Australian Private Health Insurance Rebate

What it is, why it matters, and how to make sure you’re getting the savings you’re entitled to.

What is the Private Health Insurance Rebate?

The Private Health Insurance Rebate is an Australian Government contribution that helps reduce the cost of your eligible private health insurance premiums.
 
It applies to hospital cover, extras cover, or combined hospital and extras cover purchased through an Australian-registered health insurer, and the amount you receive depends on your age and income tier.
 
The aim? To make private cover more affordable – and to support a more sustainable public health system.

How does the Private Health Insurance Rebate work?

Your rebate is determined by your income tier, family status, and age.
 
  • Income tiers: Your income for Medicare levy surcharge purposes places you into Base Tier, Tier 1, Tier 2, or Tier 3. Higher incomes receiver a lower rebate, and Tier 3 receive a 0% rebate rate. For the latest income tiers, please see the ATO’s income threshold table here.
  • Family status: Singles and families have different income thresholds. Family income thresholds are doubled and increase for each dependent child after the first.
  • Age bands: Older Australians receive a higher rebate rate within the same income tier. For example, someone is aged 70 or older would receive the highest rebate in their tier.
  • Annual update: Rebate percentages are reviewed and updated on 1 April every year, based on CPI and average premium increases.
To get an estimate of your private health insurance rebate percentage based on your current situation, please use the ATO’s private health insurance rebate calculator.
 
For the latest rebate rates, and for more information about income tiers and age bands, visit the ATO’s Income thresholds and rates for the private health insurance rebate page.
 
How you receive your rebate:
 
  • As an upfront reduction in your premiums through your insurer, or
  • As a tax offset when you lodge your tax return.
If your estimated income tier isn’t accurate, the ATO reconciles it automatically at tax time.

Who does the rebate apply to?

The rebate is available to most Australian residents who:
 
  • Hold a complying health insurance policy (hospital, extras, or combined) issued by an Australian-registered fund
  • Are eligible for Medicare
  • Earn below the Tier 3 income threshold, which is currently $164,001 for singles or $328,001 for families for the 2026-27 financial year
You won’t receive the rebate if:
 
  • Your income places you in Tier 3
  • You hold overseas visitors cover or cover from an insurer not registered in Australia
Extras only or ambulance only policies can qualify – as long as they are complying policies.

How to make sure you receive the rebate

  1. Nominate your income tier
    Contact your insurer or use their online member portal to select the tier you expect to fall into. This allows the rebate to be applied upfront.

  2. Update your tier if your income changes
    If your income goes up or down, update it with your insurer to avoid a bill or refund surprise at tax time.

  3. Prefer to claim at tax time?
    Skip nominating a tier and pay your full premium, then claim the rebate as a tax offset in your return. Your insurer will send the relevant information to the ATO.

Start saving with the Private Health Insurance Rebate today

The rebate is one of the simplest ways to make private health insurance more affordable.
 
Whether you’re comparing options or reviewing your current cover, making sure your income tier is up-to-date puts you in control of your costs.
 
Explore your cover options with AIA Health. Get a quote today.

Frequently asked questions

You may be eligible if you:
 
  • Hold a complying private health insurance policy (hospital, extras, or combined) with an Australian-registered insurer
  • Are eligible for Medicare
  • Have income below the Tier 3 threshold

Yes. The rebate applies to hospital, extras, combined, and ambulance cover, as long as it’s a complying policy issued by an Australian-registered insurer.

There are no penalties for choosing the wrong tier.
 
If you over or underestimate your income, the ATO will adjust your rebate amount when you lodge your tax return – resulting in either a refund or tax bill depending on the difference.

Yes. You can update your nominated income tier at any time by contacting your insurer. This helps ensure your rebate is applied correctly and minimises adjustments at tax time.

No. Your entitlement to the rebate is linked to your Medicare eligibility, income, and holding a complying policy – not the specific insurer you’re with.
 
If you switch funds, your rebate continues as long as your new policy is eligible. 

No. You must choose either:
 
  • A premium reduction throughout the year, or
  • A tax offset when you lodge your return.
Your insurer will supply your private health insurance statement for tax purposes, and the ATO will reconcile any differences. 

Yes. Rebate percentages are reviewed annually on 1 April and may change depending on CPI and industry premium adjustments. Visit the Private health insurance rebate page on the ATO website for the latest rebate percentages.

You can use the ATO’s Private health insurance rebate calculator, which estimates your percentage based on your income, age, and family status.