Private Health Insurance Tax Offset

The Private Health Insurance tax rebate (PHIR) is based on a percentage of private health insurance premium paid.

The rebate has been subject to an income test since 1 July 2012

The rebate can be claimed..

  • as an offset (rebate) in your tax return; or
  • as a direct payment; or
  • as a reduction in the premiums paid to the health insurance provider.

If you have no tax payable and the premium reduction has not been fully claimed, the offsets are available for refund. Part-year claims are paid on a pro-rata basis. Likewise any calculation adjustment resulting from an overclaim, will be required to be paid back to the Tax Office.

Unclaimed rebate entitlements or over-claims are calculated by the Tax Office on tax return lodgment and issued as an adjustment to the tax assessment calculation.

See further: Private health insurance rebate eligibility

From 1 July 2012, the Health Insurance Tax Offset is limited by income, as calculated in the tables below. If income is over the thresholds, the available rebate may be reduced or stopped completely.

PHIR Annual inflation adjustments

  • The income thresholds are inflation-adjusted each financial year on 1 July (currently frozen); and
  •  from 1 April 2014 the rebate percentages are to be adjusted annually on 1 April

[su_label type=”warning”]Note:[/su_label] This means that there are two rebate values in each financial year (from 1 July 2013). Because of this additional complexity, the Tax Office recommends that you wait for your annual statement from the health insurer before completing your tax return.

PHIR Income Thresholds and Rebate Percentages

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[su_tab title=”2015 to 2021″]

2015-16 and 2016-17 and 2017-18 income tiers remain at 2014-15 levels. Under 2014 amendments annual indexation of the income levels for the health insurance rebate and MLS is frozen (at 2014-15 levels) for 3 years from the 2015-16 financial year until 30 June 2018. A Budget 2016 proposal now enacted extends the indexation freeze for a further 3 years from 1 July 2018.

Income 2015-16 to 2020-2021
No TierTier 1Tier 2Tier 3
Singles$0 to $90,000$90,001 to $105,000$105,001 to $140,000over $140,000
Families$0 to $180,000$180,001 to $210,000$210,001 to $280,000over $280,000
Age: Rebate (tax offset) % from 1 July 2016 to 31 March 2017
Under 6526.791%17.861%8.930%0%
From 65 to 69 years31.256%22.326%13.395%0%
70 years and above35.722%26.791%17.861%0%
Age: Rebate (tax offset) % from 1 April 2017 to 31 March 2018
Under 6525.934%17.289%8.644%0%
From 65 to 69 years30.256%21.612%12.966%0%
70 years and above34.579%25.934%17.289%0%
Age: Rebate (tax offset) % from 1 April 2018 to 30 June 2018
Under 6525.415%16.943%8.471%0%
From 65 to 69 years29.651%21.180%12.707%0%
70 years and above33.887%25.415%16.943%0%

For families with children, the thresholds are increased by $1,500 for each child after the first.[/su_tab]

[su_tab title=”2015-16″]

2015-16 Income Thresholds and Rebate Percentages

Rebate percentages are index-adjusted from 31 March.

Income 2015-16
No TierTier 1Tier 2Tier 3
Singles$0 to $90,000$90,001 to $105,000$105,001 to $140,000over $140,000
Families$0 to $180,000$180,001 to $210,000$210,001 to $280,000over $280,000
Age: Rebate (tax offset) % from 1 July 2015 to 31 March 2016
Under 6527.820%18.547%9.273%0%
From 65 to 69 years32.457%23.184%13.910%0%
70 years and above37.094%27.820%18.547%0%
Age: Rebate (tax offset) % from 1 April 2016 to 30 June 2016
Under 6526.791%17.861%8.930%0%
From 65 to 69 years31.256%22.326%13.395%0%
70 years and above35.722%26.791%17.861%0%

For families with children, the thresholds are increased by $1,500 for each child after the first.

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[su_tab title=”2014-15″]

2014-15 Income Thresholds and Rebate Percentages

Rebate percentages are index-adjusted from 31 March.

Income 2014-15
No TierTier 1Tier 2Tier 3
Singles$0 to $90,000$90,001 to $105,000$105,001 to $140,000over $140,000
Families$0 to $180,000$180,001 to $210,000$210,001 to $280,000over $280,000
Age: Rebate (tax offset) % from 1 April 2015 to 30 June 2015
Under 6527.820%18.547%9.273%0%
From 65 to 69 years32.457%23.184%13.910%0%
70 years and above37.094%27.820%18.547%0%
Age: Rebate (tax offset) % from 1 July 2014 to 31 March 2015
Under 6529.04%19.36%9.68%0%
From 65 to 69 years33.88%24.20%14.52%0%
70 years and above38.72%29.04%19.36%0%

 

For families with children, the thresholds are increased by $1,500 for each child after the first.

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[su_tab title=”2013-14″]

2013-14 Income Thresholds

Adjusted rebate calculation formula

Commencing 1 April 2014 the private health insurance rebate is calculated by using the commercial premiums (excluding LHC loadings) as at 1 April 2013 and indexed annually by the lesser of CPI or the actual premium increase. This will only apply to premiums paid from 1 April 2014.

On that basis, the adjusted rebate percentages from 1 April 2014 are 96.8% of the specified 2013-14 percentages, reflected in the table below.

Income 2013-14
No TierTier 1Tier 2Tier 3
Singles$0 to $88,000$88,001 to $102,000$102,001 to $136,000over $136,000
Families$0 to $176,000$176,001 to $204,000$204,001 to $272,000over $272,000
Age:Rebate (tax offset) % from 1 April 2014 to 30 June 2014
Under 6529.04%19.36%9.68%0%
From 65 to 69 years33.88%24.20%14.52%0%
70 years and above38.72%29.04%19.36%0%
Age: Rebate (tax offset) % from 1 July 2013 to 31 March 2014
Under 6530%20%10%0%
From 65 to 69 years35%25%15%0%
70 years and above40%30%20%0%

 

For families with children, the thresholds are increased by $1,500 for each child after the first. So for example if you have two dependant children the family income threshold increases by $1,500, for 3 children by $3,000.[/su_tab]

 

[su_tab title=”2012-13″]

2012-13 Income Thresholds

TierIncome (2012-13)Private health insurance rebate (tax offset) %
Below 65 years65 to 69 years70 years & over
No tierSingles: $0 to $84,000
Families: $0 to $168,000
30%35%40%
1Singles:
$84,001 to $97,000
Families
:
$168,001 to $194,000
20%25%30%
2Singles:
$97,001 to $130,000
Families
:
$194,001 to $260,000
10%15%20%
3Singles: over $130,000
Families: over $260,000
0%0%0%

For families with children, the income thresholds are increased by $1,500 for each child after the first. So for example if you have two dependant children the family income threshold increases by $1,500, for 3 children by $3,000.[/su_tab]
[su_tab title=”Calculation of ‘Income'”]

Income for these purposes is more than just simple taxable income.
It is a formula made up of the following items:

= Taxable income

+ adjusted fringe benefits
+ reportable super contributions
+ total net investment loss
+ tax-free government pensions or benefits

  • Less: deductible child maintenance expenditures.
  • Also excluded is any taxed element of a super lump sum, other than a death benefit, which you received that does not exceed your low rate cap and you are 55–59 years old.

The tax office has an online calculator – see here.

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[su_tab title=”2011-12″]

Offsets payable up to 30 June 2012

Private Health Insurance Offset
(not income tested)
 AgeTax Offset
 Under 65 years30%
 65 to 70 years35%
 70 years and above40%

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[su_tab title=”Restrictions”]

Further rebate restrictions

The premium base
  • the private health insurance rebate will be calculated using commercial premiums as at 1 April 2013 and then indexed annually by the lesser of CPI or the actual increase in commercial premiums.
  • this means your rebate (offset) may be calculated on an amount which is less than the actual health insurance premium that you paid
Exclusion of LHC premium loading

With effect from 1 July 2013, the Lifetime Health Cover loading will not be included when the private health insurance rebate is determined. This will effectively increase the premiums payable by those people required to pay the loading.

Insurance Premium Loadings Explained – Lifetime Health Cover

The health insurance rebate is the “carrot“, a government subsidy of health insurance premiums designed to encourage us to take out a minimum level of private hospital insurance cover.

Lifetime Health Cover is the “stick” – a scheme introduced by the Federal Government in 2000 as financial punishment for non-members of private health insurance fund, for everyone over the age of 31 years.  In general, if you do not have adequate hospital cover after you turn 31 (determined at the following 1 July) and subsequently take out hospital cover, you will pay a 2% premium surcharge to the health insurer for every year you are aged over 30. The maximum loading is 70%.

The premium loading is removed after 10 continuous years of cover.

There are some concessions and exemptions to the premium surcharge, summarised as follows:

  • if your birthday is before 1 July 1934, you are exempt from The Lifetime Health Cover premium loading
  • possession of a current Department of Veterans’ Affairs Gold Card is treated as full hospital cover (previous periods holding the card since 1 July 1999 also count).
  • gaps in cover of up to 1,094 days in total over your lifetime will not trigger the 2% loading. Over 1094 days will incur a 2% loading on resumption of insurance, and 2% for each uninsured year after that.
  • cancelled insurance days spent overseas are excluded from the 1,094 days lifetime limit
  • new migrants have a grace period of 12 months from Medicare registration
  • short-term suspensions agreed to by the insurer are treated as maintaining cover
  • ADF members are considered to have full hospital health cover. Discharge after 1 July after turning 31 years enables a 1,094 day grace period; discharge before, attracts the normal rules.
  • citizen or Australian PR overseas on 1 July after turning 31 enables a 12 month grace period on return. While overseas, return visits of up to 90 days are still counted as time spent overseas.
  • citizen or Australian PR over 31 and overseas on 1 July enables a lifetime 1,094 day grace period on return. While overseas, return visits of up to 90 days are still counted as time spent overseas
  • residents of Norfolk Island are generally treated as ‘overseas’

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  • The ‘Age’ criterion is taken as the age of the oldest person on the policy.
  • The tax offset is calculated as the specified percentage of the eligible health insurance premium.

See also

.

This page was last modified 2018-06-27