How to claim Government rebates for private health insurance

Planning to get health cover? Here’s how to claim the government rebate to make your policy more affordable.

If you’re looking to get private health insurance, no doubt you’ve heard about the health insurance rebate. The Australian Government rebate has certainly made health cover more appealing by reducing the amount you pay in premiums.

That’s because the private health rebate has been designed to encourage more Aussies to take up health insurance to reduce the pressure on the public health system.

To be eligible, all you need to do is :
  • Take out approved health cover
  • Have a Medicare card
  • Have income that falls beneath the rebate threshold

How you then claim the private health tax rebate is up to you. You can either save on your insurance premiums or submit a claim at the end of the financial year as part of your tax return.

This guide will explain in further detail about the how you can take advantage of the rebate today. We’ll cover all the information you need to know to establish whether you’re eligible for the rebate and how you can submit your claim.

If you think you’ve got a pretty good handle on the basics and see the benefit of taking out a health insurance policy, you can always skip ahead compare the options.

Our comparison tool allows you to compare a range of insurance policies in just a few minutes.

What is the private health rebate and how does it work?

The Australian Government rebate on private health insurance is an incentive for more Aussies to take up health cover. If eligible, the tax rebate helps to reduce the costs of your insurance premiums when you lodge your tax claim.

The rebate is income tested. This means your eligibility for the rebate depends on your annual income. If you have a higher income, your private health insurance rebate entitlement may be reduced, or you may not be entitled to any rebate at all.

How does the rebate work?

If you’re trying to work out whether your premiums are eligible for the Australian Government rebate, you’ll need to work out your annual taxable income. This, together with your age and the number of dependent children you have, will help to determine the percentage you’ll receive off your premiums.

The income thresholds are indexed by the Australian Government. These determine how much rebate you’ll receive off your premiums or as a tax offset. The current rebate levels applicable to 30 June 2020 can be found in the table below.

Single parents and couples (including those who are in a de facto relationship) fall under the family thresholds.

Income Threshold
Age Group
Rebate Amount
Singles - $90,000 or less
Families - $180,000 or less
65 or younger
65 to 69
70 or older
Singles - $90,001 to $105,000
Families - $180,001 to $210,000
65 or younger
65 to 69
70 or older
Singles - $105,001 to $140,000
Families - $210,001 to $280,000
65 or younger
65 to 69
70 or older

How often do the Australian Government Rebates change?

The current income threshold structure is fixed until 30 June 2021. The rebate percentages applied are adjusted annually in response to the average cost of health cover premiums and the changes to the cost of living. The above rebate levels are applicable until 30 June 2020.

Key points you need to know about the rebate thresholds

When determining if your premiums are eligible for the Australian government rebate, there are a few things to consider.

The income used to determine the rebate

When calculating your income, you’ll need to use the income for the Medicare Levy Surcharge, not just your annual taxable income. This will include your income, as well as fringe benefits, the total net investment losses incurred, reportable super contributions and any exempt foreign employment income.

If you have a spouse, your combined income will be used to calculate your tax rebate entitlement.

The number of dependent children

If you have dependent children, your rebate threshold will increase. This includes any children under 18 years old. Any child under 25 years old who doesn’t have a partner will also be deemed a dependent.

The rebate threshold will increase by $1,500 for each dependent child after your first. If you have three children for example, your income threshold will increase by $3,000.

Singles and couples fall under the family threshold

Single parents and couples, including those in de facto relationships, fall under the family threshold. The family threshold applies regardless of whether the individuals are on the same or different insurance policies. This means even if you and your partner have individual singles policies from two different funds, your income will still fall under the family rebate threshold.

Age is determined by the oldest policy member

The age of the oldest policy holder will determine your family rebate threshold. For example, if you’re 30 years old and share a policy with someone who is over 65, you’ll qualify for a greater tax rebate than if all members of the policy are under 65.

The rebate will apply on a variety of policies

You can buy any level of hospital, extras, ambulance or combined cover from a registered Australian health fund to be eligible for the tax rebate. This means you could take out a basic level of hospital cover with premiums just a little bit more or the same as the rebate.

If you’re an overseas visitor or student, you may not be eligible

Regardless of your income and family circumstance, if you hold an overseas visitor health cover or student cover, you’ll be ineligible for the rebate. If your fund’s policy has a Reciprocal Health Care Agreement with Australia, you may be eligible.

Am I eligible for the private health tax rebate?

If you are an Australian Citizen or Permanent Resident and hold a full Medicare Card, when you take out private health insurance with a registered fund, you’ll eligible for the tax rebate. The percentage of your rebate will then depend on your income, age of the policy holders and how many dependent children you have.

How do I calculate my income and rebate?

You’ll need to use your income for the Medicare Levy Surcharge to determine your tax entitlements. This can be easily calculated using the Australian Taxation Office online tools:

To use the Medicare Levy Calculator, click here.
For the Private Health Insurance Rebate Calculator, click here.

You can also contact the Australian Taxation Office (ATO) on 132 861 for further assistance.

How do I claim the Australian Government rebate?

Read through the following overview so you can easily understand how to claim your insurance tax rebate by:

  • 1. Claiming through your health fund

    One of the most popular ways to claim the rebate is through your health fund to reduce the costs of your premiums.

    To do this, when you purchase your health cover, select the appropriate income and age group tier. Your rebate then will be automatically applied against your premiums.

    If you have an existing private health insurance policy and want to reduce your premiums using the rebate, you can contact your health fund to authorise them to do so or submit a Medicare rebate claim form.

  • 2. Claiming with your tax return

    Some people choose to claim their rebate entitlement at the end of the financial year to be used as a tax offset. If you choose this method, you’ll claim through your tax return instead of paying reduced premiums.

    By claiming at the end of the year, you won’t be required to nominate an income tier with your health fund.

Completing your policy details on your tax return

Completing your tax return with your private health insurance details is relatively straightforward. All you need is your policy statement provided to you by your health fund at the end of the financial year. Simply write the amount found on the statement and copy it onto your tax return in the Your Australian Government rebate field.

If you complete the details of your private health insurance correctly on your tax return, you’ll prevent any delays in the processing of your rebate and ensure you receive the correct payment.

What if my income tier changes?

If you’ve incorrectly calculated your income or it changes, this could affect you financially at the end of the year. You won’t receive a lot for choosing the wrong tier, but you may have to pay the difference at the end of the financial year.

  • 1. If you claim too high

    If you’ve claimed in a higher income tier, but earned less than you originally anticipated, this rebate debt will be reflected in your tax return. This means, you may end up paying a higher bill come tax time.

  • 2. If you claim too low

    If you have claimed in the lower tier, but come tax time you have been entitled to claim in a higher tier, the gap will be reimbursed to you as an offset. While it might be nice to receive a bonus at the end of the financial year, you could have been using that money to lower your premiums.

What’s next with your health insurance rebate?

If you want to take advantage of the Australian Government health insurance rebate, establishing your income tier and finding the best cover for your health needs is the first step.

With our online comparison tool you can compare a range of hospital, extras, ambulance or combined cover from health insurance providers.

During the process of selecting your chosen health cover, decide on how you want to claim your rebate. Would you prefer to pay reduce premiums or include it as a tax office in your end of financial year return?

Claiming your health insurance rebate couldn’t be any easier!

If you have any questions or queries with your health cover or how the rebate works, we have friendly staff who are all health insurance experts. You can call one of our team on 1300 806 119