AUSTRALIAN GOVERNMENT REBATE*
The rebate is an Australian Government Rebate is designed to encourage more Australians to sign up for private health cover. If you make less than $140,000 (as a single) or $280,000 (as a family), you could be eligible to save on your private hospital cover premiums.
WHAT IS THE PRIVATE HEALTH INSURANCE REBATE?
The Private Health Insurance Rebate is an amount the government contributes towards the cost of your private hospital health insurance premiums. The scheme is income-tested, so the rebate you can claim depends on how much you earn each year.
It also factors your single or family status, how many children you may have, and your age. Generally, the less you make, the more that the Australian Government will pitch in to help foot your health insurance bill. However, it’s important to remember that if you earn over $140,000 as a single or $280,000 as a family (or couple), you’re not eligible for the rebate.
WHY IS THERE A PRIVATE HEALTH INSURANCE REBATE?
There are a number of reasons why the Private Health Insurance Rebate was introduced in Australia.
First and foremost, it helps everyday Australians afford private health cover. It also helps make the private health industry more sustainable by attracting more members.
Finally, the rebate and health insurance in Australia work to take the pressure off the public healthcare system. For example, by limiting the number of people needing to use public hospitals, and reducing long waiting lines.
WHAT REBATE ARE YOU ELIGIBLE FOR?
Whether you can claim the Private Health Insurance Rebate depends on how much you earn each year. If you’re single and earn under $90,000 a year, or a family that earns under $180,000 a year, you fall under the base tier category and qualify for the full rebate.
If you earn over $90,000, but up to $140,000 a year as a single, or over $190,000 but under $280,000 as a family – you will fall under tier 1 or 2 and qualify for a reduced rebate rate. Your rebate, whether full or reduced, will also depend on your age. For example, the older you are the more rebate you receive.
The rebate applies to hospital, general treatment and ambulance policies. It does not apply to overseas visitors cover.
The rebate levels applicable from 1 April 2018 to 31 March 2019** are outlined in the table below.
NOTE: Single parents and couples (including de facto couples) are subject to family tiers. For families with children, the thresholds are increased by $1,500 for each child after the first.
The income thresholds are indexed and will remain the same to 30 June 2021.
Single parents and couples (including de facto couples) are subject to family tiers. For families with children, the thresholds are increased by $1,500 for each child after the first. If you’re a single parent family or a couple (including de facto relationships), you’ll be treated as a family for Private Health Insurance Rebate purposes.
WHAT HAPPENS IF YOU NOMINATE THE WRONG TIER?
When you claim your rebate, you’ll be asked to nominate your estimated income for the year. If you earn less at the end of the year than the tier you nominated, you’ll get a tax offset with your tax return.
If you make more at the end of the year than your chosen tier, you’ll have to refund the amount that you incorrectly received through the rebate with your tax return. There are no other consequences for incorrect estimates.
ARE YOU ELIGIBLE FOR THE PRIVATE HEALTH INSURANCE REBATE?
To qualify for the private health insurance rebate, you need to meet a number of conditions. This includes making less than $140,000 as a single, or $280,000 as a family (unless you have two or more children, in which case your threshold goes up by $1,500 for every dependent child after the first).
Additionally, you must be an Australian citizen or permanent resident and have a Medicare card. Finally, you must have an appropriate level of private patient hospital cover, provided by a registered health insurer.
An ‘appropriate level of private patient hospital cover’ means that you need private hospital insurance with an excess of $500 or less for singles, or $1,000 or less for couples. Cover for ‘extras’, covering you for items such optical or dental does not count as hospital cover.
HOW CAN YOU CLAIM THE PRIVATE HEALTH INSURANCE REBATE?
You can claim the Private Health Insurance Rebate in one of two simple ways. You can get it upfront as a discount on your premiums, or you can claim it through your tax return to the ATO.
If you choose to get it as a discount on your premiums, you’ll need to fill out the Medicare Rebate Claim Form, and give your health insurance fund your estimated income.
THE REBATE AND LIFETIME HEALTH COVER
Lifetime Health Cover (LHC) is a financial loading applied on top of your hospital premium at a rate of 2% for every year you are aged over 30 when you take out hospital cover, up to a maximum of 70%.
The LHC loading is removed once you have held hospital cover and paid the loading for 10 continuous years.
As of 1 July 2013, if you currently pay a LHC loading, the Rebate does not apply to the LHC component of your hospital cover premiums. You still receive the Rebate on the standard component of your hospital cover.
For information about your policy and for quotes on premiums, please contact your health fund.
* The information in this article and the links provided are for general information only. They’re not intended to provide, and should not be relied on for, tax, legal or accounting advice.