• Changes to private health insurance rebate and Medicare levy surcharge

    Attention

    For an explanation of terms used, see Definitions.

    End of attention

    Summary of changes

    The private health insurance rebate is an amount that the government contributes towards the cost of your private health insurance premiums. The majority of people with private health insurance claim the rebate as a reduction in the amount of premiums they pay to their private health insurers (known as premium reduction).

    From 1 July 2012, the private health insurance rebate is income tested, based on income for surcharge purposes. This means that if you have a higher income, your rebate entitlement may be reduced, or you may not be entitled to receive any rebate at all.

    See the Private health insurance rebate income tests to find out what percentage of rebate you are entitled to receive in 2012–13 and 2013–14.

    You will be income tested on your share of the private health insurance policy. Your household will get more than one annual statement from your insurer for the one policy if there was more than one adult on the policy when the premiums were paid.

    There have also been changes to the Medicare levy surcharge from 1 July 2012. If you and all your dependants do not have an appropriate level of private patient hospital cover for the full year and your income is more than the relevant income test threshold, a higher rate of Medicare levy surcharge may apply.

    See Completing your 2013 tax return for more information on:

    • understanding your private health insurance statement
    • determining your tax claim codes.

    You will also find information on how to complete your tax return if you:

    • are claiming the rebate for your spouse
    • prepaid your private health insurance policy in 2012–13
    • are claiming for a dependent child only policy
    • are covered as a dependent child on a policy
    • claimed your rebate from a Medicare Service Centre.

    When you lodge your tax return, we will test your income against the three income thresholds to determine the level of rebate you are entitled to receive. Depending on how you claimed your rebate and the level of rebate you claimed, this may result in a tax debt or a tax offset. See Private health insurance income thresholds.

    Additional changes: 2013–14 income year

    No rebate on lifetime health cover (LHC) loading from 1 July 2013

    The government no longer pays the private health insurance rebate on LHC loading applied to the costs of a policy from 1 July 2013. For an example, see No rebate on LHC loading.

    Indexing the rebate from 1 April 2014

    The government has changed the way the private health insurance rebate is calculated. From 1 April 2014, all rebate percentages will be adjusted annually by a rebate adjustment factor.

    The rebate adjustment factor represents the proportional increase in the consumer price index compared to the proportional average premium increase. It will be calculated by the Department of Health each year.

    The adjusted rebate percentages will be applied to premiums paid on or after 1 April. This means your rebate percentage for premiums paid (excluding LHC) before 1 April 2014 will be different to the rebate percentage for premiums paid (excluding LHC) on or after 1 April 2014. See Entitlement by income threshold for 2013–14.

     

    Find out more

    Capping of the private health insurance rebate

    End of find out more

     

    • Last modified: 11 Apr 2014QC 22719