Capping of the private health insurance rebate
On 1 April each year, starting 1 April 2014, the Australian Government rebate on private health insurance will be adjusted.
The Private Health Insurance Legislation Amendment Act 2014 (the Act) received royal assent on 9 April 2014. On 1 April each year, starting 1 April 2014, a single rebate adjustment factor will be applied to all insurance products adjusting the rebate percentage received by individuals. The rebate adjustment factor is based on a formula that uses the Consumer Price Index and the average annual increase in premiums.
This means there will be two periods in the financial year where the rebate percentage will be different – 1 July to 31 March; and 1 April to 30 June. As a result, the annual tax statements issued to taxpayers by their health insurer will show two rows of information about premiums and rebates.
The rebate will continue to apply to the premiums paid excluding any lifetime health cover loading.
The Act repealed the Private Health Insurance Legislation Amendment (Base Premium) Act 2013External Link to simplify indexation of the private health insurance rebate and reduce the regulatory burden for private health insurers.
This change is now law.
End of attention
Legislation and supporting material
The following legislation received royal assent on 9 April 2014: