The Australian Government’s private health insurance rebate refunds a portion of your premium if you’re eligible for Medicare and hold a complying policy with a registered Australian insurer. For 2025–26, the rebate is worth up to about 32% of what you pay, scaled down as income rises and scaled up with age. Singles earning $101,000 or less and families earning $202,000 or less sit in the top (Base) tier; anyone above roughly $158,000 single or $316,000 family gets nothing.1Australian Taxation Office. Income Thresholds and Rates for the Private Health Insurance Rebate
Who Qualifies
Two conditions have to be met. You need to be eligible for Medicare, which the ATO applies “regardless of your residency status in Australia,” so the gate is Medicare eligibility rather than citizenship or visa class.2Australian Taxation Office. Private Health Insurance Rebate Eligibility And your policy has to be a complying health insurance policy issued by a registered Australian insurer — hospital, general treatment (extras), ambulance, or any combination.3PrivateHealth.gov.au. Private Health Insurance Rebate
Overseas visitors health cover (OVHC) and overseas students health cover (OSHC) do not count. Holding one of those products gets you no rebate at all, even if you have paid substantial premiums during the year.4Australian Taxation Office. Overseas Visitors – Private Health Insurance on Your Tax Return If your cover lapsed partway through the year, the rebate only applies to the period you were actually insured and paid up.
Income Tiers for 2025–26
The rebate is means-tested across four tiers. Your tier sets the percentage you get back.1Australian Taxation Office. Income Thresholds and Rates for the Private Health Insurance Rebate
- Base tier: singles $101,000 or less; families $202,000 or less
- Tier 1: singles $101,001–$118,000; families $202,001–$236,000
- Tier 2: singles $118,001–$158,000; families $236,001–$316,000
- Tier 3: singles $158,001 or more; families $316,001 or more
Tier 3 gets 0% regardless of age. The family threshold rises by $1,500 for each dependent child after the first, so a family with three dependent children has a Base tier ceiling of $205,000 rather than $202,000.1Australian Taxation Office. Income Thresholds and Rates for the Private Health Insurance Rebate
The Income Figure the ATO Actually Uses
The number tested against those thresholds is not your taxable income. It’s “income for surcharge purposes,” which adds back several items most people forget about:5Australian Taxation Office. Medicare Levy Surcharge Income, Thresholds and Rates
- Taxable income (assessable income minus deductions)
- Reportable fringe benefits at their grossed-up value
- Net financial investment losses and net rental property losses, added back
- Reportable employer super contributions and any deductible personal super contributions
If you have a spouse, both incomes combine for the family test. This is where salary-sacrificed super and negatively geared property owners get caught: taxable income looks modest, surcharge income lands them a tier higher.
How Much You Get Back
Two things determine your rebate rate: your income tier and the age of the oldest person on the policy. Rebate percentages reset on 1 April each year, so a financial year contains two sets of rates. From 1 April 2026, the figures are:6Department of Health and Aged Care. PHI 12/26 Private Health Insurance Rebate Adjustment Factor Effective 1 April 2026
- Under 65: 24.118% (Base), 16.079% (Tier 1), 8.038% (Tier 2)
- Age 65–69: 28.139% (Base), 20.098% (Tier 1), 12.058% (Tier 2)
- Age 70 and over: 32.158% (Base), 24.118% (Tier 1), 16.079% (Tier 2)
Tier 3 is 0% across every age band. A worked example: a 40-year-old in the Base tier paying $2,000 a year in premiums gets about $482 back. A 72-year-old in the same tier on the same premium gets about $643.
Two Ways to Claim
You can take the rebate as a premium reduction through your insurer, or as a tax offset when you lodge. You can also mix them within the same year.
Premium Reduction
You register with your insurer and nominate an expected income tier. The government pays the rebate directly to the insurer and your monthly bill drops.7Services Australia. How to Claim a Rebate on Private Health Insurance You get the cash flow benefit immediately rather than waiting for a tax refund.
The risk is nominating too low a tier. If your actual income lands you in a higher tier, you’ve been overpaid and the ATO claws back the difference at tax time.8Australian Taxation Office. Claiming the Private Health Insurance Rebate If your income is lumpy — bonuses, capital gains, a job change — nominating a higher tier than you expect is the safer play. Any under-claim comes back as a refund.
Tax Offset at Lodgment
The alternative is paying the full premium throughout the year and claiming the whole rebate on your return. Your insurer issues a Private Health Insurance Statement after 30 June, and the figures flow into the relevant labels. The ATO treats the rebate as a refundable tax offset, so you can get a refund even if you have no tax to offset against.8Australian Taxation Office. Claiming the Private Health Insurance Rebate You carry the full premium cost all year, but you can’t overclaim.
What Happens at Tax Time
However you claimed, the ATO reconciles the rebate on your return. It compares what you were entitled to (based on actual income) against what you received as a premium reduction.8Australian Taxation Office. Claiming the Private Health Insurance Rebate Under-received amounts show up as a tax offset on your notice of assessment. Over-received amounts show up as a tax liability.
Couples face a specific trap. If you claim your spouse’s share of the rebate on your return, you also inherit any excess rebate they received as a premium reduction. And if your spouse never lodges their return by the end of the lodgment year, any rebate they owe automatically transfers to you.8Australian Taxation Office. Claiming the Private Health Insurance Rebate
The Medicare Levy Surcharge Side of the Equation
The rebate tiers share their income thresholds with the Medicare Levy Surcharge, and the two work in opposite directions. If you earn above the Base tier threshold and don’t hold private hospital cover, the ATO charges a surcharge on top of the 2% Medicare levy:5Australian Taxation Office. Medicare Levy Surcharge Income, Thresholds and Rates
- Tier 1: 1.0% of taxable income
- Tier 2: 1.25% of taxable income
- Tier 3: 1.5% of taxable income
For higher earners the surcharge is often more than a basic hospital premium would cost. A single person on $160,000 without hospital cover pays $2,400 in MLS (1.5% of $160,000); a basic hospital policy can come in below that even with no rebate at Tier 3. The surcharge is triggered by the absence of hospital cover specifically. Extras-only or ambulance-only policies don’t exempt you.