Changes to private health insurance rebate and Medicare levy surcharge

Dependent children

Dependent children are not income tested and their income does not count towards the income test. Anybody that is covered as a dependent child on a private health insurance policy is not considered to have a share of the cost of the policy and is not income tested to determine their entitlement to a private health insurance rebate. Dependent children under the Private Health Insurance Act 2007 include either:

• a person who is under 18 years old
• a dependent child under the rules of the private health insurer that is not 25 years old or over, and who does not have a partner.

Your private health insurer can advise you who is covered as a dependent child on your policy.

Example

Caroline and Gordon are married with a son, Archie. Archie is 19 years old, studying full time at university, and earns $95,000 a year as a part-time model. Under the rules of their private health insurer, Archie is classified as a dependent child because he is studying full time. Because Archie is covered under the private health insurance policy, Archie:

• is covered as a dependent child on the family policy and his income is not taken into consideration for the family income threshold
• is not income tested for any share of the family private health insurance policy because he is not entitled to a private health insurance rebate; and
• is also exempt from the Medicare levy surcharge as he has an appropriate level of private patient hospital cover.

Dependent child only policies

If a dependent child is covered by a child only policy, they are not income tested to determine their rebate entitlement to a private health insurance rebate.

The following people are income tested to determine the private health insurance rebate - either the:

• parents of the dependent child if they are together at the end of the income year
• payer of the policy (who may or may not be the parent of the child).

Sections within Income testing on your share of the policy

• Single
• Multiple adults
• Dependent children