Tax incentives of maintaining private health cover

Tax incentives of maintaining cover

The Australian Government Private Health Insurance Rebate

To receive the Private Health Insurance Rebate you must be with a registered health fund.

If you are eligible for the rebate, you can claim the ‘discount’ two ways:

  • Ask your health fund to include it as a premium reduction (it automatically comes out of your premium payments). This is how most people get the rebate
  • Claim it on your tax return with the Australian Taxation Office (ATO) at the end of the financial year

If you choose to receive your rebate through your insurer, you will be asked to nominate the tier you expect to fall into to avoid a tax liability. You can nominate your tier by contacting your insurer or by filling out the Medicare rebate claim form.

For further information about claiming the rebate please visit the ATO’s Claiming Your Rebate web page.

Whichever way you choose to receive it, the Australian Government rebate on private health insurance is there to make private health cover more affordable for more Australians.

Why is the Private Health Insurance Rebate so important?

By making private health insurance more affordable for more Australians, the Private Health Insurance Rebate helps balance Australia’s public and private health systems.

Before the rebate, many people found it difficult to afford to stay covered and this increased the pressure on Medicare.

Because of the partnership between the two systems, if people leave private health insurance, the cost of providing private health insurance and public health care both rise. The balance between the private and public sectors in Australia works well. When people drop their private health cover it means premiums increase and along with pressure on the public hospital system.

Restoring the Private Health Insurance Rebate to 30%

Australian low and middle-income earners used to receive up to 30% back on their private health insurance premiums, over time the rebate has decreased and now they receive less than 25%.

Restoring the Private Health Insurance Rebate to 30% would put more money in the pockets of health insurance customers and ensure Australians receive affordable, timely and quality health care.

It is a myth that private health insurance is for the wealthy. Over half of the 13.5 million Australians who hold Private Health Insurance have disposable incomes under $50,000.

Low and middle-income Australians benefit from the means-tested Private Health Insurance Rebate through reduced premiums. This group is likely to be forced out of the private system if the rebate is not restored to 30%

Avoid Lifetime Health Cover loading

Lifetime Health Cover loading is an additional 2% on top of your private health insurance bill.

Avoid Lifetime Health Cover loading by taking out private health insurance by the time you turn 31.

You are also not liable to pay the Medicare Levy Surcharge if you earn under $90,000 for singles and $180,000 for families.