Your guide to the private health insurance rebate

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This blog explains what the private health insurance rebate is, how it works and, if you’re a health fund member, what you need to do to claim it.

What is the private health insurance rebate?

The private health insurance rebate was introduced in the late 1990s to encourage more Australians to take up private health insurance.

It was intended to take the pressure off the public health system and to provide private health fund members with easier and more affordable access to private health services.

For eligible private health fund members, the Australian Government offers a rebate on hospital and extras covers.

You can take advantage of the health rebate by claiming it as a discount to your premium or a tax refund.

How do I know if I’m eligible for the rebate?

To be eligible for the private health insurance rebate, you must be registered with Medicare, earn less than the rebate threshold and hold an approved private health insurance policy.

The rebate has been income tested since 2012. It’s assessed using four income- and age-based tiers. This means, the older you are, the higher the rebate you receive. For example, a private health fund policy holder aged 70-plus years with a ‘base tier’ income (the lowest) could benefit from a rebate of up to 33 per cent.

You’re eligible for a higher rebate if you earn $90,000 or less as a single person or $180,000 or less as a family, while individuals earning $140,000 or more and families with an income of $280,000 or more receive a lower rebate.

You can see what tier you fall into by visiting the Private Health Insurance Ombudsman website.

How do I claim the rebate?

As a private health insurance member, you can claim the rebate in one of two ways:

  1. As a reduced premium through your private health insurer – contact your private health fund to advise them of your nominated income tier or
  2. As a lump sum, also called a tax offset, received as part of your tax return.

Remember, your health rebate tier and cover premium payment information will be automatically pre-filled when your tax return is lodged.

You can also request a statement from your private health insurer at the end of the financial year to help you with your tax return.

CUA Health Insurance Head of Subsidiaries Josh Edwards said this was a simple process.

“CUA Health Insurance takes care of all the calculations and tax lodgement details for its members,” Mr Edwards said.

The health insurance company then sends the details to the ATO.

“All our members need to do is to let us know if their income circumstances change so we can then update their details with the ATO to ensure an accurate adjustment on their next rebate amount,” Mr Edwards said.

A premium reduction of up to 25 per cent is available to singles and families under the age of 65, and up to 33 per cent for singles and families aged 70-plus who fall into the ATO’s eligible range.

If you’re looking for even more ways to plan and save at tax time, then read CUA’s Saving on Tax guide.

Looking for more ways to save with CUA Health Insurance?

Mr Edwards said CUA Health Insurance also offered its members two additional potential discounts:

  1. A four per cent discount on their CUA Health Insurance premium when members direct debit from a CUA transaction account
  2. For members aged between 18 and 29 years, a discount of between two and 10 per cent is offered on all CUA Health Insurance hospital covers

He said when combined with the health insurance rebate, these could offer members very attractive savings.

Health insurance quote – an example

A common example of a health insurance quote showing reductions applied for the highest available tax rebate and CUA’s direct debit transaction is outlined below:

Member profile:  Single, aged 31 from NSW
Private health insurance plan: Standard Hospital (Silver Plus) & Essential Extras
Standard premium rate:  $37.76 weekly

Premium with health insurance rebate & direct debit discount applied: $27.14 weekly The yearly saving on premiums, based on the above example is just over $550 per year.

The best way to tally the premium applicable to your circumstances is to request a quote, which will include your options for claiming the private health insurance rebate, either as a monthly fee reduction or a lump sum rebate when lodging your annual tax return.

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