Understanding private health insurance rebates

Understanding private health insurance rebates
About this post

Private health insurance rebates were introduced to relieve Australians from the full cost of their premiums by covering part of the premium costs.

On April 1 2014 the rebate contributions from the Australian government increased on a weighted average ratio – which factors in the Consumer Price Index and the industry weighted average premium increase.

Currently, 96.8 percent of the health insurance premiums paid will attract a rebate – this excludes Lifetime Health Cover Loadings. Any payments made on or after April 1 will benefit from these increases.

So what do the health insurance premium changes look like for you?


Rebates are income tested and apply to general treatment, hospitals and ambulance insurance policies.

The rebate categories are spilt into singles and families and then work to a tier threshold. If you are a single parent or a couple, including de facto relationships, you are subject to family tiers. For families with children, the thresholds are increased by $1,500 for each child, after the first child.

For singles earning less than $90,000 per year and families earning less than $180,000 per year – there is no tier, so they receive the standard rebate. As the household income increases so do the tier levels but the rebates decline. There are three tier levels in total.

The rebate thresholds are indexed annually, so visit The Australian Government Department of Health website for the latest up-to-date information.  

Claiming a rebate

There are two ways of claiming a rebate if you meet the eligibility requirements;

A reduced premium – this will lower your insurance policy price, or
Claiming it through your tax return with the Australian Taxation Office


If you claim your rebate through your private health insurer the rebate will be passed on as a reduced premium that you pay on your insurance policy. For tax purposes you will need to nominate your correct tier when claiming a rebate through your insurer or by filling out a Medicare rebate claim form.

Tax refund

If you are eligible for a rebate and you have not claimed it through your insurer as an insurance premium policy cost reduction, you can claim the rebate as a refundable tax offset when you lodge your tax return.

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