Australian Government Private Health Insurance Rebate

Most Australians with private health insurance currently receive a rebate from the Australian Government to help cover the cost of their premiums. The private health insurance rebate is income tested. The table below details the different rebate amounts and Medicare Levy Surcharge levels. The rebate applies to hospital, general treatment and ambulance policies.

The rebate levels applicable from 1 April 2019 to 31 March 2021* are:

Single parents and couples (including de facto couples) are subject to family tiers. For families with

children, the thresholds are increased by $1,500 for each child after the first. 

*The income thresholds are indexed and will remain the same to 30 June 2021.

Health Insurance Landscape – 2019-2020 Changes

On 1 April 2019, the Australian Government introduced new rules to help make private health insurance simpler, and make it easier for people to choose the cover that best suits them.

Gold, Silver, Bronze and Basic hospital cover

Four new tiers of hospital cover began rolling out in 2019 and became mandatory from 1 April 2020.  All hospital insurance policies with all private health funds are now classified as Gold, Silver, Bronze or Basic.

What is, and is not, covered in these tiers is based on new minimum standard categories of treatment. These standard categories are simply groups of what hospital treatments are, and are not, covered under each policy. Each standard category—for example, ‘bone, joint and muscle’ category, or ‘heart and vascular system’ category—sets out the hospital treatments that must be covered by your private health insurer. If a policy covers a certain category, then it must cover everything listed in it—not only some things.

Cover levels are:

Basic – very little if any cover in a private hospital

Bronze – low cover

Silver – medium cover

Gold – full or top cover

Insurers are able to offer additional coverage above the minimum requirements in Basic Plus (+), Bronze Plus (+) and Silver Plus (+) tiers.  Basic Plus, Bronze Plus and Silver Plus policies cover at least one service more than normal Basic, Bronze or Silver policies.  For example a Silver Plus policy could include cover for pregnancy or cataract surgery, services normally only covered under Gold policies.

Natural therapies

Since 1 April 2019 private health insurers are no longer permitted to offer benefits for some natural therapies as part of a health insurance policy. The affected natural therapies are Alexander technique, aromatherapy, Bowen therapy, Buteyko, Feldenkrais, western herbalism, homeopathy, iridology, kinesiology, naturopathy, Pilates, reflexology, Rolfing, shiatsu, tai chi, and yoga.

Ability to change excess levels

Eight out of 10 people with hospital cover choose products with excesses. These excesses were set at a maximum of $500 for singles or $1,000 for couples and families in order to avoid the Medicare Levy Surcharge.  Under the changes, insurers have the option to allow people to increase their excess in exchange for a lower premium – if they choose to do so.  The maximum excesses are now raised to $750 for singles and $1,500 for couples and family policies.

Age-based Discounts

From 1 April 2019, insurers have the option to offer people aged 18–29 years discounts of up to 10 per cent of their private health insurance hospital premiums. Not all health funds have introduced this initiative.  People will retain the discount until they turn 41, when it will be gradually phased out.

The allowable discount is two per cent for each year that a person is aged under 30, to a maximum of 10 per cent for 18 to 25 year olds.  If a policy offers age-based discounts they will be available to both new and existing policy holders. 

What are the discount rates per age?

If you are on a couple or family policy, your discount is calculated as an average between the individual discount of the two adults. For example, if one person has a 10% discount and the other person has a 6% loading, the total discount applied to the policy is 8%.

* as a transitional arrangement for existing policy holders, their age when their insurer first introduces age-based discounts to their product. For example, a consumer who is 28 on 1 April 2019 could receive a 4 per cent discount, even if they first purchased hospital insurance when they were 26 years old.

How is the discount phased out?

When a member turns 41, the discount is reduced by 2%. So, if you had an existing 10% discount, this reduces to 8% when you turn 41. For each further year, the discount is reduced by a further 2% until it reaches 0%.