The private health insurance tax rebate is an Australian Government subsidy that pays a percentage of your premiums for complying hospital or general treatment cover, lowering what you pay out of pocket. From 1 April 2026, the base rebate is 24.118% of premiums for policyholders under 65, with higher percentages for older Australians and lower percentages as income rises. You can take it as an upfront discount on your premiums through your insurer, or as a refundable tax offset when you lodge your return.
Who Qualifies
Two things have to be true. You must be eligible for Medicare, and your policy must be a complying health insurance product held with a private health insurer registered under the Private Health Insurance Act 2007.1Federal Register of Legislation. Private Health Insurance Act 2007 A complying product covers hospital treatment, general treatment (extras), or both. An extras-only policy still qualifies, provided the insurer is registered.2Services Australia. How Much Rebate You Can Get on Private Health Insurance
When more than one adult is covered by the same policy, each adult is income-tested individually on their share of the premium. Two people on the same policy can end up with different rebate entitlements.3Australian Taxation Office. Income Thresholds and Rates for the Private Health Insurance Rebate
How Much the Rebate Is
Two things set your percentage: the age of the oldest person on the policy, and your income. Three age brackets apply — under 65, 65 to 69, and 70 and over — and older policyholders receive a higher percentage. At the base tier, someone aged 70 or over receives roughly a third more in rebate than someone under 65.
The age adjustment happens automatically. You do not need to notify your insurer or the ATO when someone on the policy crosses into a new bracket.
Income is tested in four tiers. Rebate percentages change on 1 April each year and income thresholds change on 1 July, so during 2026 two sets of thresholds apply.
1 July 2025 to 30 June 2026
Thresholds and rates (percentages as they stand from 1 April 2026):4Private Health Insurance. Private Health Insurance Rebate
- Base Tier — singles up to $101,000, families up to $202,000: 24.118% under 65; 28.139% aged 65–69; 32.158% aged 70+.
- Tier 1 — singles $101,001–$118,000, families $202,001–$236,000: 16.079% under 65; 20.098% aged 65–69; 24.118% aged 70+.
- Tier 2 — singles $118,001–$158,000, families $236,001–$316,000: 8.038% under 65; 12.058% aged 65–69; 16.079% aged 70+.
- Tier 3 — singles above $158,000, families above $316,000: no rebate at any age.
1 July 2026 to 30 June 2027
Percentages hold; the thresholds move up:4Private Health Insurance. Private Health Insurance Rebate
- Base Tier: singles up to $105,000, families up to $210,000.
- Tier 1: singles $105,001–$123,000, families $210,001–$246,000.
- Tier 2: singles $123,001–$164,000, families $246,001–$328,000.
- Tier 3: singles above $164,000, families above $328,000.
Family thresholds rise by $1,500 for each dependent child after the first. Single parents and couples, including de facto couples, are assessed under the family tiers.4Private Health Insurance. Private Health Insurance Rebate
What Counts as Your Income
The tiers are tested against income for surcharge purposes, not taxable income. That figure adds together:5Australian Taxation Office. Medicare Levy Surcharge Income, Thresholds and Rates
- Taxable income, including any amount on which family trust distribution tax has been paid.
- Reportable fringe benefits from your employer.
- Total net investment losses, covering both net financial investment losses and net rental property losses.
- Reportable super contributions, both reportable employer contributions and deductible personal contributions.
This catches common tax-reduction strategies. A negatively geared rental property reduces your taxable income, but the net rental loss is added back for surcharge purposes. Heavy salary sacrifice into super does the same. Going even one dollar over a threshold drops you into the lower rebate tier for the whole financial year, so estimate this figure carefully before nominating a rebate percentage with your insurer.
How to Claim It
You have two options and can switch between them at any time.6Australian Taxation Office. Claiming the Private Health Insurance Rebate
As a Premium Reduction
You nominate a tier with your insurer and they reduce each bill accordingly, claiming the difference from the government on your behalf. This is the more popular option because the discount lands immediately rather than at tax time. If your income changes during the year, contact your insurer to adjust your nominated tier.
As a Refundable Tax Offset
Alternatively, pay full premiums throughout the year and claim the whole rebate when you lodge. The ATO works out your entitlement from your actual income for surcharge purposes and applies it as a refundable tax offset, either reducing tax owed or increasing your refund. This method suits people with fluctuating incomes who would rather not risk over-claiming during the year.
If You Nominate the Wrong Tier
Lodging your return trues everything up against your actual income. If you took the rebate at a higher percentage than you were entitled to, the ATO recovers the excess as a tax liability on your notice of assessment, reducing your refund or adding to what you owe.3Australian Taxation Office. Income Thresholds and Rates for the Private Health Insurance Rebate If you claimed too little, or nothing at all, through your insurer, the shortfall comes back as a refundable tax offset when your return is processed.6Australian Taxation Office. Claiming the Private Health Insurance Rebate
Your Private Health Insurance Statement
Your insurer issues a statement each year, either by mail or through their online portal. If you lodge online, much of it is pre-filled by the ATO, but check the figures against your statement.7Australian Taxation Office. Your Private Health Insurance Statement The fields that matter are the Health Insurer ID, the Benefit Code (which sets your age-based rebate level, based on the oldest person on the policy), the Tax Claim Code (a letter from A to F describing your circumstances on 30 June, such as single, partnered, or a dependant on someone else’s policy),8Australian Taxation Office. Private Health Insurance Policy Details 2025 and the dollar figures for premiums paid and rebate already received. The ATO warns against doing your own calculations on these numbers — enter each line into your return exactly as shown.
How the Rebate Interacts With the Medicare Levy Surcharge
The rebate and the Medicare Levy Surcharge (MLS) are two sides of the same policy. The rebate helps pay for private cover; the MLS charges you if you earn above the thresholds and do not have it. In 2025–26, singles above $101,000 and families above $202,000 without private hospital cover pay the MLS at 1%, 1.25%, or 1.5% depending on income.9Australian Taxation Office. Paying the Medicare Levy Surcharge
Only hospital cover exempts you from the surcharge. Extras-only cover does not, and neither does cover held with an unregistered or international insurer.10PrivateHealth.gov.au. Medicare Levy Surcharge The MLS income thresholds mirror the rebate tiers, so the same brackets that shrink your rebate also set your surcharge rate. For higher earners, the surcharge often exceeds the cost of a basic hospital policy.