Summary
- Private health insurance rebate is an additional government sponsorship to lower insurance premiums.
- The rebate is significantly impacted by an individual’s family situation, his/her age, and annual gross income.
- The Australian government offers this rebate so that more people could get into private health insurance by making the private policy more affordable. This also helps avoid the risk of overwhelming the public system.
Most Australian families have some private health insurance cover that can get quite expensive over time. For that reason, the Australian government decided to partially cover some of the costs for private healthcare policies, depending on various factors.
Private health insurance rebate is the system through which the government contributes towards private health insurance. This article covers the insurance rebate in detail.
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What is private insurance rebate?
The private health insurance rebate is the Australian government’s way of sponsoring towards private health insurance premiums. The authorities figured that the rebate might bring a touch of relief to families that are bringing income under a certain level, which means that some Australians do not qualify for the government incentive.
Australians are eligible for the rebate depending on their annual gross income (or taxable income).
What must an individual take into consideration?
The total rebate sum will be significantly affected by the family situation, that is, if the individual is a single person or living with a partner and children. Moreover, de facto partners also count towards the family tier.
The government has different tiers for different age groups too. Generally, older generation will get back more money due to more visitations to the hospital.
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However, annual gross income is a crucial factor that affects the rebate percentage. The more one earns, the less rebate one will receive. There are some limits when it comes to this element – if singles make more than A$140,000 and families or couples over A$280,000, they are not eligible for the rebate sponsorship.
What does the rebate cover?
As the name suggestions, the private health insurance rebate covers private insurance policies only. Specifically, it applies to general treatments, hospital cover, and ambulance service.
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It is important to understand that Overseas Visitors Health Cover is not subjected to the government rebate.
Why is there a need for rebate?
There are three main reasons why a rebate is required in Australia:
- The Australian standard of living is extremely high compared to some other nations. Ever since the government changed the healthcare system into a hybrid model, more families were forced to join private health insurance. Medicare is sufficient for general treatments, but for severe diseases like cancer, public healthcare will not cover the treatment costs. That said, Australian government has decided to offer more affordable medical treatments in private hospitals to its citizens.
- Private health is quite expensive, especially for families with more than four members. Private policies need to be paid per person or as a family package. In either case, the government has allowed private healthcare to become more accepted with more individuals attracted towards private insurers.
- With an increasing number of aged people in need of hospital admissions and hospitalisations, the public system is at a risk of being overburdened. The government does not want that situation to arise, and thus created the private insurance rebate to relieve the pressure that public hospitals often bear.
What are the rebate levels?
The rebate levels are mentioned in the table below. Please note that they are applicable from 1 April 2019 through 31 March 2021. The rebate applies to general treatment, hospital, and ambulance cover.
What if the wrong rebate is chosen?
Generally, there are no financial penalties if the wrong rebate is chosen, irrespective of whether it was intentional or by accident. However, if the individual chooses a lower tier compared to the income, a higher rebate will be applied which may result in tax debt.
In case when people nominate a higher tier, they will receive a lower rebate. The lower rebate will result in tax offsets for that financial year.
Rebate tiers are filled in annual tax return forms. For extra safety, Australians may request an official form from their private insurer to be certain about the eligible tier levels.
How to claim the rebate?
There are two possible ways of claiming the rebate:
- An individual can demand lower premiums at their private insurance company.
- Alternatively, the rebate can be claimed through annual tax return forms. More information about this procedure is available on the official Australian Taxation Office website.
