cover, extras cover or a combined hospital and extras policy.
Higher income earners receive a lower rebate, and some may not receive a rebate at all.
The Australian Government adjusts rebate percentages when private health insurance premiums change each year on 1 April.
Income thresholds used to calculate the rebate are reviewed at the start of each financial year.
How does the rebate percentage work?
The rebate percentage a person receives depends on their income tier and age.
Higher income earners receive a lower rebate percentage, while older Australians receive a higher rebate percentage.
| Rebate Tier | Singles Income | Families Income | < 65yo | 65-69yo | >= 70yo |
|---|---|---|---|---|---|
| Base Tier | Up to $101,000 | Up to $202,000 | 24.118% | 28.139% | 32.158% |
| Tier 1 | $101,001 – $118,000 | $202,001 – $236,000 | 16.079% | 20.098% | 24.118% |
| Tier 2 | $118,001 – $158,000 | $236,001 – $316,000 | 8.038% | 12.058% | 16.079% |
| Tier 3 | $158,001+ | $316,001+ | 0% | 0% | 0% |
How can the rebate be claimed?
Most people choose to claim the rebate as a reduction on their private health insurance premiums throughout the year.
This lowers the amount they pay directly to their health fund.
Others choose not to claim the rebate upfront and instead receive it when lodging their annual tax return.
The rebate percentage selected with your health fund should reflect your expected income tier for the financial year.
What happens if your income changes?
The rebate is income tested, so changes to your income can affect the rebate percentage you are entitled to receive.
If you claim a higher rebate than you were entitled to during the financial year, you may need to repay some of the rebate at tax time.
If you claim a lower rebate than you were entitled to, you may receive the difference back after lodging your tax return.
It’s important to keep your rebate tier up to date with your health fund if your circumstances or income change.
If you’re unsure which rebate tier applies to you, it’s worth speaking with your accountant or tax adviser.
