A Guide To Private Health Insurance Rebates
Key Points
You might be eligible for the private health insurance rebate. This is a private health insurance entitlement that could put money back into your pocket.
You could get up to 32%* of the private health insurance premium you pay refunded to you.
The rebate can be paid as an upfront reduction to your premium payments, or as a refundable tax offset on your tax return.
If you see the phrase “excess private health insurance premium reduction or refund” on your tax return, you might owe money.
Want to reduce the private health insurance premium you pay?
You might be eligible for the private health insurance rebate. This is a private health insurance entitlement that could put money back into your pocket.
You could get up to 32% of the private health insurance premium you pay refunded to you.
The rebate can be paid as an upfront reduction to your premium payments, or as a refundable tax offset on your tax return. If you see the phrase “excess private health insurance premium reduction or refund” on your tax return, you might owe money.
How does private health insurance affect my tax bill?
To help ease the burden on our public healthcare system, the Australian Government has several initiatives in place to encourage people to get private health cover. The three main ones are:
The private health insurance rebate.
Each of these can affect your tax bill and insurance premiums in different ways. The result is that you can end up getting a bigger tax refund by having health cover, paying more tax if you don’t, or paying higher insurance premiums the longer you wait to get health cover.
What is the private health insurance rebate?
The private health insurance rebate is a partial refund or rebate the government provides on health insurance premiums. It’s age and income-tested, which means the percentage you can get back (i.e. your rebate entitlement) depends on your age and how much you earn.
If you’re eligible, you can get a partial refund on eligible hospital cover, extras cover, or both.
Private health insurance rebate: Eligibility
So, are you eligible to receive a private health insurance premium reduction or refund?
It all depends on how much you earn.
To receive the private health insurance rebate for the 2024/25 financial year, you need a taxable income of less than $151,000 for singles, or $302,000 for families.
But not everyone receives the same refund amount. The private health insurance rebate is structured into income tiers that determine the percentage of the rebate you can claim.
| Base tier | Tier 1 | Tier 2 | Tier 3 |
|---|---|---|---|---|
Singles | $97,000 or less | $97,001 – $113,000 | $113,001 – $151,000 | $151,001 or more |
Families | $194,000 or less | $194,001 – $226,000 | $226,001 – $302,000 | $302,001 or more |
You also need to be an Australian citizen or permanent resident with a Medicare card, and have an eligible private health insurance policy with an Australian-registered health insurer.
Private health insurance rebate: Benefits
If you’re eligible to receive the private health insurance rebate/benefits, the refund you receive is based on your income tier and the oldest person covered by your policy.
Here’s a breakdown of how much of you can expect to get back for the 2024/25 financial year:
| Oldest person on policy is under 65 | Oldest person on policy is under 65 to 69 | Oldest person on policy is 70 or older |
|---|---|---|---|
Base tier | 24.608% | 28.710% | 32.812% |
Tier 1 | 16.405% | 20.507% | 24.608% |
Tier 2 | 8.202% | 12.303% | 16.405% |
Tier 3 | Not eligible | Not eligible | Not eligible |
How do I claim the private health insurance rebate?
There are two ways to claim the rebate:
Have it paid directly through your health fund, meaning you get an upfront reduction to your premium payments, or
Have it paid as a refundable tax offset on your tax return
If you want to claim the rebate as a reduction to your premiums, you’ll need to give your health fund your estimated income so they can calculate the premium reduction for you (you will need to fill out a Medicare Rebate claim form).
Otherwise, you can claim the rebate as a refund from the Australian Taxation Office (ATO) when you lodge your tax return.
COMPARE & SAVEPrivate health insurance rebate: Understanding excess
Here’s where the rebate gets a little more complicated. You might see the phrase “excess private health insurance premium reduction or refund” on your tax return.
It can happen if your rebate is paid directly to your health fund, and your actual income is higher than the estimated income your health fund used to calculate your premium reduction. This might mean you’ve received a higher rebate than you’re entitled to, and may owe some money at tax time. But the reverse is also true. If you earned less than expected, you may be refunded the difference through your tax return.
Frequently Asked Questions
What is excess private health insurance premium reduction refund?
At the end of the financial year, the ATO compares your actual income with the estimated income used to determine your rebate. If you've received too much rebate (over-claimed), you need to pay back the difference. But if you've under-claimed, you might get a refund. This is known as an excess private health insurance premium reduction or refund.
What is excess private health insurance entitlement?
An excess private health insurance entitlement is just another name for an excess private health insurance premium reduction refund. It refers to a situation where an individual has received more in private health insurance rebates than they are entitled to based on their actual income.
What is excess private health reduction or refund (rebate reduced)?
Excess private health reduction or refund (rebate reduced) refers to the process of correcting the overpayment of the private health insurance rebate that an individual has received due to an overestimation of their entitlement based on their actual income.
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Sources
*Income thresholds and rates for the private health insurance rebate (ATO) **Australian Government Private Health Insurance Rebate ^ Parliament of Australia, Sustainable funding of health care: Challenges ahead.
Things You Should Know
*As our customer you'll be provided with quotes directly from the insurer for the product you intend to purchase. We manage the application and deal with the administration work and insurer. We do not charge you a fee for the service we provide, the insurer simply remunerates us in return for setting up your policy. The financial and insurance products compared on this website do not necessarily compare all features that may be relevant to you. Comparisons are made on the basis of price only and different products may have different features and different levels of coverage. Compare Club does not compare all policies available in Australia and our partner insurers may not make all policies available to Compare Club.
This guide is opinion only and should not be taken as medical or financial advice. Check with a financial/medical professional before making any decisions.
Chris Stanley is the sales & operations manager of health insurance at Compare Club. With extensive experience and expertise, Chris is a trusted leader known for his deep understanding of health insurance markets, policies, and coverage options. As the sales & operations manager of health insurance, Chris leads a team of dedicated professionals committed to helping individuals and families make informed decisions about their health insurance needs.
Meet our health insurance expert, Chris Stanley
Chris's top health insurance tips
- 1
Australia’s public health system is world-class, but wait times for public hospitals can be long, inconvenient - and leave you living in constant pain while you wait.
- 2
An appropriate private health insurance policy can speed up your surgery, relieving your pain sooner.
- 3
Family health cover means your children are covered under the same policy as you.
- 4
Many health insurance policies come with a 12-month waiting period for pregnancy-related cover, so it’s a good idea to get a family policy organized well before starting your family. This means your child will be covered from birth until at least their early twenties (depending on which health fund you select).
