Personal Income Tax

Private Health Insurance Tax Rebate - Thresholds And What You Need To Know

If you have private health insurance, you are probably eligible for a rebate from the government. The scheme has been in place for a few years now, although the amount of the rebate varies according to your income level and age.

To qualify for the rebate you need to have appropriate private health insurance, and you need to have an annual income that is less than $14,001 if you are single, or $280,001 if you are a family. Single parents and couples are regarded as families with regard to this rebate. If you have more than one child, the thresholds are increased by $1,500 per child, so you could earn slightly more than the maximum and still qualify for the rebate.

You can claim the rebate in three main ways:

  1. As a reduction on your private health insurance premium
  2. In your tax return as a refundable tax offset
  3. As a direct payment through your local Medicare office

In most circumstances you have to nominate a tier. The tiers and rebate levels are in the table below. These apply to the 2015/2016 financial year. For previous tables you can visit the Department of Health website They change every year, however, based on government calculations. It should be noted that both the rebate amount and the thresholds can change. This can impact the amount of rebate you receive, but it can also move you between the different tiers.












 Rebate  Standard  Tier 1  Tier 2  Tier 3
 < age 65  27.820%  18.547%  9.273%  0%
 Age 65-69  32.457%  23.184%  13.910%  0%
 Age 70+  37.094%  27.820%  18.547%  0%


As already mentioned, the thresholds in the first row can be impacted if you have dependent children. The threshold increases by $1,500 for each child. That would mean, for example, that the standard tier for families would increase to $184,500 for a family with three dependent children.

To calculate your income as a family you need to combine the income of both adults. The age is calculated for families based on the oldest person.


Other Considerations

It is important that you nominate the correct tier to avoid complications in the future. If you nominate a tier that gives you a rebate that is too low, you will get the difference as a tax offset at the end of the financial year. If, on the other hand, you get too much of a rebate because you selected the wrong tier, you could end up owing tax.

If your income has changed since you nominated your tier, it is important that you inform your private health insurance provider as soon as possible.

Finally, the thresholds for applying for a rebate apply regardless of whether you and your partner are on the same private health policy. This will impact you if you have separate policies, as it is not possible to get a rebate on behalf of your spouse or partner. 




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