Private health insurance is something many Australians weigh up at some point, especially when considering the rising costs of healthcare and unexpected medical expenses. But while comparing policies can feel overwhelming, the government does offer some support in the form of the private health insurance rebate. This rebate is designed to reduce the cost of premiums and make private cover more accessible.
What is the Private Health Insurance Rebate?
The rebate is a government subsidy that lowers the cost of eligible private health insurance. It applies to policies that include hospital cover, extras, or a combined package. The rebate percentage depends on your age and income, meaning it’s structured to give more support to those who need it most.
The purpose behind the rebate is twofold: to ease the financial pressure of private health premiums for individuals and families, and to encourage greater uptake of private cover, which helps reduce the demand on Australia’s public healthcare system.
How Does It Work?
The rebate is income-tested, so the amount you qualify for depends on your earnings and your age. You can receive the benefit in two different ways:
- Upfront discount: Your insurer applies the rebate directly to your premiums, making your monthly payments cheaper.
- Tax offset: Alternatively, you can pay the full premium and claim the rebate when lodging your tax return, which reduces your overall tax bill.
Both methods give the same financial benefit—the difference comes down to whether you prefer smaller monthly savings or a lump-sum offset at tax time.
Rebate Tiers and Income Thresholds
The percentage you receive is based on income tiers and age brackets. The higher your income, the smaller your rebate. The older you are, the higher the rebate percentage becomes.
As of the 2025–26 financial year, here’s a simplified overview:
- Base Tier: Singles earning up to $101,000 and families earning up to $202,000 receive the highest rebate.
- Tier 1: Singles earning $101,001–$118,000 and families earning $202,001–$236,000 get a reduced rebate.
- Tier 2: Singles on $118,001–$158,000 and families earning $236,001–$316,000 receive a smaller rebate again.
- Tier 3: Anyone above these thresholds isn’t eligible for a rebate.
The rebate percentages also vary with age:
- Under 65s receive the standard percentage.
- Those aged 65–69 get a slightly higher rebate.
- Australians aged 70 and over receive the maximum rebate percentage available.
Since thresholds are reviewed periodically, it’s important to check the latest figures with the ATO or your insurer.
Lifetime Health Cover Loading and the Rebate
One common question is whether Lifetime Health Cover (LHC) loading affects the rebate. It doesn’t. The rebate only applies to the base premium of your health insurance policy. Any LHC loading—which is the additional cost added if you take out cover later in life—is excluded from the rebate calculation.
Estimating Your Rebate
If you’re unsure how much you’ll receive, the ATO provides a rebate calculator. To use it, you’ll need to provide details such as your age, marital status, taxable income, fringe benefits, investment income, and other relevant financial information. The calculator will then give you an estimate of your entitlement.
Claiming the Rebate
You can access the rebate in one of two ways:
- Through your insurer: Most Australians choose this option, as it lowers premiums straight away.
- Through your tax return: Pay the full premium upfront and claim the rebate as a tax offset when you lodge your return.
Both methods ultimately deliver the same outcome—the choice is simply about timing.
Why the Rebate Matters
The private health insurance rebate plays an important role in making cover more affordable. For families, singles, and retirees alike, the cost of health insurance can be significant. By subsidising premiums, the government not only provides financial relief but also encourages more people to take up cover, ensuring better access to private healthcare while reducing strain on the public system.
For those considering private health insurance—or reviewing their current policy—the rebate is an incentive worth factoring into your decision. It may help tip the scales in favour of getting covered sooner rather than later.
