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What you need to know: Tax rebates on health insurance and how to claim
Looking for an easy way to pay less tax? Consider taking out health insurance! Depending on how much you earn, a percentage of your premiums could be tax deductible – and it’s usually easy to claim.
A disclaimer before we go any further. Here at iSelect, we’re not accountants. Or tax advisors. Or any other type of bean counter. So, please remember that this information is general only. Have a chat to your accountant or tax adviser to work out what’s right for you at tax time.
Tax rebate on health insurance
The tax deduction comes in the form of the Australian Government Private Health Insurance Rebate. This rebate aims to make private health insurance more affordable and accessible to more Australians. Except for high income earners, most Australians are eligible to receive this rebate to help pay for the cost of private health insurance.
Basically, you can claim the rebate as a reduction on your tax return OR through a reduced premium with your insurer. Either your accountant or your insurer will use the table below to calculate how much you can save.
Source: PrivateHealth.gov.au
How to claim the rebate at tax time
Every year, at tax time, your health insurer sends you a form called the ‘Private Health Insurance Statement’. Some health funds also make these forms available in the member section of their website. If you haven’t been claiming your rebate as a reduced premium throughout the year, then you can use this form to claim the rebate at tax time.
On the form (in section G), you will be able to see how much you can claim as a tax deduction. Then, you have to complete the form and submit it with your tax return.
How to claim the rebate as a reduced premium
If you want to claim your rebate as a reduced premium (which means you will pay less to your health fund throughout the year), then you need to fill out a Government Rebate Form and give it to your health fund.
This form is very straightforward. If you have any questions about how to complete it, you should speak to your accountant or tax advisor.
High earner and want to avoid paying extra tax?
The flip-side of a tax deduction is a tax surcharge. And, just like there are ways to reduce your tax by taking out health insurance, there are ways you can pay extra tax by not having health insurance.
The Medicare Levy Surcharge (MLS) is a levy that Australians have to pay if they:
- Earn over a certain amount each year, and
- Don’t have private hospital cover
If you earn enough to be affected by MLS then to avoid paying this levy at tax time, you should make sure you have the right level of hospital cover. Learn more about the MLS.
The information in this article is intended for general information only. We recommend that you obtain advice from an independent taxation advisor regarding your own individual situation. iSelect does not compare all products in the market. Not all products are available at all times.