Private Health Insurance Rebate

Contents

  • Eligibility for the private health insurance rebate
  • PHI income thresholds 
  • PHI rebate amounts
  • How to claim the rebate
  • Income testing for adults covered by the policy
  • Scenarios affecting income tests for the private health insurance rebate

Eligibility for the private health insurance rebate

To qualify for the private health insurance rebate, you must have private health insurance, (PHI). The rebate, also referred to as the private health insurance tax offset, is an amount contributed by the government towards your private health insurance. 

Your entitlement to the private health insurance rebate depends on several factors. First, it considers the age of the oldest person covered by your policy. Second, it takes into account your single or family income thresholds and rates for the Medicare levy surcharge, based on your family status. If your income is higher, the amount you can receive as an rebate may be reduced or unavailable if it exceeds a certain threshold.

Health Insurance

PHI income thresholds 2024–25

Threshold Base tier Tier 1 Tier 2 Tier 3
Single threshold $97,000 or less $97,001 – $113,000 $113,001 – $151,000 $151,001 or more
Family threshold $194,000 or less $194,001 – $226,000 $226,001 – $302,000 $302,001 or more

PHI income thresholds 2023–24

Threshold Base tier Tier 1 Tier 2 Tier 3
Single threshold $93,000 or less $93,001 – $108,000 $108,001 – $144,000 $144,001 or more
Family threshold $186,000 or less $186,001 – $216,000 $216,001 – $288,000 $288,001 or more

PHI Rebate 2024–25 & 2023–24

Threshold Base tier Tier 1 Tier 2 Tier 3
Aged under 65 24.608% 16.405% 8.202% 0%
Aged 65-69 28.710% 20.507% 12.303% 0%
Aged 70 or over 32.812% 24.608% 16.405% 0%

How to claim the rebate

Claiming your private health insurance rebate can be done in two ways: as a premium reduction or as a refundable tax offset when you lodge your tax return.

  • Premium Reduction: By opting for a premium reduction, you can lower the price of your policy charged by your health insurer. However, it’s important to note that depending on various factors such as your chosen offset level and income threshold for the Medicare levy surcharge, you may be required to repay a portion of your premium reduction.
  • Refundable Offset: Alternatively, you can choose to receive the private health insurance offset as a refundable amount when you lodge your tax return. This means that you will receive the offset as a refund, providing you meet the eligibility criteria.

The method you choose to claim your offset and the level of offset you claim for your policy will determine whether you receive a private health insurance tax offset or need to repay some of your premium reduction. These factors are also influenced by your income threshold for the Medicare levy surcharge.

Insurance Health Risk Assessment Vitality Concept.

Income testing for adults covered by the policy

Each adult covered by a private health insurance policy is subject to income testing to determine their entitlement to the rebate. It is important to note the following:

Determining Entitlement: Regardless of who pays for the insurance policy, each adult is income tested to assess their eligibility for the private health insurance rebate.

Share of Insurance Cost: Income testing is conducted on each adult’s share of the cost of the insurance policy.

Scenarios affecting income tests for the private health insurance rebate

Depending on your specific circumstances, the income test for the private health insurance rebate may vary. The following scenarios outline the different outcomes:

One Adult Covered by a Policy: If you are the only adult covered by a private health insurance policy, your share of the policy for rebate purposes is determined by the total cost of the policy, excluding any lifetime health cover loading. Regardless of who pays for the policy, you will undergo income testing to determine your rebate entitlement.

Multiple Adults Covered by a Policy: In cases where the policy covers more than one adult, the premiums paid are divided equally among the adults covered by the policy at the time of payment. Each adult’s share of the policy cost is calculated based on the total cost divided by the number of adults covered. When lodging their tax returns, each adult undergoes income testing for their share of the policy cost, resulting in potential different outcomes.

Dependent Persons Covered by a Policy: Dependent persons on a private health insurance policy are not income tested, and their income does not count towards the income test for the rebate. Therefore, dependent persons are not considered to have a share of the policy cost.

Dependent Person-Only Policies: A dependent person covered by a dependent person-only policy is not entitled to a private health insurance rebate. Consequently, they are not subject to income testing.

This article is general information only and does not provide advice to address your personal circumstances. To make an informed decision you should contact an appropriately qualified professional.