The Australian Government Private Health Insurance Rebate is a means-tested subsidy that reduces the cost of eligible private health insurance for most Australians. The rebate is income-tested — higher earners receive a lower rebate percentage, and those above the highest income threshold receive no rebate at all. You can receive the rebate either as a reduced premium through your insurer (so you pay less upfront) or as a tax offset when you lodge your income tax return.
How the Rebate Works
The federal government contributes a percentage of your private health insurance premium, based on your income tier and age group. The rebate is available for hospital cover, general treatment (extras) cover, and ambulance cover.
The rebate is calculated as a percentage of your premium. The percentage varies by income tier and, for most tiers, by age bracket.
Income Tiers and Rebate Percentages (FY2024–25)
The income thresholds for the income tiers are adjusted annually (on 1 April each year). For FY2024–25:
| Income tier | Singles income | Families income | Rebate (under 65) | Rebate (65–69) | Rebate (70+) |
|---|---|---|---|---|---|
| Base tier | ≤$93,000 | ≤$186,000 | 24.608% | 28.710% | 32.812% |
| Tier 1 | $93,001–$108,000 | $186,001–$216,000 | 16.405% | 20.507% | 24.608% |
| Tier 2 | $108,001–$144,000 | $216,001–$288,000 | 8.202% | 12.304% | 16.405% |
| Tier 3 | $144,001 and over | $288,001 and over | 0% | 0% | 0% |
Income for the purposes of the rebate test = income for surcharge purposes (taxable income + reportable fringe benefits + total net investment losses + reportable employer super contributions).
Important: The higher age-bracket percentages acknowledge that older Australians typically use more health services and pay higher premiums.
Two Ways to Receive the Rebate
Option 1 — Reduced premium through your insurer (most common)
You nominate a rebate percentage to your insurer and they apply it to reduce your monthly or annual premium. You pay only the after-rebate premium amount. At tax return time, your insurer reports the rebate amount to the ATO and you confirm or adjust the claim.
Risk: If your actual income turns out to be in a higher tier than you nominated (e.g., you received a bonus), you may need to repay some rebate at tax time.
Option 2 — Tax offset at return time
You pay the full premium throughout the year and claim the rebate as a tax offset when lodging your income tax return. This is simpler for those with variable incomes who are uncertain of their final tier.
Medicare Levy Surcharge Interaction
The Private Health Insurance Rebate and the Medicare Levy Surcharge (MLS) use the same income thresholds but work in opposite directions:
- If you earn above $93,000 (singles) and do not have private hospital cover, you pay the MLS (1%–1.5% on top of the standard 2% Medicare levy)
- If you have private hospital cover, you avoid the MLS — and the rebate reduces your premium cost
For those in Tier 1–3 income ranges, the financial decision is often between:
- Paying the MLS, or
- Taking out hospital cover (with a reduced or zero rebate) to avoid the MLS
What Is Not Covered by the Rebate
The rebate applies to eligible private health insurance premiums only. It does not apply to:
- Hospital excess amounts you pay out of pocket
- Items not covered by your policy
- Health expenses you claim through Medicare
Related Articles
- Private Health Insurance Rebate — Income Tiers Explained
- SAPTO — Seniors and Pensioners Tax Offset
- Tax Offsets hub
- Taxes hub
Frequently Asked Questions
Does the rebate apply to extras/general treatment cover? Yes. The rebate applies to hospital, general treatment (extras), and ambulance-only policies registered with a registered Australian health insurer. It does not apply to travel insurance or income protection insurance premiums.
My income varies year to year. How do I choose a rebate tier? You can nominate any tier to your insurer. If in doubt, many people nominate a higher (lower-rebate) tier to avoid having to repay rebate at tax time. You always reconcile your actual entitlement when you lodge your tax return.
If I am in Tier 3, do I get any rebate at all? No. If your income for surcharge purposes exceeds $144,000 (singles) or $288,000 (families), the rebate percentage is 0% and you receive no government contribution toward your premium.
This article provides general tax information only. For advice tailored to your situation, speak with a registered tax agent or financial adviser. Find one through the Tax Practitioners Board register or visit MoneySmart.