Private Health Insurance Australian Government Rebate

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The Australian Government Private Health Insurance Rebate (Health Insurance 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 helps 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 taxable income. For the Private Health Insurance Rebate, it means that if your taxable 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 rebate levels applicable from 1 April 2022 to 31 March 2023:

 Base TierTier 1Tier 2Tier 3
< age 6524.608%16.405%8.202%0.0%
Age 65-6928.710%20.507%12.303%0.0%
Age 70+32.812%24.608%16.405%0.0%
Source: Australian Government Private Health Website.1 The rebate levels applicable from 1 April 2022 to 31 March 2023.
The income thresholds are indexed and will remain the same to 30 June 2023.

The rebate levels applicable from 1 April 2019 to 31 March 2021.

 Base TierTier 1Tier 2Tier 3
< age 6525.059%16.706%8.352%0.0%
Age 65-6929.236%20.883%12.529%0.0%
Age 70+33.413%25.059%16.706%0.0%
Source: Australian Government Private Health Website.2 The rebate levels applicable from 1 April 2019 to 31 March 2021.

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.

Why do you need to know my level of income?

Your eligibility for and level of rebate depends on your annual taxable income. So knowing your estimated annual income tier helps us provide a more accurate quote including your estimated rebate.

What is my applied / applicable Health Insurance 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.

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 based on 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 recent 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 can provide peace of mind in the event of a medical situation, 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) depending on your income.

What are the MLS tier limits?

Eligible Australians can be taxed up to 1.5% of their taxable income for not having private hospital cover. For some higher income earners, purchasing suitable private hospital cover, and therefore avoiding having to pay the MLS, could result in financial savings.

The MLS income thresholds for 2022 – 2023 are:

SinglesLess than$90,000$90,001
Couples/FamiliesLess than $180,000$180,001
Source: Australian Government Private Health Website.3

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 could I be charged for the 2022 – 2023 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
All ages0%1%1.25%1.5%
Couples/ Families$1,800-$2,100$2,625-$3,500$4,200+

Dollar amounts are provided as an estimate only and should not be relied upon as tax advice.

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