Government Rebate

Australian Government Rebate on Private Health Insurance


Introduction

The Australian Government recognises that Australians with private health insurance make a substantial financial contribution not only to their own healthcare but also to Australia’s healthcare system, by taking pressure off the public system. This saw the introduction of the 30% private health insurance rebate which was introduced by the Australian Government in 1999. From 1 July 2012, the Australian Government introduced an income test system, called the `Private Health Insurance Incentives Tiers’, to determine the level of rebate available to eligible persons.

Purpose of the rebate

The Australian Government Rebate on private health insurance reduces the cost of private health insurance for people who are eligible for Medicare and who meet income threshold requirements.

By making private health insurance more affordable for many people, the Australian Government Rebate together with other government initiatives including Lifetime Health Cover and the Medicare Levy Surcharge has helped balance Australia’s public and private healthcare systems.

Helping older Australians & Residents

Since 1 April 2005, the Australian Government has further assisted the eligible older population to maintain health insurance, many who may be on a limited income. For many the rebate is increased when the oldest person on the policy reaches 65 years and again when they reach 70 years. There are also special provisions to safeguard families when the oldest person leaves the policy, so those remaining on that policy can retain the higher level rebate, subject to conditions.

How to claim Australian Government’s rebate on private health insurance

Families and individuals who pay private health insurance premiums may be eligible for the Australian Government Rebate on private health insurance. The Australian Government Rebate on private health insurance is available to people who are eligible for Medicare and earn under $272,000 for family income or $136,000 for single income for the 2013/2014 Financial Year.

There are 2 easy ways you can choose to receive the rebate;

1. A reduction to your policy premium direct from Police Health; or by

2. A refundable tax offset through your annual tax return.

If you would like to register for the rebate as reduced premiums on your policy contributions, simply fill out the Application for Australian Government Rebate on private health insurance found on the application form for Police Health. Once registered you can choose to change your selected rebate tier anytime by emailing, faxing or calling Police Health.

Application Form

Rebate Application Form

What income threshold tier should I select?

The Private Health Insurance Rebate reduces the amount you pay for private health insurance. The level of rebate you receive is based on the age of the oldest person covered by the policy and by annual earnings.

The Income Tiers for the 2014/2015 Financial Year

Rebate Tiers 1 July 2014

Income level

Base Tier (Full Rebate)

Tier 1

Tier 2

Tier 3 (No Rebate)

Singles

Families

$90,000 or less

$180,000 or less

$90,001- $105,000

$180,001- $210,000

$105,001- $140,000

$210,001- $280,000

$140,001 or more

$280,001 or more

REBATE

Under age 65

29.04%

19.36%

9.68%

0%

Age 65-69

33.88%

24.20%

14.52%

0%

Over 70 years

38.72%

29.04%

19.36%

0%

Note: The thresholds increase annually, based on growth in Average Weekly Ordinary Time Earnings (AWOTE). Single parents and couples (including de facto couples) are subject to the family tiers. For families with children, the thresholds are increased by $1,500 for each child after the first, income tiers based on the 2014/2015 Financial Year.


The Income Tiers for the 2013/2014 Financial Year

 Rebate Tiers 1 April 2014 to 30 June 2014

Income level

Base Tier (Full Rebate)

Tier 1

Tier 2

Tier 3 (No Rebate)

Singles

Families

$88,000 or less

$176,000 or less

$88,001- $102,000

$176,001- $204,000

$102,001- $136,000

$204,001- $272,000

$136,001 or more

$272,001 or more

REBATE

Under age 65

29.04%

19.36%

9.68%

0%

Age 65-69

33.88%

24.20%

14.52%

0%

Over 70 years

38.72%

29.04%

19.36%

0%

Note: The thresholds increase annually, based on growth in Average Weekly Ordinary Time Earnings (AWOTE). Single parents and couples (including de facto couples) are subject to the family tiers. For families with children, the thresholds are increased by $1,500 for each child after the first, income tiers based on the 2013/2014 Financial Year.


Rebate Tiers 1 July 2013 to 31 March 2014

Income level

Base Tier (Full Rebate)

Tier 1

Tier 2

Tier 3 (No Rebate)

Singles

Families

$88,000 or less

$176,000 or less

$88,001- $102,000

$176,001- $204,000

$102,001- $136,000

$204,001- $272,000

$136,001 or more

$272,001 or more

REBATE

Under age 65

30%

20%

10%

0%

Age 65-69

35%

25%

15%

0%

Over 70 years

40%

30%

20%

0%

Note: The thresholds increase annually, based on growth in Average Weekly Ordinary Time Earnings (AWOTE). Single parents and couples (including de facto couples) are subject to the family tiers. For families with children, the thresholds are increased by $1,500 for each child after the first, income tiers based on the 2013/2014 Financial Year.

 

Important things to know

  • The Australian Government Rebate on private health insurance is there to help you to save!

  • Entitlement to a rebate is determined using the income test for Medicare Levy Surcharge purposes. This may be of particular importance if you or your partner has: foreign employment income; reportable fringe benefits or superannuation contributions; or investment or rental property loses. A calculator to assist with calculating “income for surcharge purposes” is available on the Australian Taxation Office (ATO) website.

  • As the oldest person on the policy reaches 65 years and 70 years your rebate will increase making health insurance more affordable, unless you are in income Tier 3.

  • The Australian Taxation Office will determine the amount of private health insurance rebate you are entitled to receive when you lodge your tax return. This may result in a refund or a liability for you, so it may be helpful for you to speak to your taxation advisor or accountant before you select what rebate tier is best for you to receive as a reduced premium. Alternatively, if you do not register to receive the rebate through reduced premiums you can claim the rebate when you lodge your annual tax return.

 

  •  IMPORTANT CHANGES: If you are subject to a Lifetime Health Cover loading (LHC)

    Lifetime Health Cover (LHC) is a financial loading applied on top of your hospital premium at a rate of 2% every year you are aged over 30 when you take out hospital cover, up to a maximum of 70%. The LHC loading is removed once you have held hospital cover and paid the loading for 10 continuous years.

    If you currently pay a LHC loading, as of the 1 July 2013, the Australian Government Rebate on private health insurance will no longer apply to the LHC component of your hospital cover premiums. You will still receive the Rebate on the  standard component of your chosen cover.

    For more information about the change, please see the Department of Health & Ageing.


More information on the 1 July 2012 changes


The Australian Taxation Office

The Department of Health and Ageing 

Medicare Australia

Important Changes Brochure

Police Health cannot advise on financial or tax matters. All material regarding the Australian Government Rebate on private health insurance featured by Police Health should be used as a general guide only and should not be taken as advice and should not be relied upon in determining your personal tax or financial position. You should obtain independent advice relevant to your circumstances.