Who is eligible for the private health insurance rebate and how to claim it
About 40 per cent of Aussies are entitled to this tax time cash boost. Find out if you are one of them.
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Aussies who hold private health insurance could be eligible for a cash boost to their tax return.
Around 14 million of us hold a private health insurance policy, which can offer tax savings including avoiding the Medicare Levy Surcharge and the Lifetime Health Cover loading.
But few realise that having private health can also qualify you for a tax rebate too, either in the form of a lump sum or as a discount on premiums.
What is the private health insurance rebate?
The private health insurance rebate is an amount the federal government contributes towards the cost of your hospital premiums.
Designed to make private health insurance more accessible and affordable for Australians, the health insurance tax rebate you’re entitled to depends on things like age, income and number of dependants.
Who is eligible for the private health insurance rebate?
To be eligible for the private health insurance rebate, you must hold or purchase a private health insurance policy from a registered health insurer and ensure it provides ‘hospital’ cover or ‘combined hospital and extras’ cover. If you have a policy with an overseas health insurance provider not registered in Australia, you won’t be eligible for the rebate.
Eligibility for the health insurance rebate is also based on income and age. Those earning $140,000 or less as a single, or $280,000 or less as a family, and who are entitled to Medicare and hold a private health insurance policy can apply. However, if you’re on overseas visitors’ cover, you’re not entitled to it.
The private health insurance rebate only applies to the days within the tax year that you and your family have been covered by your private health insurance policy.
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How do I claim the private health insurance rebate?
Claiming your private health insurance rebate is relatively straightforward and there are two ways you can receive it.
You can claim the rebate as a lump sum, also called a tax offset, which you’ll receive as part of your annual tax return, or as a discount to the cost of your health insurance.
If you’d prefer the latter, you’ll need to contact your insurer and let them know which rebate tier you’re in, they will then apply the rebate directly to your premium so you can start paying less.
If your financial situation changes, make sure you let them know so you don’t incur any tax liabilities.
This year the private health insurance rebate is 24.6 per cent for under 65s on the base tier income.
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How much tax can I save with the private health insurance rebate?
The total amount of tax you can save with the private health insurance rebate is based on your single or combined family’s total taxable income, which also includes the net amount on family trust distribution tax that has been paid, reportable fringe benefits, total net investment losses and reportable super contributions.
This rebate is means tested so the more you earn, the less you’ll receive.
Private health insurance rebate rates vary each year and are spread across four income tiers. This year, if you are a single person under 65 years of age who earns under $90,000 or a family with a combined taxable income under $180,000, you will receive a rebate of just under 25 per cent.
For singles under 65 who earn more than $140,000 or a family with a combined taxable income of $280,000 you will receive no rebate at all.
Policy holders over 65 can expect to receive a higher rebate rate, except for those who fall within the highest income tier.
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