Current Issues

Income Testing of the Private Health Insurance Rebate

Issue

Changes to private health insurance. Income testing for the private health insurance rebate and increase to the Medicare levy surcharge for some people who do not hold appropriate private health insurance hospital cover.

Response

The changes to the private health insurance rebate and Medicare levy surcharge will operate as follows from 1 July 2012:

	Unchanged	Tier 1	Tier 2	Tier 3
Singles Families	≤ $84,000 ≤ $168,000	$84,001-97,000 $168,001-194,000	$97,001-130,000 $194,001-260,000	≥ $130,001 ≥ $260,001
Rebate
< Age 65	30%	20%	10%	0%
Age 65-69	35%	25%	15%	0%
Age 70+	40%	30%	20%	0%
Medicare Levy Surcharge
All ages	0.0%	1.0%	1.25%	1.5%

Note: The thresholds increase annually, based on growth in Average Weekly Ordinary Time Earnings. Single parents and couples (including de facto couples) are subject to the family tiers. For families with children, the thresholds are increased by $1,500 for each child after the first.

Nine out of ten Australians will not be affected by these changes at all. Single people earning less than $84,000 a year and couples or families earning less than $168,000 a year will keep their 30, 35 or 40 per cent rebate (depending on their age).

It is estimated that 99.7 per cent of people with private health insurance hospital cover will keep their insurance, with only 27,000 people dropping their cover. Last year from October to December alone, 50,000 people took up private health insurance. The private health insurance industry is strong and growing.

The small number of people who may drop private health insurance cover will not significantly burden public hospitals or cause premiums to increase.

For more information, please see the Frequently Answered Questions page.