The Private Health Insurance Rebate
The private health insurance rebate is offered by the government for eligible Australians who hold a hospital or extras policy (or both). If can make private health insurance more affordable for you and your family.
Some of the benefits of having hospital cover include greater flexibility in choosing your own doctor or surgeon, higher quality of care including access to private hospital rooms post-surgery, and avoiding lengthy waiting lists.
The benefits extend further with extras cover, where you’ll receive rebates on routine check-ups, consultations and treatments (such as optical and dental) among several other services that can make for a healthier you.
Certain treatments, services and medications are excluded from the Medicare benefits schedule (MBS), making health insurance a necessity for some Australians who want to save money. The private health insurance rebate is just one of the government’s incentives to encourage Australians to use the private health system.
- The private health insurance rebate is provided by the government to help individuals and families afford health insurance. You will only receive the rebate if you hold hospital or extras cover (or both) and are eligible.
- The rebate amount you receive depends on your household income and policy premium. You can determine your rebate amount with our calculator below.
- There are two ways you can claim the PHI rebate. You can opt for a reduction in your premium, or alternatively, you may claim the rebate through your tax return.
- 1 What is the PHI Rebate?
- 2 How much do I get back?
- 3 Who is eligible to receive the PHI rebate?
- 4 How do I claim the PHI rebate?
- 5 What if I choose the wrong tier?
- 6 Do all health insurance policies qualify for the PHI rebate?
- 7 The PHI rebate vs. the MLS
What is the PHI Rebate?
The Australian government offers eligible individuals and families a rebate, or in other words, a percentage off their premium, for having hospital and/ore extras cover. Your eligibility is determined by how much money you earn as a household/individual and the type of health insurance you have.
There are two options when it comes to payment. The PHI rebate can be paid directly to your insurer in order to reduce your premium. Alternatively, it can be paid through your tax return. Regardless of the option you choose, the PHI rebate may cover a significant portion of your costs depending upon how much you and your family earn.
How much do I get back?
The rebate amount you receive depends on your household income, along with the amount you’re paying for your premium/s. Individuals and families are grouped into different tiers depending upon their household income. People who are married or who are in a de facto relationship will use their combined household income to calculate the rebate.
This health insurance rebate calculator allows you to input your income, age, and relationship status so that you can determine the amount of your rebate.
$90,001 - 105,000
$105,001 - 140,000
$180,001 - 210,000
$210,001 - 280,000
Age < 65
The rebate pays a percentage of insurance premiums. For an individual who makes less than $90,000 per year or a family with a combined income of less than $180,000 per year, the PHI is equal to 25.415% of premium costs as of April 1st 2018.
This rebate for singles and families within this income threshold increases to 29.651% of premiums when between the ages of 65 and 69, or to 33.887% of premiums at age 70 or older.
As your individual or family income climbs, the amount you get back declines. For example, a single person under age 65 who makes between $90,001 and $105,000 would only get a 16.943% rebate and would get a 8.471% rebate once his or her income was between $105,001 and $140,000. No rebate is available for singles with an income of $140,001 or higher, or for families with an income above $280,001.
Single parents and couples are subject to the family tier, rather than the singles tier. However, if families have multiple children, the threshold increases $1,500 per child for the second and subsequent children.
Who is eligible to receive the PHI rebate?
The PHI rebate applies to Australians who are eligible for Medicare coverage but who opt to purchase private insurance. Any Australian resident who buys a qualifying health insurance policy and whose income does not exceed the rebate threshold should be eligible to receive the rebate.
If you did not purchase health insurance prior to the age of 30, you are charged an additional cost for your insurance that is referred to as Lifetime Health Cover (LHC) loading. The rebate does not apply to the LHC component of health insurance premiums. You will only receive a rebate for the standard base amount of premiums.
PHI rebates do not apply to overseas or visitors cover. However, overseas visitors who are covered under a reciprocal health agreement (RHCA) and who are eligible for Medicare may be able to obtain a rebate for the purchase of either hospital or extras cover.
How do I claim the PHI rebate?
You have two primary options for claiming the PHI rebate. One option is to claim it by having the money paid out directly to your insurer. This will lower your ongoing premiums.
You will need to inform the insurer of the tier that you fall into so your rebate is calculated correctly. You may complete Form MS006, which is called an “Application to Receive or Change the Australian Government Rebate on Private Health Insurance as a reduced premium form.” This form is available at the Australian Government Department of Human Services. You may also ask your insurer about how to obtain and complete a form so your rebate can be paid directly to your insurer.
Your other option is to claim the rebate through your tax return filed with the Australian Taxation Office. The rebate is considered a refundable tax offset. You must lodge a tax return to claim the money back. The Australian Taxation Office has detailed information on lodging a tax return on its website. You can lodge a tax return yourself using either myTax or e-tax. A registered tax agent can also assist with lodging your return and claiming your rebate.
What if I choose the wrong tier?
When you lodge your tax return, you should know your income and be able to select the correct tier when claiming your rebate. However, if you claim the rebate as a premium reduction, there is a risk that you may provide incorrect information on your income.
If you estimate your income too high and you receive less of a rebate than you should, this can be corrected when you lodge your tax return as you can claim the additional funds. However, if you estimate too low and your income is higher than expected, you will need to pay back the additional rebate you received. The tax debt must be paid at the end of the financial year, but there are no penalties for estimating incorrectly.
Do all health insurance policies qualify for the PHI rebate?
Not all health insurance policies qualify. You should ask your health fund if the policy you are considering is eligible for the PHI rebate. The policy must be a complying health insurance product (CHIP) that provides hospital treatment, general treatment (ancillary or extras cover) or both.
The PHI rebate vs. the MLS
Both the PHI rebate and the medicare levy surcharge (MLS) are affected by your household income. While the private health insurance rebate encourages you to buy coverage by subsidising it, the medicare levy surcharge encourages the purchase of coverage by imposing a fine if you choose not to purchase hospital cover.
The medicare levy surcharge is only assessed if your income exceeds a certain amount. This medicare levy surcharge calculator can help you to determine if you will be required to pay the MLS. The levy kicks in once a single person has an income above $90,000 or a family has an income above $180,000. It begins at one percent and rises up to 1.5 percent for singles with an income exceeding $140,000 or families with an income exceeding $280,000.
$90,001 - 105,000
$105,001 - 140,000
$180,001 - 210,000
$210,001 - 280,000
Having to pay the levy may seem inconvenient. What’s worse? Inadequate health cover for you and your family. Being on a waiting list for surgery when you’re in significant pain is far from ideal, and paying expensive bills out-of-pocket for services you need is not in your interests.
Take advantage of the incentive the PHI rebate provides and buy the cover you require to take care of yourself and your family’s medical needs.
Frequently Asked Questions About Health Insurance
There are three types of health insurance in Australia. They are:
- Hospital Cover
- Extras Cover (also known as general or ancillary cover)
- Ambulance Cover
Hospital cover can ensure any unexpected surgeries, treatments or hospital stays you may require will be covered. With appropriate cover you will have the flexibility to choose your own doctor and the option of receiving treatment in a private hospital. Most hospital covers allow you to stay in a private room. One other perk is skipping the public hospital systems’ waiting list, which can be lengthy for non emergency treatment.
Extras cover pays benefits for a a range of services, often including treatments and procedures related to the fullowing:
- Dental/oral health
- Glasses and contact lenses
- Remedial massage
- Hearing aids
- Travel vaccinations
Ambulance cover, as the name suggests, will cover you should you require emergency ambulance transport. In an emergency, there is enough to worry about. Having the expenses covered for provides security and peace of mind. Many hospital covers include emergency ambulance transport If yours doesn’t, you will need to shop for this separately.
Life is unpredictable. You never know when you might need cover. No matter what life stage you’re in, there’s a policy out there for everyone. You can select as much or as little cover as you want, depending on your health needs and requirements. It’s a small price to pay for the peace of mind health cover provides.
There is no one answer here. Costs vary across providers and policy types. Just because a policy is cheap, that does not mean it is ‘value for money’ and vise versa. Make sure you check what’s included and excluded in a policy before signing up, as you want to purchase a policy that best fits your specific needs.
Premium: A premium is the price you pay for your insurance policy (it may be paid annually or on an ongoing basis).
Policy: An insurance plan. In other words, it is the type of insurance you choose to select.
Policy Holder: The owner, or ‘holder’ of a policy.
Claim: In the event that you require treatment for a service covered by your policy, you can lodge a claim for reimbursement of all or part of the cost of that treatment.. These days, most claims are submitted electronically by the health care provider (dentist, physio etc)
Lifetime Health Cover: Lifetime Health Cover was put in place to encourage young Australians to seek out and maintain ownership of private health insurance early in their lives. If you do not take out a policy before you turn 31, extra charges will be applied should you take out a policy at a later time.
This means you will pay a 2% loading on top of your premium for every year that passes after you turn 30. For example, if you take out a policy for the first time at age 32, you will be charged 4% of your premium as an extra, then at age 40, 20% and so on, up to a maximum loading of 70%.
The loading is payable for 10 consecutive years of cover - after which it is removed and you premiums will be reduced.
Pharmaceutical Benefits Scheme (PBS): Medicare offers assistance for Australians with many of their their prescribed medication costs through the PBS. This assistance is in the form of subsidies towards the cost of many medications. You can check if your prescribed medication is on the list of subsidised items here.
Medicare Levy Surcharge: The Medicare Levy Surcharge is an additional charge (tax) applied to single Australian taxpayers who earn over the income threshold of $90,000 per year, or families/couples who earn over $180,000 per year. This surcharge is only applied to those who choose not to have a private health insurance policy.
The surcharge is designed to reduce pressure on the public health system by encouraging those with higher incomes to invest in private health cover.
Private Health Insurance Rebate: The government’s Private Health Insurance rebate lowers premiums for most Australians with private health insurance Older Australians may enjoy an even higher rebate. Our calculator can help you estimate the Government health insurance rebate you may receive.
Disclaimer: The above information is correct and current at the time of publication
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