Private Health Insurance Rebate
A government rebate that reduces the cost of private health insurance premiums, means-tested based on income and age.
The Private Health Insurance Rebate is a government subsidy that reduces the cost of eligible private health insurance premiums. The rebate percentage varies by age and income tier, with older and lower-income policyholders receiving a higher rebate, and is updated each 1 April (not aligned with the financial year). For the rebate year effective 1 April 2026 – 31 March 2027, the base rebate for singles earning $105,000 or less (families $210,000 or less) is 24.118% for those under 65, 28.139% for ages 65–69, and 32.158% for 70 and over.
The rebate reduces as income increases through three tiers, and individuals/families above the top threshold ($164,000 singles / $328,000 families) receive no rebate at all. You can receive the rebate in one of two ways: as a premium reduction (your insurer reduces your premiums by the rebate amount, and you claim this on your tax return for reconciliation) or as a refundable tax offset (you pay full premiums and claim the rebate when you lodge your tax return).
If you receive the rebate as a premium reduction during the year but your income ends up being higher than expected, you may need to repay some of the rebate through your tax return. The ATO reconciles the rebate you received against the rebate you were entitled to, based on your actual income for the year.
How it works
The Private Health Insurance Rebate scales down as income rises and up with age, so two people with the same policy can receive very different subsidy amounts. It's structured in income tiers — a Base tier and three tiers above it — with the rebate percentage highest for the Base tier and reducing at each higher tier, until it disappears entirely once income passes the top threshold. Within each income tier, older policyholders receive a higher rebate percentage than younger ones, reflecting that older Australians are more likely to need private hospital treatment. Unusually for a government concession, the rebate percentages are reset on 1 April each year rather than at the start of the financial year, so the applicable rate can change partway through an income year.
Most people receive the rebate as a premium reduction — the health insurer applies the discount directly to the premium charged, so you never pay the full amount upfront. The alternative is to pay full premiums and instead claim the rebate as a refundable tax offset when lodging your tax return, which suits people who prefer to manage the cashflow themselves or whose income fluctuates significantly during the year. Either way, the rebate you actually received during the year (based on the income tier you or your insurer estimated) gets reconciled against your actual income once your tax return is assessed.
The reconciliation step catches people whose income ends up higher than expected — a bonus, extra investment income, or a pay rise partway through the year can push you into a lower rebate tier retrospectively, meaning you received more premium reduction than you were entitled to and need to repay the difference through your tax return. This is worth planning for if your income is close to a tier boundary; nominating a slightly lower rebate percentage with your insurer at the start of the year, or using the refundable-offset method instead of the premium-reduction method, can avoid an unwelcome repayment at tax time.
Example: rebate on a $3,000 annual premium
A 45-year-old single policyholder earning $95,000 sits under the Base tier's $105,000 threshold, so for the rebate year effective 1 April 2026 they qualify for the under-65 Base tier rebate of 24.118%.
On an annual premium of $3,000, that works out to a rebate of roughly $723, leaving an effective net premium of about $2,277 once the rebate has been applied through the reduced-premium method.
Related Terms
Medicare Levy Surcharge (MLS)
An additional 1%–1.5% surcharge on higher-income earners who don't hold private hospital insurance.
Medicare Levy
A 2% levy on taxable income to help fund Australia's public healthcare system, Medicare.
Tax Offset (Rebate)
A direct reduction in the amount of tax you owe, different from a deduction which reduces taxable income.
Income Tax
Tax levied by the federal government on your taxable income, calculated using progressive tax brackets.