Private Health Insurance Tax Offset: Eligibility, Rates, and Claiming

The private health insurance tax offset, formally the Private Health Insurance Rebate, returns between about 8% and 32% of your premium depending on your age and household income. You can take it as an upfront discount that lowers each premium bill, or claim it as a refundable tax offset when you lodge your return. For the 2025–26 financial year, singles earning up to $101,000 and families earning up to $202,000 receive the full Base tier rebate; those above $158,000 single or $316,001 family receive nothing.1Australian Taxation Office. Income Thresholds and Rates for the Private Health Insurance Rebate

Who Can Claim

The Australian Taxation Office sets four requirements. You need a complying health insurance policy with a registered Australian health insurer, you must be eligible for Medicare, you must be classified as a private health insurance incentive beneficiary, and your income for surcharge purposes must fall below the Tier 3 threshold.2Australian Taxation Office. Private Health Insurance Rebate Eligibility The test is Medicare eligibility rather than citizenship, so some visa holders and visitors from reciprocal-agreement countries can qualify.

A complying policy is one offered by a health insurer registered under the Private Health Insurance Act 2007, and it must cover hospital treatment, general treatment (extras), or both.3Services Australia. How Much Rebate You Can Get on Private Health Insurance Not every product from a registered insurer automatically qualifies. Check with your fund before assuming the rebate applies.

How Much You Get

Your rebate has two moving parts: an income tier and an age band. The tier is set by your income for surcharge purposes, which adds together taxable income, reportable fringe benefits, total net investment losses, and reportable super contributions. Spouse income is included if you have one.4Australian Taxation Office. Medicare Levy Surcharge Income, Thresholds and Rates Salary-sacrificed super and deductible personal super contributions both count, even though they don’t appear in taxable income.

For 2025–26, the tiers are: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, rebate is zero

Families with more than one dependent child add $1,500 to each family threshold for every child after the first.1Australian Taxation Office. Income Thresholds and Rates for the Private Health Insurance Rebate

The percentage that applies to your premium then depends on the age of the oldest person on the policy. Rates adjust each 1 April based on a formula tied to CPI and industry-weighted premium growth, so two sets of percentages apply across a single financial year.5PrivateHealth.gov.au. Private Health Insurance Rebate

From 1 July 2025 to 31 March 2026:1Australian Taxation Office. Income Thresholds and Rates for the Private Health Insurance Rebate

  • Under 65: 24.288% Base, 16.192% Tier 1, 8.095% Tier 2
  • 65–69: 28.337% Base, 20.240% Tier 1, 12.143% Tier 2
  • 70 and over: 32.385% Base, 24.288% Tier 1, 16.192% Tier 2

From 1 April 2026 to 31 March 2027 the rates drop slightly:6Australian Government Department 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
  • 65–69: 28.139% Base, 20.098% Tier 1, 12.058% Tier 2
  • 70 and over: 32.158% Base, 24.118% Tier 1, 16.079% Tier 2

If you’re 60 and your partner on the same policy is 66, the 65–69 rate applies to the whole policy.

Upfront Reduction or Tax Offset

You choose how to receive the rebate. Most people take it as an upfront premium reduction: you nominate an expected income tier with your insurer and they discount every bill by the matching percentage.5PrivateHealth.gov.au. Private Health Insurance Rebate Lower cash outgoings all year, at the cost of some exposure if your income climbs.

The alternative is to pay the full premium and claim the whole rebate as a refundable tax offset on your return.5PrivateHealth.gov.au. Private Health Insurance Rebate Refundable means you get the money even if you owe no tax. This suits people with variable income: freelancers, anyone expecting a large bonus, or someone who changed jobs mid-year. The trade-off is waiting up to 12 months for money you could have used earlier.

If Your Income Estimate Is Off

Nominate a tier that turns out to be too high, and you’ll have received less rebate than you were entitled to. The ATO makes it up through a tax offset when you lodge.5PrivateHealth.gov.au. Private Health Insurance Rebate

The other direction stings more. If your income lands higher than the tier you nominated, you’ve been overpaid, and the ATO recovers the excess as a tax liability on your notice of assessment.7Australian Taxation Office. Claiming the Private Health Insurance Rebate There’s no penalty for guessing wrong, only the adjustment itself. If you think you might cross a tier boundary, claiming through your return instead of upfront avoids the surprise.

Also Weigh the Medicare Levy Surcharge

For higher earners, the rebate sits alongside a second calculation. The Medicare Levy Surcharge is an extra 1% to 1.5% tax that applies to people above the Base tier threshold who don’t hold private hospital cover.8Australian Taxation Office. Paying the Medicare Levy Surcharge The income thresholds match the rebate tiers exactly:

  • Base tier ($101,000 single / $202,000 family or less): no surcharge
  • Tier 1: 1%
  • Tier 2: 1.25%
  • Tier 3: 1.5%

A single earner on $160,000 without hospital cover pays 1.5% MLS, or $2,400 a year. A basic hospital policy often costs less than that, and the rebate reduces it further.4Australian Taxation Office. Medicare Levy Surcharge Income, Thresholds and Rates Only hospital cover satisfies the MLS test. Extras-only policies don’t.

What You Need at Tax Time

Your health insurer issues an annual private health insurance statement after the financial year ends. The ATO aims to pre-fill your return with this data by around 20 July, and you can also pull the statement from your insurer’s portal or your myGov account. It shows your share of premiums paid, any rebate already received as a premium reduction, and a benefit code identifying the tier applied.

You also need your income for surcharge purposes for the year, which as noted goes beyond taxable income to include reportable fringe benefits, net investment losses, and reportable super contributions.4Australian Taxation Office. Medicare Levy Surcharge Income, Thresholds and Rates When you lodge through myTax, the system checks whether the tier your insurer applied matches your actual income and adjusts the assessment either way.