The Australian Government Rebate and Private Health Insurance

The Australian Government Rebate and Private Health Insurance

There are a number of Government Surcharges and incentives as part of the private health system to encourage people to take our private health insurance. These include the Australian Government Rebate, Lifetime Health Cover, and the Medicare Levy Surcharge. 

Australian Government Rebate

Most Australians with private health insurance receive a rebate from the Australian Government to assist with the cost of their private health insurance. The rebate received depends on your level of income. The income thresholds are reviewed and indexed by the Government each financial year. The following income thresholds apply from July 1, 2023


  Base Tier Tier 1 Tier 2 Tier 3
Single Income $0 - $93,000 $93,001 - $108,000 $108,001 - $144,000 $144,001 +
Family Income $0 - $186,000 $186,001 - $216,000 $216,001 - $288,000 $288,001 +



  Base Tier Tier 1 Tier 2 Tier 3
Less than 65 years 24.608% 16.405% 8.202% NIL
65 to 69 years 28.710% 20.507% 12.303% NIL
70 years or older 32.812% 24.608% 16.405% NIL

The rebate can be claimed in two ways:
  1. As an upfront reduction to your premium. To do this, you will need to complete the Australian Government Rebate Application Form. You will need to nominate a rebate tier from the above table so that we know how much rebate you wish to claim. If you need to change your rebate tier, you can nominate a new tier by calling us on 1300 651 988, by email to, visit your local St Lukes customer care centre or login to St Lukes Connect.
  2. At the end of the financial year when you lodge a tax return. For more information about the rebate, click here or contact the Australian Taxation Office on 13 28 61.

Lifetime Health Cover

What is Lifetime Health Cover?
Lifetime Health Cover was introduced by the Australian Government on July 1, 2000 and is designed to encourage people to take out hospital cover earlier in life and to maintain their hospital cover.

How do I avoid paying a Lifetime Health Cover loading?
The lowest hospital premium you can pay is the base rate. To qualify for this base rate premium, a person needs to take out hospital cover before July 1 immediately following their 31st birthday. People who join after this date will pay an extra 2 per cent loading (in addition to the base rate) for each year they are over the age of 30, up to a maximum of 70 per cent.

Are there exemptions?
People born on or before July 1, 1934 can join a registered health insurer at any time and always qualify for the base rate premium. Other special provisions apply to people who were overseas when Lifetime Health Cover was introduced, those overseas when they turned 31, migrants, those covered by a Department of Veterans’ Affairs Gold Card and members of the Australian Defence Force.  New migrants to Australia who are aged 31 or over will not have to pay a loading providing they purchase hospital cover within 12 months of becoming eligible  for Medicare.

Can the Lifetime Health Cover loading be removed?
The Australian Government allows health funds to remove any Lifetime Health Cover loading that applies to a person after that person has held hospital cover for a continuous 10-year period.  The government recognises that people may need to stop their hospital cover for various reasons, such as during times of financial difficulty. Therefore, people can cease their hospital cover for a cumulative period of up to two years and 364 days over their lifetime, without incurring any premium loadings when they rejoin. If a member ceases their membership for three years or more, calculated over a lifetime, they will pay an additional 2 per cent loading for each full year of absence over and above the first two years when they return to hospital cover.

What happens when I change funds?
When you change funds, your Lifetime Health Cover loading moves with you. All registered health funds are obliged to recognise the certified age of any contributor wanting to transfer from another fund. The period of absence rule will apply to any gap in hospital cover if a member is not paid up to date with their previous fund.

For more information about Lifetime Health Cover, visit

Medicare Levy Surcharge

The Medicare Levy Surcharge is an additional surcharge imposed on people earning above defined income thresholds, who are eligible for Medicare but do not hold an appropriate level of private hospital cover.
If your income for Medicare Levy Surcharge purposes is above the defined income thresholds set by the government, you will be required to pay an additional Medicare Levy Surcharge of up to 1.5% if you, your spouse and all your dependants don’t hold an appropriate level of private Hospital cover. An appropriate level of Hospital cover is one which does not have an excess greater than $750 for single members or greater than $1500 for couples, single parent, or family members. If you take out private Hospital cover with St.LukesHealth, you may be exempt from paying the Medicare Levy Surcharge from the date the policy is effective on all Hospital covers, with the exception of our high excess product – Gold Hospital 1000.


  Base Tier Tier 1 Tier 2 Tier 3
Single Income $0-$93,000 $93,001-$108,000 $108,001-$140,000 $144,001+
Family Income $0-$186,000 $186,001-$216,000 $216,001-$288,000 $288,001+
Medicare Levy Surcharge NIL 1.00% 1.25% 1.50%

How is my Medicare Levy Surcharge, calculated?

To calculate your income for Medicare Levy Surcharge purposes, the following items are considered:

  • Taxable income
  • Reportable fringe benefits
  • Total net investment losses
  • Reportable super contributions
  • If you have a partner or spouse, their share of the net income of a trust on which the trustee must pay tax and which has not been included in their taxable income
  • Exempt foreign employment income.

For example, Cindy is 35 years old, single and does not have the appropriate level of private hospital cover. Her taxable income for the 2021-22 financial year is $90,000.

When Cindy completes her tax return, she also declares that she has reportable fringe benefits of $20,000

Cindy’s total income for Medicare Levy Surcharge purposes is $110,000This makes her a Tier 2 income earner for calculating the Medicare Levy Surcharge.

To calculate Cindy’s Medicare Levy Surcharge: $90,000 taxable income + $20,000 reportable fringe benefits X 1.25% = $1375.

What about if I have a partner or family?

If you have a partner or spouse, your combined income will be used to calculate your Medicare Levy Surcharge.

If you are a family with a combined income of more than $186,000, you may need to hold hospital cover for you, your partner and your dependents to avoid the surcharge . If your partner or one of your dependents is not covered, you will pay the surcharge unless an exemption applies.

If you do have to pay the Medicare Levy Surcharge, it will be included with the Medicare levy and shown as one amount on your assessment called “Medicare levy and surcharge”.

For families with children, the income thresholds increase by $1500 for each child after your first child. For Medicare Levy Surcharge purposes, your child is still a dependent if you are paying child support while the child does not reside with you.

For more information on the Medicare Levy Surcharge, visit

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