Australian Government Rebate
Learn what it is, who's eligible, and how it can be claimed.
What is the Australian Government Rebate on Private Health Insurance?
The Australian Government provides an income-tested rebate to help people with the cost of private health insurance, in an effort to take pressure off the public healthcare system and keep treatment accessible.
How does the rebate work?
When you take out hospital or extras cover, you nominate a rebate tier based on your annual household income. Your selected tier, along with the age of the oldest person on your policy, is used to determine how much the Australian Government will contribute towards your health insurance premium.
The rebate has several eligibility criteria, as well as income threshold tiers. Your income level determines which tier you fall into and how much money you will get back.
The rebate can be claimed as either a tax refund (at tax time) or as a deduction from your premium (reducing the amount you pay upfront). You can choose to claim the rebate whichever way suits you best.
The rebate applies to both hospital and extras cover, so you'll get the same amount back no matter what type of cover you have. All GMHBA covers are eligible for the rebate.
Am I eligible for the private health insurance rebate?
To claim the private health insurance rebate, you must:
- Be eligible for Medicare
- Have a complying health insurance product (all GMHBA hospital and extras covers are eligible for the rebate)
- Be on either a Base Tier, Tier 1 or Tier 2, as determined by your annual income.
If your current income places you in Tier 3, you can still register for the rebate. Tier 3 has a 0% rebate applied, so while you won't receive any immediate benefit, you would already be registered if your income level drops into any of the lower tiers in future.
Your rebate entitlements depend on your family status on 30 June, and different thresholds apply, depending on whether you have a single or family income.
Always let us know if your income has changed, so that we can make sure you’re receiving the correct rebate level.
What is the current rebate threshold?
The current tiers, for this financial year, are as follows:
Income threshold rates from 1 July 2024
| Base Tier | Tier 1 | Tier 2 | Tier 3 | |
|---|---|---|---|---|
| Singles | $97,000 or less | $97,001 – $113,000 | $113,001 – $151,000 | $151,001 or more |
| Couples / Families | $194,000 or less | $194,001 – $226,000 | $226,001 – $302,000 | $302,001 or more |
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.
How much do you receive?
The amount of money you get back (either as a premium reduction, or a lump sum rebate at tax time) is a percentage of your overall cost. The rebate doesn’t apply to any Lifetime Health Cover (LHC) loading applicable on your cover.
The current rates (rebate percentage levels) for the period 1 April 2023 to 31 March 2025 can be found below. Note that these may change on 1 April 2025, as the Rebate Adjustment Factor is reviewed yearly.
Private Health Insurance Rebate
| Base Tier | Tier 1 | Tier 2 | Tier 3 | |
|---|---|---|---|---|
| Rebate Entitlement | ||||
| Under 65 | 24.608% | 16.405% | 8.202% | 0.00% |
| 65-69 | 28.710% | 20.507% | 12.303% | 0.00% |
| 70+ | 32.812% | 24.608% | 16.405% | 0.00% |
Note: Rebate levels are adjusted annually on 1 April based on the Rebate Adjustment Factor.
You can also view the rebate tiers on the ATO website.
How to claim the private health insurance rebate
If you’re eligible for the Australian Government Rebate on private health insurance (also known as the AGR or Rebate), there are two basic ways to claim:
- Apply to receive the rebate as a premium reduction. This means the amount you pay your health insurer is reduced. Or;
- Pay the full amount for your premium and have the rebate amount factored into your tax return.
To receive the Australian Government Rebate on private health insurance as a premium reduction, you’ll need to complete a rebate form and send it to us.
Please note: for individual tax advice, please consult your tax professional, or the ATO website.
Tax benefits of private health insurance
While your private health insurance premium isn’t tax deductible, the rebate can assist with the cost of having private health insurance.
If you earn more than $97,000 as a single, or $194,000 (plus $1,500 for each dependent child after the first one) as a family, taking out hospital cover can also help you avoid the Medicare Levy Surcharge (MLS).
While the rebate applies to both extras and hospital cover, it’s worth noting that only hospital cover or combined hospital and extras cover will help you to avoid the MLS. Extras on its own won’t exclude you from paying the MLS if it applies to you.
What if my income changes?
If your annual income changes, you need to let us know, as this may affect the rebate amount you’re eligible to receive.
If you’re receiving your rebate as a reduced premium, and your rebate tier doesn’t match your taxable income, you may get a refund or have an extra amount to pay when you lodge your tax return. This isn’t a penalty, just an adjustment that reflects your actual earnings. To change your details, just get in touch.
Frequently asked questions about the private health insurance rebate
The rebate is an annual, income-tested payment designed to encourage Australians to get private health cover by helping them out with their premiums each year.
To claim the private health insurance rebate as a premium deduction or tax refund, you must:
- Be eligible for Medicare
- Have a complying health insurance product (all GMHBA hospital and extras covers are eligible for the rebate)
- Be on either a Base Tier, Tier 1 or Tier 2, as determined by your annual income.
You can claim the rebate as either a reduction on your insurance premium, or a lump sum refund at tax time. It’s up to you. If you want the premium reduction, you’ll need to fill out a rebate form and return to GMHBA. To claim a lump sum at tax time, simply fill out the appropriate section in your tax return. Your accountant or tax professional can also help you with this step.
If you have Lifetime Health Cover loading (LHC) applied to your policy, please be aware that the government will not pay the rebate for the LHC loading component of your policy.
If you decide to claim the rebate as a premium reduction, you'll be asked to choose a tier based on your estimated income. While there are no penalties for accidently estimating your income incorrectly, it can affect your income tax return for that financial year.
If your annual income changes, you need to let us know. We can help to make sure you’re receiving the correct rebate amount.
If you select a tier that is higher than your actual income, you'll end up receiving a lower rebate than what you're entitled to. If that occurs, you will receive a tax offset through your tax return for that particular financial year.
On the flip side, if you select a tier that is lower than your actual income, you'll receive a higher rebate than what you’re entitled to. If that happens, you may have to pay an extra amount when you lodge your tax return for that financial year.
Your rebate details (and other private health insurance tax statement information) is sent directly to the ATO each year, so it can be auto-filled as part of your income tax return.
If you earn more than $97,000 as a single, or $194,000 (plus $1,500 for each dependent child after the first one) as a family, and you don’t have hospital cover, then you will have to pay the Medicare Levy Surcharge. This is a levy you pay in addition to the tax on your income. It’s either a 1%, 1.25% or 1.5% levy on your taxable income and helps fund some of the cost of Australia’s public health system.
The rebate applies to both hospital and extras cover. That means, even if you have an extras-only policy, you can still potentially save money.
Please refer to the threshold table shown in the article above to see the most up-to-date tiers. Also keep in mind that your tier could change, depending on the current income threshold rates, your family status and the age of the oldest person in your household. For more information, we’re here to help.
The truth is, there’s no one-size-fits-all answer. There’s only what’s right for you. Factors like income, age, family status and number of dependants can all determine whether hospital cover is ‘worth it’.
Having said that, in the right circumstances, hospital cover could save you money at tax time (not to mention the obvious peace-of-mind benefits). If you're unsure about how hospital cover may impact your tax, it's always a wise move to consult with a tax professional, or check out the ATO website.