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Rebate changes - will they affect you?

Tuesday, 4 March 2014

From 1 July 2012 the Australian Government Rebate on Private Health Insurance will be subject to an income test.

For the majority of members – those earning under $84,000 as a single or $168,000 as a couple or family – your rebate entitlement will not change.

However, for those earning over these amounts there will be some changes and it is important that you understand how they will impact you and your family.

From 1 July 2012 the level of rebate you are entitled to will depend on your level of income and which rebate tier (or income threshold) you fall into. You can use the table below to work out which rebate tier you are in and how the changes will affect you.

Private Health Insurance Rebate Tiers - Effective 1 July 2012 (for the 2012-2013 income year) 

  Tier 1   Tier 2 Tier 3
 Single income   $0 - $84,000   $84,001 - $97,000    $97,001 - $130,000  $130,001 +
 Family income   $0 - $168,000    $168,001 - $194,000   $194,001 - $260,000  $260,001 +
   Private Health Insurance Rebate
 Less than 65 yrs   30%   20%  10% Nil 
 65 to 69 yrs   35%  25% 15% Nil 
 70 yrs or over  40%  30%  20% Nil 


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

The income testing applies to the financial year in which the payment is received by the health fund, regardless of the period the payment covers. It does not affect payments received and processed by the fund before 1 July 2012. You will still receive your full rebate entitlement for any payments made during the 2011-2012 financial year.

The income thresholds shown above apply for the 2012-2013 financial year. These thresholds will be reviewed and indexed by the government for future financial years.

You can continue to claim the rebate as a premium reduction, through your annual tax return or as a refund from a Medicare office. 

What do you need to do?

If you expect your taxable income for the 2012-2013 financial year will be under $84,000 as a single or under $168,000 as a couple or family, you don’t need to do anything and you can continue to claim your current level of rebate.

If you expect your taxable income for the 2012-2013 financial year may fall into one of the higher income thresholds, you may wish to nominate a new rebate tier so we can adjust your premium accordingly. 

How can I nominate a new rebate tier?

You can nominate a new rebate tier in one of three ways:

1. Call us on 1300 651 988;
2. Email general@stlukes.com.au; or
3. Visit your nearest St.LukesHealth office.

After 1 July 2012 you can also nominate your rebate tier through online member services, or if you are not registered for online member services you can register now

What if you claim the wrong level of rebate as a premium reduction?

If at the end of the financial year you find out you are eligible for a different level of rebate to the level you have claimed as a premium reduction, an adjustment will be made in your annual tax return. You may wish to nominate a rebate tier based on what you believe would be the upper limit of the income you expect to earn to avoid a tax liability at the end of the year. There is no penalty imposed by the ATO for claiming the wrong level of rebate, however, if you have claimed too much or too little this will be adjusted in your annual tax return. 

How often can I change my rebate tier nomination?

You can change your rebate tier as often as you wish, however you can’t backdate a tier nomination as the rebate would already have been claimed from the government for your previous premium payments. 

What income is included in the income test?

To find out what income is tested for a single person or for a family or couple go to www.ato.gov.au/privatehealthinsurance.

How can I find out more information about the rebate?

Go to www.ato.gov.au/privatehealthinsurance or download the Australian Government brochure from the link below.

Australian Government Rebate on Private Health Insurance brochure

To find out how the rebate changes introduced from 1 July 2012 may affect your individual circumstances, consult your tax advisor or contact the ATO on 13 28 61.

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