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What is the proposed change to health insurance rebates for people over 65?

What are the private health insurance rebate tiers?

When will the proposed changes occur to the private health insurance rebate?

What might the changes to the private health insurance rebate mean for Australians over 65?

What are the pros and cons of the proposed changes to the private health insurance rebate?

Where can I find and compare health insurance?

Long story short

These changes would reduce the rebate for older Aussies

They would remove the extra age-based rebate, making the rebate income-based only.

The changes are proposed for 1 April 2027

This means they will not affect your rebate in the 2025–26 financial year or for most of the 2026–27 financial year.

The changes could mean a $252 average increase in annual premiums

However, this could be minimised by reviewing your health insurance, including adjusting cover levels and comparing policies.

What is the proposed change to health insurance rebates for people over 65?

As part of the 2026 Federal Budget, the Australian Government has proposed removing the extra private health insurance rebate for people aged 65 and older. For instance, if under the current scheme you’d be eligible for a rebate of 28.139% from 1 April 2027, the proposed changes would mean that you’d receive a rebate percentage of 24.118% instead. If you’re over 65, you can still be eligible for a health insurance rebate; the amount you’ll receive will depend on your income and the thresholds of the given year.

It’s important to keep in mind that these changes are only proposed and are not a done deal; however, they’re an important reminder that it’s always a good idea to look at how you can save on your private health insurance beyond government incentives. For instance, comparing a range of available policies could potentially help you find the cover you want at a lower price tag. iSelect can help you do that!

Current private health insurance rebate percentages

Note: These figures reflect current rebate percentages and income thresholds, based on ATO. Data retrieved June 2026.

Proposed changes to the private health insurance rebate percentages

Note: These figures reflect 1 April 2027 rebate percentages and income thresholds, based on ATO. Data retrieved June 2026.

What are the private health insurance rebate tiers?

The private health insurance rebate has four income-tested tiers: base, tier 1, tier 2 and tier 3. All tiers except tier 3 are eligible for a rebate percentage, with the base tier having the highest. The income thresholds are different depending whether you have a single or combined taxable income.

Currently, each income tier is then broken into age categories with higher rebate rates for older people, including pensioners. Aussies under 65 receive the lowest rebate, while people over 70 receive the highest rebate amount. The proposed changes would take age out of the equation, so only a person’s income is taken into account.

When will the proposed changes occur to the private health insurance rebate?

The proposed change to the private health insurance rebate is scheduled to begin from 1 April 2027, affecting roughly 3.2 million Australians. This means that the changes won’t be in effect for the 2025–26 financial year or for most of the 2026–27 financial year.

While the changes aren’t guaranteed, it could be worthwhile reviewing your health insurance and looking for a better deal. For instance, you might want to take into account a lower private health insurance rebate entitlement. This way, you could keep your cover and minimise the impact of the changes if they do go ahead.

What might the changes to the private health insurance rebate mean for Australians over 65?

The proposed changes would mean Aussies aged over 65 who claim the rebate could pay more for their health insurance. This could then lead to flow-on effects, like older Australians reducing or dropping their health cover and more demand on the public health system.

Rising premiums can sound scary, but it’s expected that older Australians will only see an average private health insurance premium increase of $252 per person annually,¹Department of Health, Disability and Ageing – Modernising the Private Health Insurance Rebate: Impact Analysis, p26 according to the Department of Health, Disability and Ageing.

Additionally, the Government reckons only around 1% (roughly 44,000)²Department of Health, Disability and Ageing – Modernising the Private Health Insurance Rebate: Impact Analysis, p34 of Australians affected will lower their level of health insurance or get rid of it entirely.³Department of Health, Disability and Ageing – Modernising the Private Health Insurance Rebate: Impact Analysis, p36 After all, older Aussies usually get more out of health insurance than they pay in premiums, making it pretty good value.

If some people do get rid of their hospital cover, it’s not expected to strain our public hospitals either. In fact, the increased demand on the public system is thought to be less than 1% of projected public hospital admissions for 2028–29,⁴Department of Health, Disability and Ageing – Modernising the Private Health Insurance Rebate: Impact Analysis, p30 according to the Department of Health, Disability and Ageing.

Helpful tip

The value of private health insurance can be about more than the money saved. For instance, going private for elective surgery tends to come with a shorter wait. This can mean you don’t have to tough out uncomfortable or painful health conditions for as long, reducing your quality of life.

Similarly, when you’re admitted as a private patient to hospital, you can choose your treating specialist. This can help you feel more comfortable about your surgery and confident in your recovery.

Andres Gutierrez

General Manager – Health

What are the pros and cons of the proposed changes to the private health insurance rebate?

Pros for these proposed changes include increasing the funds for important health care services by as much as $2,994.7 million,⁵Department of Health, Disability and Ageing – Modernising the Private Health Insurance Rebate: Impact Analysis, p13 as well as making the rebate more equitable across generations. On the other hand, cons of the proposed changes include increased premiums for older Australians, which could cause some to feel that they can’t afford their current health insurance (although only 1% are expected to change or end their cover).

Pros

• Funds for important health, disability and aged care services would increase
• Everyone in an income tier would get the same rebate percentage, making things fairer between generations

Cons

• Older Aussies could have an average $21 per month premium increase, according to the Department of Health, Disability and Ageing,⁶Department of Health, Disability and Ageing – Modernising the Private Health Insurance Rebate: Impact Analysis, p26 adding to cost-of-living worries
• Fewer private hospital admissions could mean some private hospitals shut (but this would need to be much more significant than expected).

Where can I find and compare health insurance?

While it can be tempting to get rid of your health cover if the premium increases, it’s not the only way to handle this proposed changed. Switching rather than ditching can be a savvy way to keep your cover but cut down on costs, whether that’s re-looking at exactly what you need on a policy or tweaking your excess for a lower premium. Comparing policies, like speaking with one of iSelect’s friendly and informed health insurance comparison experts on 1800 784 772, is also worth a try before deciding you’re done with health insurance.

At iSelect, we make it easy to compare a range of health insurance policies from different health insurers – and we can even take into account your likely rebate tier. All you need to do is give us a call or use our online comparison tool.