Eligibility to claim the rebate
To claim the private health insurance rebate depends on your circumstances, regardless of your residency status in Australia. You must:
- have a Complying health insurance policy with an Australian-registered health insurer
- be eligible for Medicare
- be a Private health insurance incentive beneficiary
- have an income for surcharge purposes that is less than the Tier 3 income threshold.
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.
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 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.
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