If you are eligible for the rebate, you can claim the rebate either:
- through your private health insurance provider – your private health insurance provider will apply the rebate to reduce your private health insurance premiums
- when you lodge your tax return – as a refundable tax offset.
The rebate can be claimed for premiums paid for a private health insurance policy that provides either:
- private patient hospital cover
- general cover (commonly known as extras)
- combined hospital and general cover.
The government does not give this rebate on the lifetime health cover loading component of a policy.
Example: Claiming the private health insurance rebate
Peter is single with no dependants, 45 years old, and earned $100,000 in 2022–23. 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 2023 as the government did not change the rebate percentage on 1 April 2023. He makes payments monthly in 2022–23.
In claiming his rebate, Peter can choose to either:
- receive 16.405% of premium reduction from his health insurer for premiums paid in the respective months
- 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.
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.
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 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 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 2022–23. 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 2022, 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 2023. As a result, the health insurer continued to provide Toby with a premium reduction of 28.710% for premiums paid from 1 April 2023 to 30 June 2023.
Toby paid premiums monthly, which adds up as follows:
- $1,069 between 1 July 2022 and 31 March 2023 after premium reductions of $431
- $378 between 1 April 2023 and 30 June 2023 after premium reductions of $152.
When Toby lodges his 2023 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 2022 and 30 June 2023
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 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 2022–23.
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 2022. Donna pays her full year's (2022–23) health insurance on 1 July 2022, 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 2022.
Donna does not end up getting her promotion, and when she lodges her 2023 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 2022, she receives an additional $246.12 as a refundable tax offset when she lodges her 2023 tax return. This offset is listed on her notice of assessment.End of example
You can choose to claim your spouse’s rebate entitlement (as well as your own) if you satisfy all of the following 3 conditions:
- You must have a spouse on the last day of the income year (this includes if your spouse died during 2022–23).
- 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.
Changes made to Private Health Insurance Act 2007, which apply from 1 April 2021:
- introduce the term 'dependent person'
- increase the maximum age for children to be covered as a dependent person under a family, single parent, or dependent person-only, private health insurance policy from under 25 years old to under 32 years old, and
- allow children with a disability, regardless of their maximum age and marital status, to be covered as a dependent person under a family, single parent or dependent person-only, private health insurance policy.
A 'dependent person' is one of the following:
- a dependent child who is aged under 18 and does not have a partner
- a dependent non-student who is all of the following
- aged between 18 and 31 (inclusive)
- not receiving full-time education at a school, college or university
- a dependent non-student under the rules of the private health insurer that insures the person
- does not have a partner
- a dependent person with a disability who is
- aged 18 or over and may have a partner, and either
- a person with a disability within the meaning of the expression person with a disability as defined by the Private Health Insurance (Complying Product) Rules
- a person with a disability within the meaning of the expression person with a disability as defined by the rules of the private health insurer that insures the person
- aged 18 or over and may have a partner, and either
- a dependent student who is all of the following
- aged between 18 and 31 (inclusive)
- receiving full-time education at a school, college or university
- a dependent student under the rules of the private health insurer that insures the person
- does not have a partner.
These changes for private health insurance purposes don't affect the Medicare Levy Surcharge (MLS) definition of dependant. Dependants for MLS purposes are your spouse, children under 21 or students under 24 years old and in full time study.
Kate and Antonio have 26 year old twins, Ethan and Edgar, who are both studying at university full time.
Ethan and Edgar are covered as dependants under Kate and Antonio's private health insurance policy. Ethan and Edgar can be covered by Kate and Antonio's policy until they turn 32 years old.
However, at 26 years old, Ethan and Edgar are no longer considered dependants for Medicare levy surcharge (MLS) purposes. Ethan and Edgar stopped being dependants for MLS purposes at 24 years old.
This means when we work out if Kate and Antonio need to pay the MLS we will use the usual MLS threshold of $180,000 rather than an increased threshold.End of example
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 in which the premiums are paid, not in the financial year for which it is paid. For example, if your 2022–23 premiums were paid in 2021–22, claim the rebate in your 2021–22 tax return, not in your 2022–23 tax return.
However, you still need to enter the private health insurance statement details in your current year’s tax return. This will confirm you had an appropriate level of private patient hospital cover during this time and ensure we don't charge the Medicare levy surcharge.
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 there are other adults on the policy
- Dependent person covered in a family policy
- Dependent person-only policies
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 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.
Anyone covered as a dependent person 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.
If you pay for a policy that only covers a dependent person (or persons), the person is not eligible for the private health insurance rebate.
If the person'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 person.
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.How to claim the private health insurance rebate, how to claim for your spouse and if you have prepaid your premium.