Changes to private health insurance rebate and Medicare levy surcharge

Single

If you are the only adult covered by the policy, your share of the private health insurance policy is 100%. You are income tested to determine your private health insurance rebate entitlement based on the total cost of your health insurance policy regardless of who pays for the policy.

Example

Narelle is single, 45 years old and is the only adult covered by her private health insurance policy. The total cost of her policy is $1,000. However, when she paid for the policy, Narelle nominated her rebate tier as tier 1 and received a premium reduction of 20%, reducing the amount paid for her insurance premiums to $800.

When Narelle lodges her tax return, her income for surcharge purposes is $83,000. Her income is below $84,000, so Narelle's private health insurance rebate entitlement is actually 30% of the total cost of her health insurance policy. Narelle received 20% upfront from her insurer through reduced premiums and receives the remaining 10% ($100) as an offset in her tax return. This offset is listed on her notice of assessment.

Example

Peta is 50 years old and is single. As a condition of Peta's employment, her employer pays part of her private health insurance policy. The total cost of Peta's insurance policy is $1,000. Peta claims a 30% premium reduction for the policy and Peta's employer has agreed to pay the remaining $700 for the policy.

Peta lodges her tax return and her income for surcharge purposes for the year is calculated as $86,000. Peta's income falls into the income threshold for rebate tier 1 so her rebate entitlement for the cost of her insurance policy is actually 20%. As Peta's employer paid 70% of the policy, and Peta elected to receive 30% as a premium reduction, Peta incurs a liability for the extra 10% rebate that she had already claimed. The liability is listed on her income tax notice of assessment.

Sections within Income testing on your share of the policy

Last Modified: Friday, 15 February 2013