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Health Insurance Rebate

Private Health Insurance Rebate

Prior to 1st July 2012 all permanent Australian residents received the Federal Government 30% Rebate on private health insurance premiums. Higher rebates applied to people over the age of 65. This was designed to make private health insurance affordable for all Australians.

From 1st July 2012 the Federal Government changed the laws to impose an eligibility test to qualify for a rebate based upon an individuals or family’s level of income called a means test. The eligibility for a rebate (if any) will be determined by policyholder’s income and age. Only individuals and families whose income exceeds the threshold set by the Government will be affected.

Further changes took effect from 1 April 2014 as to how the rebate is calculated. Rebate contributions now increase based on a weighted average ratio taking into account growth in the Consumer Price Index and the average premium increase for the health insurance industry.  This means the value of an individual’s rebate may reduce over time. If you would like to know more visit www.health.gov.au/privatehealth.

The Federal Government also introduced changes to the Medicare Levy Surcharge. This means that greater tax penalties may apply to those who do not have cover or drop their private hospital cover.

Private Health Insurance Rebate and Medicare Levy Surcharge effective 1 April 2014

 

Rebate Tier

Income

Private health insurance rebate

Medicare Levy Surcharge


Thresholds from 1 July 2014

Below 65 years

65 to 69 years

70 years or over


No tier

Singles - $0 - $90,000

29.040%

33.880%

38.720%

nil


Families - $0 - $180,000



Tier 1

Singles - $90,001 - $105,000

19.360%

24.200%

29.040%

1%


Families - $180,001 - $210,000



Tier 2

Singles - $105,001 - $140,000

9.680%

14.520%

19.360%

1.25%


Families - $210,000 - $280,000



Tier 3

Singles - $140,001 +

0%

0%

0%

1.50%


Families - $280,001 +



The incentive tier thresholds will be indexed annually to the Average Weekly Ordinary Time Earnings (AWOTE). The family income threshold increases by $1,500 for each dependent child after the first.

Private Health Insurance Rebate and Medicare Levy Surcharge thresholds for the 2014 - 15 financial year

 

Rebate Tier

Income

Private health insurance rebate

Medicare Levy Surcharge


Thresholds from 1 July 2014

Below 65 years

65 to 69 years

70 years or over


No tier

Singles - $0 - $90,000

29.040%

33.880%

38.720%

nil


Families - $0 - $180,000



Tier 1

Singles - $90,001 - $105,000

19.360%

24.200%

29.040%

1%


Families - $180,001 - $210,000



Tier 2

Singles - $105,001 - $140,000

9.680%

14.520%

19.360%

1.25%


Families - $210,001 - $280,000



Tier 3

Singles - $140,001 +

0%

0%

0%

1.50%


Families - $280,001 +



The incentive tier thresholds will be indexed annually to the Average Weekly Ordinary Time Earnings (AWOTE). The family income threshold increases by $1,500 for each dependent child after the first.

Private Health Insurance Rebate and Medicare Levy Surcharge thresholds for the 2013 financial year

Rebate Tier

Income

Private health insurance rebate

Medicare Levy Surcharge


Thresholds from 1 July 2012

Below 65 years

65 to 69 years

70 years or over


No tier

Singles - $0 - $84,000

30%

35%

40%

nil


Families - $0 - $168,000



Tier 1

Singles - $84,001 - $97,000

20%

25%

30%

1%


Families - $168,001 - $194,000



Tier 2

Singles - $97,001 - $130,000

10%

15%

20%

1.25%


Families - $194,000 - $260,000



Tier 3

Singles - $130,001 +

0%

0%

0%

1.50%


Families - $260,001 +



The incentive tier thresholds will be indexed annually to the Average Weekly Ordinary Time Earnings (AWOTE). The family income threshold increases by $1,500 for each dependent child after the first.

How to calculate income for the purposes of determining a rebate tier

The rebate income test uses the same principle as when calculating income for MLS purposes. Income for surcharge purposes includes:
•    Taxable income (including the net amount on which family trust distribution tax has been paid)
•    Exempt foreign employment income (if your taxable income is $1 or more)
•    Reportable fringe benefits amount, as reported on the payment summary
•    Total net investment loss (includes both net financial investment loss and net rental property loss)
•     Reportable super contributions (includes both reportable employer super contributions and deductible personal super contributions)
•     Less -if aged 55-59 years old, any taxed element of a super lump sum (other than a death benefit) received that does not exceed your low  rate cap.

For more information, see income test information and calculators on the Australian Tax Office (ATO) website ato.gov.au or call the ATO on 13 28 61.

 

How to determine if your rebate tier is based on a family or a single

Persons covered

Who is eligible to claim the rebate?

How much are they eligible for?

Who is income tested?

Single adult

Single adult on the policy

Whole rebate

Single adult on the policy with respect to the single tier thresholds.

Single parent family

Single parent on the policy

Whole rebate

Single parent on the policy with respect to the family tier thresholds. The thresholds increase by $1,500 for each child after the first.

Couple/family

Both adults on the policy

Each is entitled to one half of the rebate. Or one member of the couple may elect to receive the benefit on behalf of their spouse.

Both adults on the policy with respect to the family tier thresholds. The thresholds increase by $1,500 for each child after the first.

* Income of dependent children is not included for both family and single parents. Source: Fairer Private Health Insurance Incentives Bill 2011, Explanatory Memorandum.

How to claim the private health insurance Rebate

People can choose to receive the rebate in the method that suits them best. They can receive the rebate as;

  • a premium reduction through their Health Fund*, or

  • a refundable tax rebate in their annual income tax return

*It is up to the policyholder to inform their health fund of their nominated rebate tier. This can be done throughout the year or at tax time.  Where the tier on a policyholders health funds records does not accurately reflect theri rebate tier, the policyholder may be paying too much or too little of the required premium. If this occurs it will be reconciled when lodging their tax return in the form of a tax liability or a tax refund (if applicable).

The rebate is provided as a percentage of total premiums and therefore keeps pace with any future increases in individual funds or product premiums.


More information about the health insurance Rebate

How the health insurance rebate works
How to claim the health insurance rebate 
Frequently asked questions

You can discuss how this effects your cover with a HICA consultant by calling 1300 44 22 01 between 8:30am and 5:00pm EST, Monday to Friday or email us.

Further information can be found on the Department of Health and Ageing website health.gov.au as well as on the Medicare website medicareaustralia.gov.au. Details will also be available on the Australian Taxation Office website ato.gov.au, once legislation receives Royal Assent.

 

The information provided on this website does not constitute financial advice or tax advice.  If you require financial or tax advice about your specific situation, you should contact your financial advisor or a tax expert.