The Private Health Insurance Rebate is an Australian Government initiative that reduces the cost of private health insurance premiums based on your income, age, and family status. Understanding how this rebate works can significantly reduce your healthcare costs.
How the Private Health Insurance Rebate Works
The rebate is calculated as a percentage of your premium and is applied either as:
- Reduced premiums: Applied directly by your insurer (most common)
- Tax offset: Claimed when lodging your tax return
- Combination: Some reduction in premiums, remainder as tax offset
Rebate Rates for 2024-25
Base Tier (Income thresholds: Singles $97,000 | Families $194,000)
- Under 65: 24.608% rebate
- 65-69 years: 28.710% rebate
- 70+ years: 32.812% rebate
Tier 1 (Singles $97,001-$113,000 | Families $194,001-$226,000)
- Under 65: 16.405% rebate
- 65-69 years: 20.507% rebate
- 70+ years: 24.608% rebate
Tier 2 (Singles $113,001-$151,000 | Families $226,001-$302,000)
- Under 65: 8.202% rebate
- 65-69 years: 12.303% rebate
- 70+ years: 16.405% rebate
Tier 3 (Singles $151,001+ | Families $302,001+)
- All ages: No rebate
Calculating Your Rebate
The rebate amount depends on:
- Your income tier: Based on taxable income for you and your family
- Your age: Older Australians receive higher rebates
- Premium amount: Higher premiums mean larger rebate dollars
Example: A 45-year-old single person earning $85,000 with $2,000 annual premiums would receive: $2,000 × 24.608% = $492 rebate annually.
Use our main health insurance calculator to estimate your rebate amount. Understanding this rebate works hand-in-hand with avoiding the Medicare Levy Surcharge and managing LHC loading costs.
Family Income Thresholds
For families, income includes:
- Combined taxable income of both partners
- Plus $1,500 for each dependent child after the first
- Adjusted for any dependent children with income over $282
Maximising Your Rebate
To optimise your rebate benefits:
- Monitor income thresholds: Small income changes can affect rebate tiers
- Consider timing: Major income changes might affect which tier you're in
- Choose appropriate cover: Balance premium costs with rebate benefits
- Understand age changes: Rebates increase at 65 and 70
FAQs
Does the rebate apply to both hospital and extras cover?
Yes, the rebate applies to both hospital and extras cover premiums, as long as you have complying health insurance.
What if my income changes during the year?
The rebate is calculated based on your income for the full financial year. Any adjustments are made through your tax return.
Can I receive the rebate if I pay annually?
Yes, the rebate applies regardless of whether you pay monthly, quarterly, or annually.