Australian Government Rebate on Private Health Insurance

The Australian Government provides an income tested rebate to help people meet the cost of private health insurance.

A person may claim the private health insurance rebate if they:

  • are eligible for Medicare;
  • have a complying health insurance product (CHIP) that provides hospital treatment, general treatment (also known as ancillary or extras) cover or both; and
  • have an income for Medicare levy surcharge (MLS) purposes below Tier 3 shown in the table below.

As part of the 2014-15 Budget, the Government announced that from 1 July 2015 the income thresholds used to determine the Australian Government rebate on private health insurance (the Rebate) and MLS would be kept at the 2014-15 rates for three years. The necessary legislation to make these changes came into effect on 26 November 2014.

From 1 July 2015 to 1 July 2018 the income thresholds used to determine a person’s eligibility for the Rebate will be based on the following table:

Base TierTier 1Tier 2Tier 3
Singles $90,000 or less $90,001-$105,000 $105,001-$140,000 $140,001 or more
Couples / Families $180,000 or less $180,001-$210,000 $210,001-$280,000 $280,001 or more

The Rebate amounts will continue to be adjusted annually on 1 April based on the Rebate Adjustment Factor.

The Private Health Insurance Rebate Percentages are as follows:

Private Health Insurance Rebate effective from 1 April 2016 to 31 March 2017

Base TierTier 1Tier 2Tier 3
Rebate Entitlement
Under 65 26.791% 17.861% 8.930% 0.00%
65-69 31.256% 22.326% 13.395% 0.00%
70+ 35.722% 26.791% 17.861% 0.00%
Note: Single parents and couples (including de facto couples) are subject to the family tiers. For families with children, the thresholds are increased by $1,500 for each child after the first. Rebate levels are adjusted annually on 1 April based on the Rebate Adjustment Factor.

The tiers are based on your income for Medicare levy surcharge purposes.

Medicare Levy Surcharge

The Medicare Levy Surcharge (MLS) is an additional tax which Australians need to pay if they are without private health insurance hospital cover and are earning over $90,000 as a single or $180,000 as a couple/family. If you do not hold an eligible hospital cover (or if you drop your hospital cover) you will have to pay additional tax on top of the standard Medicare Levy that applies to all Australian taxpayers.

The Federal Government increased the MLS in July 2012 to encourage people to maintain their private health insurance, rather than adding to the already long waiting lists for public hospitals.

The amount that you pay is now based on income tiers:

  • Tier 1 – A 1% Medicare Levy Surcharge will be paid by people who earn more than $90,000 as a single or $180,000 as a family.
  • Tier 2 – A levy of 1.25% will apply to people who earn more than $105,000 as a single or $210,000 as a family.
  • Tier 3 – A levy of 1.5% will apply to people who earn more than $140,000 as a single or $280,000 as a family.
UnchangedTier 1Tier 2Tier 3
Singles $90,000 or less $90,001-$105,000 $105,001-$140,000 $140,001 or more
Couples / Families $180,000 or less $180,001-$210,000 $210,001-$280,000 $280,001 or more
Medicare Levy Surcharge
All ages 0% 1.0% (unchanged) 1.25% 1.5%

How to avoid the Medicare Levy Surcharge

You can avoid the MLS (and pay less tax) by keeping your hospital cover with us or adding a hospital cover to your policy. You’ll only be exempt from the MLS for the period during which you held this level of hospital cover. If you decide to leave and come back to private health insurance later, waiting periods and Lifetime Health Cover loading may apply. Please note Extras cover (general treatment) alone will not provide an exemption; it must be packaged with an eligible hospital cover.

Some other health funds may offer hospital covers with higher excesses that are not exempt from the MLS. At GMHBA, all of our hospital covers are eligible due to our lower excesses.

More information

For more information about the Australian Government Rebate or the Medicare Levy Surcharge you can: