Private Health Insurance Australian Government Rebate

Don't understand the private health insurance rebate and what the applied Government Rebate means? We're here to help!

Australian Government Rebate

The Australian Government Rebate was introduced as an incentive to encourage more Australians to take out private health insurance. It's designed to help Australians meet their private health insurance costs by providing a discount.

It makes private health insurance more affordable and accessible.

What is (means testing) income testing?

It's a process where a person's eligibility for a particular government benefit is determined by their level of income. For the Private Health Insurance Rebate, it means that if your income level is within one of the three defined tiers, the amount of rebate you receive may be reduced (or removed completely).

What are the income thresholds for the Government Rebate?

The income thresholds for 2014-2015 are:

Australian Government Rebate
Income
FULL REBATE TIER 1 TIER 2 TIER 3
Singles Less than $90,000 $90,001-$105,000 $105,001-$140,000 $140,001+
Couples/ Families Less than $180,000 $180,001-$210,000 $210,001-$280,000 $280,001+

What are the Government Rebate percentages?

The table below shows the Government Rebates effective from 1st April 2014.

Australian Government Rebate
FULL REBATE TIER 1 TIER 2 TIER 3
Under 65 29.04% 19.36% 9.68% 0%
65-69 33.88% 24.20% 14.52% 0%
70+ 38.72% 29.04% 19.36% 0%

The threshold increases by $1,500 for each dependant child after the first child. Single parents and couples with dependant children are also subject to the family thresholds.

I have dependant children. Are the income tiers different for families with children?

Yes. For families with children the thresholds are increased by $1,500 for each dependant child after the first child. Single parents and couples with dependant children are also subject to the family thresholds.

What's the definition of a dependant child?

The rules regarding dependant children are complicated but in summary:

  • For calculating your government rebate entitlement a dependant child is:
    • Your child under 18; or
    • Your sibling under 25, who doesn’t have a partner and is dependant on you for financial support on any day of the year

Health funds also have different rules and classifications for a dependant child which may impact the policies available to you. It's best to speak with us about who can be listed as a dependant child on the policy you're looking at.

  • For the purposes of calculating your Medicare Levy Surcharge (MLS) a dependant child is:
    • Your child under 21; or
    • Your child who is a full-time student between 21 and 25

My rebate has been reduced (or stopped). Is there something I can do about this?

Yes, there are things you can do. And the good news is you're in the right place to act. We'll aim to find you cover better suited to your needs and budget that may help to make up some or all of your lost rebate.

Why do you need to know my level of income?

Your eligibility for and level of rebate depends on your annual income. So knowing your estimated annual income helps us provide the most accurate quote possible.

What is my applied / applicable Government Rebate?

At your request and based on your annual income, age and marital / partnership status, we will apply the relevant Government Rebate to the premiums we quote for you based on the thresholds mentioned above.

Which portion of my income will determine my rebate entitlement?

It'll be determined by your income for Medicare Levy Surcharge purposes. This includes your taxable income, fringe benefits, superannuation contributions minus any net investment losses. If you have a spouse, your combined income will be used to calculate your rebate entitlement.

Visit the Australian Taxation Office for a full overview.

I'm unsure what my annual income will be. How do I know which rebate amount to apply to my health insurance?

We simply require an estimate. The key is to select the range you think will be closest to your annual income.

What happens if I select the wrong rebate level?

The tax office will determine the rebate you’re entitled to when you lodge your tax return at the end of the year. If you claimed:

  • too high a rebate; you will have a tax liability in your tax return; or
  • too low a rebate; you will be entitled to a tax refund in your tax return

Is there any change to how I claim the rebate?

No, there have been no changes to the way you claim the rebate.

You can claim your rebate as a:

  • Reduction to your policy premium
  • Tax refund as part of your end of year tax return

I’m thinking of dropping my hospital cover. Is there a reason I should keep it?

Private hospital cover provides peace of mind in the event of a medical emergency, not to mention the freedom to select a hospital, doctor and treatment date of your choice. Holding private hospital cover may also exempt you from having to pay the Medicare Levy Surcharge (MLS).

What are the increases to the MLS?

Eligible Australians can be taxed up to 1.5% of their taxable income for not having private hospital cover. For many higher income earners, it makes better financial sense to have received the benefit of private hospital cover then pay up to 1.5% more in tax.

The MLS income thresholds for 2014 - 2015 are:

INCOME THRESHOLDS
NO MLS TIER 1 TIER 2 TIER 3
Singles Less than$90,000 $90,001-$105,000 $105,001-$140,000 $140,001+
Couples/Families Less than $180,000 $180,001-$210,000 $210,001-$280,000 $280,001+

The threshold increases by $1,500 for each dependant child after the first. Single parents and couples with dependant children are also subject to the family thresholds.

What medicare levy surcharge percentage will I be charged for the 2014 - 2015 financial year?

This table shows the MLS percentage you’ll be charged by the Government if you, your spouse or your dependant children don’t have hospital cover. The MLS will be prorated for the days you do not have hospital cover.

Medicare Levy Surcharge
NO MLS TIER 1 TIER 2 TIER 3
All ages 0% 1% 1.25% 1.5%
Singles $900-$1,050 $1,313-$1,750 $2,100+
Couples/ Families $1,800-$2,100 $2,625-$3,500 $4,200+
It’s really great to be able to find the lowest cost cover for our needs. Finding an appropriate low-cost cover for pregnancy was becoming a nightmare
Thi Huong, VIC - Family policy
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