Private health insurance rebate eligibility
To claim the private health insurance rebate, regardless of your residency status in Australia, you must:
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Complying health insurance policy
Your health insurance policy is complying if it:
- is provided by a registered health insurer
- provides hospital cover or combined hospital and general (also known as 'extras') cover
- meets other complying private health insurance policy requirements.
If you are unsure, your private health insurerExternal Link can tell you whether your policy meets these conditions.
If your private health insurance provider is an overseas provider that is not registered in Australia, you will not be eligible for any rebate on your policy.
Private health insurance incentive beneficiary
All adults who are covered by a private health insurance policy are known as private health insurance incentive beneficiaries.
If a policy only covers a dependent child (or children), then the parents of that child (or children) will be private health insurance incentive beneficiaries.
If the policy only covers a dependent child (or children) and the parents are not married (or de facto) at the end of the financial year, the payer of the premiums will be the only private health insurance incentive beneficiary, as long as the payer is not a dependent child.
Income for surcharge purposes – less than Tier 3
Income for surcharge purposes is used to test your eligibility for the private health insurance rebate. It is not the same as your taxable income.
To be eligible for the private health insurance rebate, your income for surcharge purposes must be less than the Tier 3 income threshold. Tier 3 is the highest income threshold for both singles and families.
Income for surcharge purposes includes:
- your taxable income (including the net amount on which family trust distribution tax has been paid, and excluding any assessable First home super saver released amount)
- your reportable fringe benefits (as reported on your income statement or payment summary)
- your total net investment losses (is the sum of your net financial investment losses and net rental property losses)
- your reportable super contributions (the sum of your reportable employer superannuation contributions and your deductible personal superannuation contributions).
If you were aged from your preservation age to under 60 years old, you subtract from the total (above) any taxed element of a super lump sum (other than a death benefit) which you received that does not exceed your low-rate cap.
Your family income for surcharge purposes is the total of your and your spouse's income, using the criteria above.
If someone else pays your premiums
Regardless of who pays the premiums for your private health insurance policy, each adult covered by the policy is income tested to determine their entitlement to a rebate. If you share the policy, you will be income tested on your share. Allocating shares to each adult covered by the policy ensures that any available rebate is distributed evenly.
If your employer pays for your private health insurance, you are generally entitled to the rebate as a reduced premium, and your employer will pay any outstanding premium.
Example: employer pays premiums
You may have a salary sacrifice arrangement under which your employer pays for your private health insurance. Even though your employer pays your premiums, you will be income tested to determine your entitlement to a private health insurance rebate. If you claim an incorrect rebate (that is, premium reduction), it will be corrected through your tax return.
End of example
Annual rebate adjustment
All private health insurance rebate percentages are adjusted annually on 1 April by a 'rebate adjustment factor'.
The rebate adjustment factor is a percentage of the increase in the consumer price index (CPI) and the average annual premium price increase. It is calculated by the Department of HealthThis link opens in a new window.
The adjusted rebate percentages are applied to premiums paid on or after 1 April. This means your rebate percentage for premiums paid (excluding lifetime health cover loading) before 1 April will be different to your rebate percentage on or after 1 April, if the rebate adjustment factor is not equal to one.
The rebate percentage between 1 July and 31 March (Period 1) is multiplied by the rebate adjustment factor to get the rebate percentage for the period 1 April – 30 June (Period 2). As a result, your rebate percentage for Period 2 may be less than or equal to Period 1.
You don’t need to do anything as a result of a change in rebate percentages. If you claim your rebate as a premium reduction, your health insurer will adjust your rebate percentage and the rebate amount. If you claim your rebate as a tax offset in your income tax return, we will apply the adjusted rebate percentages to determine your correct private health insurance tax offset.
You don’t need to contact your health insurer to change your rebate percentage from 1 April. However, you can choose to contact your insurer, for example, to nominate a new rebate amount if you think your income will result in you being entitled to a different rebate when you lodge your tax return.
When a premium is paid
The timing of when you pay your private health insurance premiums is important when working out your rebate.
Payment of your premium occurs when your private health insurer receives the amount you paid. This is the time your insurer actually receives the amount, not:
- the date you made the payment to the insurer
- when the insurer allocates the amount to your account.
If you pay by:
- cash – your premium is paid when your private health insurer receives the cash
- electronic transfer of funds – your premium is paid when the funds are credited to your private health insurer’s account
- money order or bank cheque – your premium is paid when your private health insurer receives the money order or cheque (unless the money order or cheque is dishonoured).
You may pay your insurer either directly, through a legal agent or through your employer. If you make a payment to your health insurer's legal agent, the payment of the premium occurs when the agent receives your premium payment. For example, if your insurer has an agreement for Australia Post to receive payments on their behalf.
If you have an arrangement with your employer to pay the premium, the premium payment occurs when your private health insurer receives the amount your employer paid.
If your employer withholds an amount for a private health insurance premium, the amount is paid to your insurer when the insurer receives the payment from your employer. This may be a different date to when your employer withholds the amount from you.
If your private health insurance premiums for the current year were paid in a previous financial year (that is, prepaid), you can't claim a rebate for that in the current financial year. You claim your rebate in the financial year the premiums are paid, not in the financial year for which it is paid. For example, if your 2021–22 premiums were paid in 2020–21, claim the rebate in your 2020–21 tax return, not in your 2021–22 tax return.
How much of your premiums are your share
Your share of the premium is based on your circumstances listed below:
If you are the only adult on the policy
If you are the only adult covered by your private health insurance policy, your share of the policy for rebate purposes is the total cost of the policy excluding any lifetime health cover loading.
If there are other adults on the policy
If your policy covers more than one adult, you divide the premiums paid into equal shares regardless of:
- who paid the premium
- whether the adults on the policy are a part of a couple.
Each adult’s share of the policy is equal to the total cost of the policy divided by the number of adults covered by the policy at the time of payment.
Dependent child covered in a family policy
Anyone covered as a dependent child on a private health insurance policy is not considered to have a share of the cost of the policy. The adults covered in the family policy will have equal shares of the premium.
Dependent child-only policies
If you pay for a policy that only covers a dependent child (or children), the child is not eligible for the private health insurance rebate.
If the child's parents are:
- together, then one of the parents may claim the rebate – this applies regardless of which parent paid for the policy
- no longer together, then the payer of the policy must claim the rebate – the payer of the policy does not need to be a parent of the child.
Claiming your rebate
If you meet the eligibility requirements for a private health insurance rebate, you can claim your rebate as either:
- a premium reduction which lowers the policy price charged by your insurer
- a refundable tax offset when you lodge your tax return.
You must lodge a tax return if you think you are eligible to claim the private health insurance rebate and you have not claimed any or all of the rebate from your insurer as a premium reduction.
Example: Claiming the private health insurance rebate
Peter is single with no dependants, 45 years old, and earned $100,000 in 2021–22. He has a private health insurance policy that costs him $2,000 per year. Peter's income level entitles him to a 16.405% rebate on premiums paid before and after 1 April 2022 as the government did not change the rebate percentage on 1 April 2022. He makes payments monthly in 2021–22.
In claiming his rebate, Peter can choose to either:
End of example
- receive 16.405% of premium reduction from his health insurer for premiums paid in the respective months, or
- claim the rebate as a refundable tax offset in his tax return – we will then calculate his rebate entitlement based on his income for surcharge purposes.
When you lodge your tax return, we will test your income against the income thresholds to determine the percentage of rebate you are entitled to receive. If there was more than one adult on your private health insurance policy when the premiums were paid, you will be tested on your share of the policy.
Depending on how you claimed the rebate, and the percentage you claimed, this may result in a tax liability and/or a tax offset.
See Working out your tax claim codes to help you work out which code to use on your tax return. The tax claim code is important because it can affect the amount of private health insurance rebate you are entitled to receive.
If you claimed too much rebate
If you claim too much private health insurance rebate as a premium reduction, we recover the amount as a tax liability. This liability will be listed on your notice of assessment as an Excess private health insurance refund or reduction (rebate reduced).
Example: Claiming too much rebate
Toby is single and 67 years old in 2021–22. He has a complying health insurance policy. Toby's yearly premium is $2,030. He paid premiums monthly and did not pay any lifetime health cover loading.
On 1 July 2021, Toby nominated to receive 28.710% private health insurance rebate as a premium reduction to the cost of his policy. The government did not change the rebate percentage on 1 April 2022. As a result, the health insurer continued to provide Toby with a premium reduction of 28.710% for premiums paid from 1 April 2022 to 30 June 2022.
Toby paid premiums monthly, which adds up as follows:
- $1,069 between 1 July 2021 and 31 March 2022 after premium reductions of $431
- $378 between 1 April 2022 and 30 June 2022 after premium reductions of $152.
When Toby lodges his 2022 tax return, his income for surcharge purposes is calculated as $95,000. This puts him in the Tier 1 income threshold.
The rebate under Tier 1 for a person who is 67 years old is:
- 20.507% of premiums paid between 1 July 2021 and 30 June 2022
As Toby received more rebate than what he was entitled to, he incurred a $166.71 liability. This is listed on his notice of assessment as an Excess private health insurance refund or reduction (rebate reduced).
End of example
If you haven’t claimed the full rebate
If you have not received your full private health insurance rebate entitlement, we calculate the rebate amount you are entitled to, which becomes payable to you as a refundable tax offset when we assess your tax return. The tax offset is added together with any other tax offsets that you receive and will appear as a credit on your notice of assessment.
Example: Not claiming the full rebate
Donna is 35 years old, single, and has a complying health insurance policy worth $1,500. She expects to receive a promotion, with expected income of $106,000 in 2021–22.
To avoid a potential liability, Donna contacts her health insurer and nominates to receive a Tier 2 private health insurance rebate as a premium reduction on 1 July 2021. Donna pays her full year's (2021–22) health insurance on 1 July 2021, after reducing it by a rebate of 8.202%. That is, she pays $1,377 after a premium reduction (the rebate) of $123 on 1 July 2021.
Donna does not end up getting her promotion, and when she lodges her 2022 tax return, her income for surcharge purposes is calculated as $85,000. Donna’s income is below the base tier threshold (not Tier 2), therefore, she is eligible for a 24.608% (not 8.202%) private health insurance rebate. This means Donna is entitled to a total rebate of $369.12 (not $123) for her policy.
Because Donna only received a $123 premium reduction from her insurer on 1 July 2021, she receives an additional $246.12 as a refundable tax offset when she lodges her 2022 tax return. This offset is listed on her notice of assessment.
End of example
Claiming the rebate for your spouse
You can choose to claim your spouse’s rebate entitlement (as well as your own) if you satisfy all of the following three conditions:
- You must have a spouse on the last day of the income year (this includes if your spouse died during 2021–22).
- You and your spouse must be covered by the same complying health insurance policy for the same period of time.
- You and your spouse must agree to this before you complete and lodge your tax return.
If you claim the rebate for your spouse, your spouse can't claim a rebate in their income tax return as well.
If your spouse has no other reason to lodge a tax return, other than to claim their rebate entitlement, you can choose to claim your spouse’s rebate in your tax return. This means your spouse does not have to lodge. However, you must still satisfy the three conditions above.
Even if you and your spouse lodge your tax returns at separate times, you can still choose to claim the rebate for your spouse.
If you are choosing to claim your spouse's share of the rebate on your tax return, you will be required to pay back any of the rebate which your spouse may already have over claimed in form of premium reductions.
Your spouse must lodge their own tax return if they have:
- under claimed or overclaimed the private health insurance rebate, and
- have not agreed to allow you to claim their rebate or pay any of their private health insurance liability.
If your spouse does not lodge their tax return by the end of the lodgment year, any private health insurance liability owned by your spouse will be reduced to nil, and it will automatically become your liability.
If you separated from your spouse during the year, you can only claim for your share of the policy – your ex-spouse will have to claim their share, even if you paid all of the premiums.
If you cancel your private patient hospital cover while travelling overseas, you may be liable to pay the Medicare levy surcharge (MLS). You should contact your health fund to work out the amount of premium you expect to save by cancelling or suspending your private patient hospital cover. You can then compare that to the MLS you may have to pay.
For the purposes of MLS, travel insurance is not private patient hospital cover. Similarly, private patient hospital cover does not include cover provided by an overseas fund.
Your eligibility to receive a private health insurance rebate depends on your type of policy, your eligibility for Medicare, whether you are an adult, and your income.