A guide to the private health insurance rebate

Depending on your age and income, you could save up to one-third of your health insurance premiums with the private health insurance rebate.

This guide covers all you need to know about the private health insurance rebate, including eligibility and how to claim your discount.

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.

Why is there an Australian Government rebate for health insurance premiums?

The rebate was introduced to encourage more people to get private health insurance. With life expectancy and risk factors for chronic diseases like diabetes increasing^, the burden on the public healthcare system in Australia is growing.

The rebate helps lessen this burden by incentivising people to sign up with a private health insurer, saving the government money and reducing wait times for treatment in public hospitals.

Private health insurance rebate: Eligibility

Who is eligible for the private health insurance rebate?

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 $151,001 for singles1, or $302,001 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.

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, the refund you receive is based on your income tier and the oldest person covered by your policy. 

There are four private health rebate tiers each for singles and families. The tier you fall into, as well as your age, determines how much you can claim as a rebate. 

Here’s a breakdown of the different tiers and rebate percentages, for the tax year just finished**:

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.

Frequently Asked Questions

What is the “excess private health insurance premium reduction or 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.

What if I nominate an incorrect income tier?

If you tell your health fund your expected income but end up earning more or less, don’t worry. When you lodge your tax return, rebate amounts are recalculated against your actual income. 

So, if you overpay on your premiums, you’ll get a refund of the difference. If you underpay, you’ll have to pay a bit extra on your tax return.

What is the Medicare Levy Surcharge (MLS)?

The Medicare Levy Surcharge is a percentage of your income payable to the ATO when you lodge your tax return. You’ll need to pay the MLS if you don’t have eligible private health cover and earn more than $97,000 as a single person or $194,000 as a family (including couples and single-parent households). These income thresholds were adjusted on 1 July 2024.

The government introduced the MLS to encourage high-income earners to get private health insurance.

MLS rates range between 1% and 1.5% of your income, depending on how much you earn.

*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.

This guide is opinion only and should not be taken as medical or financial advice. Check with a financial professional before making any decisions.

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