In order to encourage Australians to take out private health insurance, most people receive a rebate on their premiums from the government. This increases the affordability of private health insurance for all but the highest earners. Different levels of rebate are available depending on your taxable income. Broadly, the more you earn, the lower the rebate. The rebate cuts out altogether if your income exceeds $140,000 (singles) or $280,000 (families).

What are the rebate rates?

The rebate applies to hospital, general treatment and ambulance policies and from 1 April 2016 to 31 March 2017, rebate rates are:

Single

Families

$90,000 or less

$180,000 or less

$90,001 - $105,000

$180,001 - $210,000

$105,001 - $140,000

$210,000 - $280,000

$140,001 or more

$280,001 or more

 

Base Tier

Tier 1

Tier2

Tier 3

< age 65

26.791%

17.861%

8.930%

0%

Age 65-69

31.256%

22.326%

13.395%

0%

Age 70+

35.722%

26.791%

17.861%

0%

Single parents and couples (including de facto couples) are subject to family tiers. For families with children, the thresholds are increased by $1,500 for each child after the first.

The rebate does not cover the Lifetime Health Cover loading element of your premiums.

Claiming the rebate

If you are eligible for the rebate, there are two ways you can claim:

  • through a reduced premium; or
  • through your tax return at the end of the financial year.

If you choose to receive your rebate through your insurer, you will be asked to nominate the tier you expect to fall into based on your estimated income. 

If you get it wrong and nominate a tier that results in a lower rebate than you are entitled to, you will receive a tax offset through your tax return at the end of the financial year, which might result in a bigger tax refund.

If you get it wrong and nominate a tier that gives you a higher rebate than you are entitled to, you will incur a tax liability when you lodge your tax return at the end of the financial year. This means you could end up owing tax to the ATO or receive a smaller refund than you might have expected.

Your private health insurer will give you a statement by 15 July after the end of the financial year outlining your premiums and rebate. You can use this information to help you complete the relevant parts of your tax return.

August 2016

 

Book a tax return appointment

With over 440 offices staffed by over 2000 experienced tax accounting professionals, our tax accountants have the knowledge to walk you through the tax refund process with ease. We are committed to offering expert and personal service year-round at a location convenient to you. Find an office and book an appointment online.

Book now

Book a tax return appointment

With over 440 offices staffed by over 2000 experienced tax accounting professionals, our tax accountants have the knowledge to walk you through the tax refund process with ease. We are committed to offering expert and personal service year-round at a location convenient to you. Find an office and book an appointment online.

Book now