Australia Private Health Insurance Rebate Guide
the Australian private health insurance rebate. The guide covers: the rebate percentage (the "government contribution") — the private health insurance rebate is the contribution from the Australian Government towards the cost of the private health insurance premium; the rebate percentage depends on the "income tier" (the "income for the rebate purposes") and the "age of the oldest person covered by the policy" (the "under 65", the "65 to 69", the "70 and over"); the rebate is calculated on the "premium amount" and is adjusted on the 1 April each year (the "indexation" in line with the "premium adjustment"); the income tiers and the rebate rates (the "2024-25 rates") — (a) the "Tier 1" (the single income up to $93,000, the family income up to $186,000) — the rebate of 24.608% for the under 65, 28.710% for the 65-69, 32.812% for the 70+; (b) the "Tier 2" (the single income $93,001-$108,000, the family income $186,001-$216,000) — the rebate of 16.405% for the under 65, 20.507% for the 65-69, 24.608% for the 70+; (c) the "Tier 3" (the single income $108,001-$144,000, the family income $216,001-$288,000) — the rebate of 8.202% for the under 65, 12.304% for the 65-69, 16.405% for the 70+; (d) the "Tier 4" (the single income $144,001+, the family income $288,001+) — no rebate applies; the claiming the rebate (the "premium reduction method vs the tax offset method") — the taxpayer can claim the rebate through: (a) the "premium reduction method" (the "default method") — the insurer reduces the premium by the rebate amount at the time of the payment; the taxpayer pays the net premium (the "gross premium minus the rebate"), (b) the "tax offset method" — the taxpayer pays the full premium to the insurer and claims the rebate as the "tax offset" in the annual tax return (the "private health insurance rebate offset" at the "Item T3" in the "Tax Return for Individuals").
Income for Rebate Purposes
- Components of the income test: The "income for the rebate purposes" includes the "taxable income", the "reportable fringe benefits amounts", the "total net investment losses" (the "net rental losses" and the "net financial investment losses") and the "reportable superannuation contributions". The income test determines the tier for the rebate entitlement.
- Family income calculation: For the family policy, the "family income" is the combined income for the rebate purposes of both the spouses (the "husband and the wife or the de facto partners"). The income of the dependent children is not included. The family income threshold is increased by $1,500 for each dependent child after the first child.
- Medicare levy surcharge interaction: The taxpayer who does not hold the appropriate level of the private hospital cover and earns above the MLS threshold pays the MLS. The taxpayer who holds the cover can claim the rebate and avoid the MLS. The net benefit of the private health insurance depends on the income tier — the higher-income earners receive the lower rebate or no rebate.
For the Medicare levy and the MLS rates and the thresholds, see our Medicare Levy Guide →.
Lifetime Health Cover Loading
- The loading rule: The "Lifetime Health Cover (LHC) loading" is the additional 2% loading on the premium for each year the individual is aged over 30 and does not hold the appropriate "hospital cover". The maximum loading is 70% (the 35 years of the no-cover after the age of 30). The loading applies for the 10 continuous years of the cover before the loading is removed.
- Exemptions from the loading: The LHC loading does not apply to the individuals who are: (a) the "Australian resident" moving from the "overseas" (the loading exemption for the 12 months from the date of the arrival), (b) the "New Zealand citizen" who has recently arrived in Australia, (c) the "temporary visa holder" who becomes the Australian resident. The loading exemption certificate must be provided to the insurer.
- Rebate on the LHC loading: The private health insurance rebate does not apply to the LHC loading amount. The rebate is calculated only on the "base premium" (the "premium without the loading"). The taxpayer pays the full loading out of pocket.
For the health insurance and the medical expenses tax treatment, see our Health & Medical Expenses Guide →.