The Australian Government Rebate reduces your private health insurance premiums by 8–33% depending on your age and income. For most people that means saving $300–$800+ a year, applied automatically by your insurer so your monthly payment is simply lower.
Understanding how the rebate works helps you maximise your savings and make informed decisions about health insurance. This guide explains exactly how much rebate you'll receive, how to claim it, and strategies to optimise your eligibility.
Important disclaimer. This guide provides general information about the Australian Government Rebate on private health insurance. It is not tax or financial advice. Tax laws are complex and change regularly. For advice specific to your circumstances, consult a registered tax agent or financial adviser. All information is current as of the 2025-26 financial year (1 July 2025 – 30 June 2026).
What is the Government Rebate?
The basics
The Australian Government Rebate is a discount on your health insurance premiums, provided by the federal government to make private health insurance more affordable.
How it works:
- The government pays a percentage of your premium directly to your insurer
- This reduces the amount you pay out-of-pocket
- You receive it either automatically, as reduced premiums, or via your tax return
Who gets it: anyone with private health insurance. The amount depends on your income and your age, and ranges from 0% to 33% of your premium.
WORKED EXAMPLE
A $3,000 annual premium, Base tier, under 65
- Annual premium: $3,000
- Your rebate: 24.608%
- Government pays: $738
You pay: $2,262 — a $738 discount you never have to ask for.
Why it exists
The rebate is designed to encourage Australians to take out private health insurance, reduce pressure on public hospitals, and maintain the dual public-private health system.
History: introduced in 1999, and reformed in 2012 when income testing was brought in — higher earners now receive less rebate.
The government's reasoning: it makes private insurance more affordable, incentivises private hospital use, reduces demand on the public system, and ultimately saves money, because the rebate is cheaper than the full public hospital cost.
Rebate vs the other two incentives
The rebate is routinely confused with the Medicare Levy Surcharge and Lifetime Health Cover loading. They are three different mechanisms pointing in different directions.
| Feature | Government Rebate | Medicare Levy Surcharge | Lifetime Health Cover |
|---|---|---|---|
| What is it? | A discount on premiums | An extra tax penalty | A premium loading |
| Direction | Government pays you | You pay the government | You pay the insurer |
| Amount | 8–33% of premium | 1–1.5% of income | 2% per year delayed |
| Based on | Income + age | Income only | Age when joining |
| Can you avoid it? | No — automatic if eligible | Yes — get cover | Yes — join before the deadline |
All three at once — a 35-year-old on $80,000 with a $3,000 premium: rebate 24.608% = a $738 discount, applied automatically; MLS $0, because their income is below the threshold; LHC loading 0%, because they joined before the deadline.
They are separate, but together they shape almost every health insurance decision.
How much rebate will I get?
Two things decide it: which income tier you fall in, and which of the three age brackets you're in.
These percentages are for the 2025-26 financial year only (1 July 2025 – 30 June 2026). Thresholds and rates are reviewed annually and typically change on 1 July. Always check the ATO website for current rates before making a decision.
Work out your rebate
Set your age bracket, whether you're assessed as a single or a family, your income for rebate purposes, and your annual premium.
Your rebate. In 10 seconds.
Your government rebate
24.608%
Base tier · under 65
Premium breakdown
You save
$738 a year
$62 a month · $7,380 over ten years
2025-26 FY rates. An estimate — verify with the ATO.
2025-26 financial year rates, taken from the tables below. Family thresholds assume a couple or a family with one dependent child — add $1,500 to the threshold for each additional child. The annual figures are the calculated ones; the monthly saving is that annual figure divided by twelve and rounded. This is general information, not tax advice.
Rebate percentages — singles
Singles with no dependants. 2025-26 financial year.
| Income range | Tier | Under 65 | Ages 65–69 | Ages 70+ |
|---|---|---|---|---|
| Under $97,000 | Base | 24.608% | 28.710% | 32.812% |
| $97,001–$113,000 | Tier 1 | 16.405% | 20.507% | 24.608% |
| $113,001–$151,000 | Tier 2 | 8.202% | 12.303% | 16.405% |
| $151,001 and above | Tier 3 | 0% | 0% | 0% |
Rebate percentages — families
Couples, and anyone with dependent children. 2025-26 financial year.
| Income range | Tier | Under 65 | Ages 65–69 | Ages 70+ |
|---|---|---|---|---|
| Under $194,000 | Base | 24.608% | 28.710% | 32.812% |
| $194,001–$226,000 | Tier 1 | 16.405% | 20.507% | 24.608% |
| $226,001–$302,000 | Tier 2 | 8.202% | 12.303% | 16.405% |
| $302,001 and above | Tier 3 | 0% | 0% | 0% |
Dependent children adjustment: add $1,500 to the family threshold for each dependent child after the first. A couple with three children: base family threshold $194,000, plus 2 × $1,500 = $197,000.
Rates current as of the 2025-26 financial year (1 July 2025 – 30 June 2026). Source: Australian Taxation Office.
What counts as "income" for rebate purposes
Not the same as your taxable income — and this is where people are caught out.
Counts
Taxable income
- Salary and wages
- Business income
- Investment income — interest, dividends, rent
- Capital gains, as included in taxable income
- Taxable government payments
Plus these, even though they aren't in taxable income
- Reportable fringe benefits
- Reportable superannuation contributions — salary sacrifice
- Total net investment losses
- Foreign income
Doesn't count
- Tax-free government payments, such as Family Tax Benefit
- Child support payments
- Tax-exempt income
Same definition as the MLS
- This is the identical income definition used for the Medicare Levy Surcharge, so you only have one number to track for both
WORKED EXAMPLE
Why your taxable income isn't the number that matters
- Taxable income: $90,000
- Reportable fringe benefits: $12,000
- Salary-sacrificed super: $6,000
- Income for rebate purposes: $108,000
Result: Tier 1 ($97,001–$113,000) → a 16.405% rebate under 65, not the 24.608% the taxable income alone would suggest. The reportable items are what pushed the tier.
Age brackets explained
Your age for rebate purposes is determined as of 1 July of the relevant financial year, or when you first take out or renew the policy.
Example: your birthday is 15 October and you turn 65 on 15 October 2025. On 1 July 2025 you were 64, so your bracket is "under 65" for the whole of 2025-26. From 2026-27 it becomes 65–69.
What if you turn 65 mid-year? Most insurers pro-rate, applying the higher rebate from your birthday onward. Check with your specific insurer.
Real dollar savings.
The same percentage is worth very different amounts depending on what your premium is — and on a family policy it is worth thousands.
Premium costs below are February 2026 market averages and are used to show the shape of the saving, not to quote a price. Rebate percentages are 2025-26 FY.
Basic hospital cover — single, under 65
| Income tier | Premium | Rebate % | Rebate $ | You pay | Monthly |
|---|---|---|---|---|---|
| Base (under $97k) | $1,440 | 24.608% | $354 | $1,086 | $91 |
| Tier 1 ($97–113k) | $1,440 | 16.405% | $236 | $1,204 | $100 |
| Tier 2 ($113–151k) | $1,440 | 8.202% | $118 | $1,322 | $110 |
| Tier 3 ($151k+) | $1,440 | 0% | $0 | $1,440 | $120 |
Difference between Base and Tier 3: $354 a year, or $30 a month.
Bronze hospital cover — single, under 65
| Income tier | Premium | Rebate % | Rebate $ | You pay | Monthly |
|---|---|---|---|---|---|
| Base | $1,800 | 24.608% | $443 | $1,357 | $113 |
| Tier 1 | $1,800 | 16.405% | $295 | $1,505 | $125 |
| Tier 2 | $1,800 | 8.202% | $148 | $1,652 | $138 |
| Tier 3 | $1,800 | 0% | $0 | $1,800 | $150 |
Difference between Base and Tier 3: $443 a year, or $37 a month.
Silver hospital cover — single, age 70+
The oldest bracket gets the highest percentage, which is what makes cover affordable at the point people most need it.
| Income tier | Premium | Rebate % | Rebate $ | You pay | Monthly |
|---|---|---|---|---|---|
| Base | $2,640 | 32.812% | $866 | $1,774 | $148 |
| Tier 1 | $2,640 | 24.608% | $650 | $1,990 | $166 |
| Tier 2 | $2,640 | 16.405% | $433 | $2,207 | $184 |
| Tier 3 | $2,640 | 0% | $0 | $2,640 | $220 |
Difference between Base and Tier 3: $866 a year, or $72 a month.
Gold family cover — couple, under 65
| Income tier | Premium | Rebate % | Rebate $ | You pay | Monthly |
|---|---|---|---|---|---|
| Base (under $194k) | $7,200 | 24.608% | $1,772 | $5,428 | $452 |
| Tier 1 ($194–226k) | $7,200 | 16.405% | $1,181 | $6,019 | $502 |
| Tier 2 ($226–302k) | $7,200 | 8.202% | $591 | $6,609 | $551 |
| Tier 3 ($302k+) | $7,200 | 0% | $0 | $7,200 | $600 |
Difference between Base and Tier 3: $1,772 a year, or $148 a month.
Key insight: a higher premium means a larger dollar rebate even at the same percentage. The percentage is the same for a $1,440 Basic policy and a $7,200 family Gold one — the money is not.
How to claim the rebate.
Two methods, the same total money. What differs is when you get it.
Method 1 — automatic reduction
How it works
- You tell your insurer your income tier and age
- They reduce your premiums by the rebate amount
- You pay the lower amount each month
- The government pays your insurer directly
Why most people choose it
- Immediate benefit — lower premiums now
- No waiting until tax time
- Simpler cash flow
- Used by 95%+ of people
Method 2 — via your tax return
How it works
- Pay full premiums to your insurer, with no reduction
- Claim the rebate when you file your annual tax return
- Receive it as part of your tax refund
The trade-offs
- A larger lump sum at tax time
- Useful if your income varies — you claim the rebate actually owed
- But: higher monthly payments all year, a months-long delay, and you must keep records of premiums paid
Side by side on a $3,000 premium
Rebate 24.608% = $738. Same destination, different route.
| Automatic reduction | Via tax return | |
|---|---|---|
| Monthly payment | $188 — $250 less the $62 rebate | $250 — the full premium |
| Cash flow | Lower payments all year | Higher payments all year, a refund later |
| When you benefit | Immediately, every month | At tax time — typically October to December |
| Total you pay | $2,262 | $2,262 after the refund |
Same total cost either way. Automatic gives you the better cash flow, which is why around 95% of people use it.
Setting up and updating your tier
Update when your income crosses a tier boundary, when you turn 65 or 70, when your family status changes, and at the start of each financial year as a check.
Or call their customer service line and ask them to update it for you.
Every insurer has one, though the label varies.
Changes usually take effect from your next billing cycle.
It is your responsibility to update it. Insurers have no way of knowing your income changed. If you claim the wrong tier, the ATO reconciles it when you file your tax return: claim too much and you owe money back, claim too little and you get a refund — but you paid more than you needed to all year.
Income tier management.
The tiers are cliff edges, not slopes. One dollar over a threshold costs you a whole tier of rebate.
The cliff edges
2025-26 FY, singles, on a $3,000 premium.
| Crossing | Income change | Income up by | Rebate change | Cost to you |
|---|---|---|---|---|
| Base → Tier 1 | $97,000 → $97,001 | +$1 | −8.203% | −$246/year |
| Tier 1 → Tier 2 | $113,000 → $113,001 | +$1 | −8.203% | −$246/year |
| Tier 2 → Tier 3 | $151,000 → $151,001 | +$1 | −8.202% | −$246/year |
Crossing a tier boundary by a single dollar costs roughly $246 a year in rebate on a typical policy — and proportionally more on an expensive one.
Legal strategies to manage income
Two of the four commonly suggested strategies barely move the needle. Here is which is which.
It reduces your taxable income, but reportable employer super contributions count for rebate purposes, so your income for the rebate is unchanged.
Example: salary $98,000, sacrifice $2,000 to super. Taxable income $96,000, reportable super contributions $2,000, income for rebate still $98,000 — still Tier 1. Worth doing for the super tax advantages; not a rebate strategy.
Legitimate work expenses reduce taxable income, and deductions do reduce income for rebate purposes. Home office, professional development, tools and equipment, work travel, union fees and professional memberships.
Example: gross income $98,000, work deductions $2,500 → taxable income $95,500 → Base tier instead of Tier 1, worth $246 a year.
Deferring a bonus to the next financial year, timing capital gains, managing investment income.
Example: normal income $96,000 (Base), a $5,000 bonus would push you to Tier 1 — request it be paid next FY. Most employers won't accommodate this, so it is mainly viable for the self-employed, investment portfolios and deferred compensation arrangements.
Spouse super contributions, or holding investment assets in the lower-earning spouse's name.
Family income is combined for rebate purposes anyway if you're a couple, so the effectiveness is limited.
When not to stress about tiers
For most people the right answer is to accept the tier your natural income puts you in.
DON'T BOTHER 1
Your income is well within a tier
A stable $85,000 sits safely in Base tier, $12,000 clear of the boundary. Nothing to optimise.
DON'T BOTHER 2
Your income growth is substantial
A $10,000 raise that pushes you into Tier 1 costs $246 of rebate. Take the raise.
DON'T BOTHER 3
You're in Tier 3 anyway
On $180,000 the rebate is 0% regardless. There is nothing left to optimise.
DON'T BOTHER 4
The complexity outweighs the benefit
Tax strategies have implications well beyond the rebate, and professional advice costs money. A $200–300 difference may not justify it.
The exception worth acting on: if you're within $1,000–$2,000 of a boundary and you have simple strategies available — deductions you're already entitled to — claim them. Otherwise, don't contort your finances for a $200–300 rebate. And consult a tax agent before implementing any of this; these strategies have broader tax implications.
Rebate + MLS + LHC: how they work together.
Three policies, one decision. The good news is they share an income definition and the same tier boundaries.
What each one is for
| Policy | Purpose | Your action | Financial impact |
|---|---|---|---|
| Government Rebate | Make insurance affordable | Get insurance | Reduces premiums 8–33% |
| Medicare Levy Surcharge | Penalise high earners without cover | Get insurance, or pay the tax | Saves 1–1.5% of income |
| Lifetime Health Cover | Encourage joining young | Join before age 31 | Avoids a 2% per year loading |
The tiers line up
Rebate tiers and MLS tiers use identical thresholds in 2025-26, so you only track one income number for both.
| Income (single) | Rebate tier | MLS tier | Rebate % (under 65) | MLS rate |
|---|---|---|---|---|
| Under $97,000 | Base | Tier 0 | 24.608% | 0% — no MLS |
| $97,001–$113,000 | Tier 1 | Tier 1 | 16.405% | 1.0% |
| $113,001–$151,000 | Tier 2 | Tier 2 | 8.202% | 1.25% |
| $151,001 and above | Tier 3 | Tier 3 | 0% | 1.5% |
COMBINED IMPACT
Sarah — 35, single, income $130,000
Without hospital cover: no insurance cost, but a Medicare Levy Surcharge of $1,625 (1.25% of $130k, Tier 2), and Lifetime Health Cover loading accumulating at 2% a year. Total: $1,625 plus a growing future loading.
With Bronze hospital cover: a $1,800 premium, less an 8.202% Tier 2 rebate of $148, so $1,652 net. MLS avoided entirely, and the LHC loading stops increasing — it's already at 10% from joining at 35.
Insurance costs $27 more than the surcharge would — and delivers actual Bronze hospital cover, avoids the MLS, and stops the loading climbing to 12%, 14%, 16% with each year delayed. Decision: get the insurance. The $27 is negligible against what it buys.
A decision framework using all three
Income above $97k single or $194k family? Yes → hospital cover is effectively required; avoiding the MLS alone justifies it. No → continue to step 2.
Aged 29–31? Yes → get Basic cover before the deadline and avoid the loading permanently. No → continue to step 3.
Work out premium less rebate. Bronze at $1,800, less a 24.608% rebate of $443, is $1,357 a year — $113 a month. Is that acceptable to you? If yes, cover is good value with the rebate. If no, rely on Medicare.
Real scenarios and calculations.
Six people, each worked through end to end — including the two where the honest answer is "it's a marginal call".
SCENARIO 1
Emma — 28, single, $85,000
Rebate: Base tier (under $97k), under 65 → 24.608%.
Cost: Bronze at $1,800/year, less a $443 rebate = $1,357/year ($113/month). MLS doesn't apply — she's below the threshold. Her LHC deadline is about three years away, at 31.
Decision: wait until 30, then get Basic cover. That saves $1,357 a year for two years ($2,714), still beats the LHC deadline, and she can upgrade to Bronze later when her income is higher.
SCENARIO 2
James — 42, single, $105,000
Rebate: Tier 1 ($97,001–$113,000), under 65 → 16.405%.
Cost: Basic at $1,440/year, less a $236 rebate = $1,204/year ($100/month). Without cover he'd pay $1,050 in MLS (1.0% of $105k), so the insurance costs $154 more.
Decision: keep the insurance. $154 a year — $13 a month — buys actual Basic hospital cover, where the MLS would buy nothing at all. At 42, having coverage is worth the difference.
SCENARIO 3
Lisa — 38, single, $140,000
Rebate: Tier 2 ($113,001–$151,000), under 65 → 8.202%.
Cost: Silver at $2,640/year, less a $217 rebate = $2,423/year ($202/month). MLS without cover would be $1,750 (1.25% of $140k), so insurance costs $673 more.
Decision: get Silver. The MLS alone nearly justifies it, and the extra $673 buys comprehensive cover, choice of doctor, a private room and faster elective surgery. At $140k, that difference is 0.5% of income.
SCENARIO 4
Michael — 52, single, $180,000
Rebate: Tier 3 ($151,001+), under 65 → 0%. No rebate at all.
Cost: Gold at $3,840/year with no rebate = $3,840/year ($320/month). MLS without cover would be $2,700 (1.5% of $180k), so insurance costs $1,140 more.
Decision: get Gold anyway. The $2,700 MLS is a sunk cost either way, and the extra $1,140 — 0.6% of income — buys the most comprehensive cover available. There is nothing to optimise on the rebate side.
SCENARIO 5
Margaret — 72, single, $125,000
Rebate: Tier 2, but aged 70+ → 16.405%, double what someone under 65 would get on the same income.
Cost: Silver at $2,640/year, less a $433 rebate = $2,207/year ($184/month). Under 65 the rebate would be $217, so her age bracket is worth an extra $216 a year.
Decision: definitely keep it. The higher age-based rebate makes cover more affordable exactly when health needs are rising, and the $1,563 MLS she'd otherwise pay covers most of the premium anyway.
SCENARIO 6
Tom & Sarah — both 36, two children, $180,000
Rebate: Base family tier — the threshold is $194,000 plus $1,500 for the second child = $195,500, and they're under it → 24.608%.
Cost: Family Bronze at $4,560/year, less a $1,122 rebate = $3,438/year ($287/month, or $72 per person). MLS doesn't apply.
A genuinely marginal call. For: young kids, accidents, procedures. Against: nothing requires it, and skipping it banks $3,438 a year while the public system handles children well. It depends on risk tolerance and family health history.
Special cases and exceptions.
Couples, children, mid-year changes and part-year cover — the four situations that don't fit the simple table.
Couples
Each person gets their own rebate, calculated on their own premium — but the tier is set by combined family income.
Example: Partner A has a $2,000 premium, Partner B a $2,400 premium, combined family income $220,000 (Tier 2 family), both under 65 → each gets 8.202%.
- Partner A: $2,000 premium, $164 rebate, $1,836 net
- Partner B: $2,400 premium, $197 rebate, $2,203 net
Combined income sets the tier; the rebate then applies to each person's individual premium.
Dependent children
Children on a family policy are included in the family tier assessment, don't pay separate premiums, and don't get a separate rebate — the family premium is already reduced.
Threshold adjustment: no adjustment for the first child, then +$1,500 for each additional child.
Example: a couple with four children — base family threshold $194,000, plus 3 × $1,500 = $198,500.
Mid-year income changes
Option 1 — update your tier with your insurer. This changes the rebate reduction on future premiums and keeps cash flow accurate.
Option 2 — leave it and reconcile at tax time. The ATO calculates the rebate actually owed: overpaid means a refund, underpaid means you owe money.
Example: you told your insurer Base tier (24.608%) but your actual income landed in Tier 1 (16.405%). You received too much rebate, and the ATO will require repayment of the difference.
The safer approach is to update your insurer when your income changes, rather than meeting a surprise at tax time.
Part-year coverage
The rebate is pro-rated if you only held insurance for part of the year.
Example: cover from 1 July to 31 December (six months), none from 1 January to 30 June. A full-year premium of $3,000 means $1,500 paid, and a 24.608% rebate of $369 — six months' worth.
Common mistakes to avoid.
Six errors that cost people money, or produce an unwelcome bill at tax time.
MISTAKE 1
Not updating your income tier
The error: "I set my rebate tier when I joined three years ago and never updated it."
What actually happens: income changes, tier boundaries change, and the wrong tier means the wrong rebate — which becomes a debt or a refund at tax time. Three years ago: $90k, Base tier, 24.608% set. Now: $115k, Tier 2. Still claiming Base. The ATO reconciles, and you owe money back.
How to avoid it: update your tier with your insurer when your income crosses a boundary, check it annually at the start of the financial year, and file an accurate tax return.
MISTAKE 2
Confusing your rebate tier with your MLS tier
The error: "I'm in Tier 2 for MLS — does that mean I get a Tier 2 rebate?"
What actually happens: same income, same thresholds, opposite outcomes. With the MLS you pay extra tax; with the rebate the government pays you a discount.
How to avoid it: think of them as one income number driving two separate mechanisms pointing in opposite directions.
MISTAKE 3
Forgetting to claim on your tax return
The error: paying full premiums all year, then not claiming the rebate at tax time.
What actually happens: the rebate isn't automatic unless you opted for automatic reduction. If you didn't, you have to actively claim it and include your health insurance statement.
How to avoid it: keep your insurer's statements, check your return includes the private health insurance section, and use myTax or a tax agent.
MISTAKE 4
Assuming a higher income means a higher rebate
The error: "I got a raise, so my rebate will go up."
What actually happens: the opposite. The rebate decreases as income increases — that is the whole point of the means test.
The correct picture: Base tier, the lowest income, gets the highest rebate at 24.608%. Tier 3, the highest income, gets 0%.
MISTAKE 5
Not telling your insurer you turned 65
The error: hitting an age bracket and leaving the old one on file.
What actually happens: age 65 means a higher rebate if you're in Base, Tier 1 or Tier 2 — and not updating simply forfeits it. At 64 in Tier 1 you get 16.405%; at 65 you get 20.507%, a gain of 4.102%.
What it's worth: on a $3,000 premium, an extra $123 a year. Update with your insurer when you turn 65 or 70 and check the next premium statement.
MISTAKE 6
Combining household income incorrectly
The error: "My income is $90k and my partner's is $110k. We're both under the $97k threshold."
What actually happens: couples use combined family income. $90k + $110k = $200k, against a family threshold of $194k — so both are Tier 1 at 16.405%, not Base at 24.608%.
How to avoid it: add your incomes together, use the family thresholds (double the single ones), and check with your insurer if you're unsure.
Frequently asked questions.
For the 2025-26 financial year it ranges from 0% to 33%, depending on your income and age.
- Most common — Base tier, under 65: 24.608%
- Oldest bracket — Base tier, 70+: 32.812%
- High earners — Tier 3: 0%
Your specific percentage depends on your income tier (Base / Tier 1 / Tier 2 / Tier 3) and your age bracket (under 65 / 65–69 / 70+).
Calculate your exact rebate
There are two methods.
Automatic reduction (recommended): tell your insurer your income tier and age, they reduce your premiums automatically, you pay less each month, and the government pays your insurer directly. Around 95% of people use this.
Via tax return: pay full premiums all year, claim the rebate when you file, and receive it as part of your refund.
Most people choose automatic for the better cash flow.
Compare claiming methods
"Income for rebate purposes" includes your taxable income, plus reportable fringe benefits, reportable superannuation contributions (salary sacrifice), and net investment losses.
This is the same definition used for the Medicare Levy Surcharge.
Example: taxable income $90,000 plus reportable fringe benefits of $10,000 gives income for rebate purposes of $100,000 — which is Tier 1, not Base.
Yes — hospital cover, extras cover and combined cover are all eligible.
Example: a $2,000 hospital premium plus an $800 extras premium is $2,800 in total. A 24.608% rebate is $689, so you pay $2,111.
The rebate applies to your total health insurance premium, regardless of type.
Hospital vs extras vs combined
You should update your tier with your insurer.
If you don't: the ATO reconciles it when you file your tax return. Claim too much rebate and you owe money; claim too little and you get a refund — but you paid more than you needed to all year.
To update: log into your insurer's member portal, update your income tier, and the change takes effect from your next billing cycle.
Yes — you get the same total rebate either way.
Automatic: lower premiums all year, the rebate applied monthly.
Tax return: full premiums all year, the rebate received as a lump sum at tax time.
Same dollar amount. Only the timing differs.
The rebate increases with two things.
Lower income — staying in a lower tier. Base tier gets the highest rebate; Tier 3 gets none.
Older age, automatically at 65 and 70. In Base tier: 24.608% under 65, 28.710% at 65–69, 32.812% at 70+.
You cannot game the system, but legitimate tax deductions that reduce your income can help you maintain a lower tier.
Income optimisation strategies
Yes — if you're in a relationship, incomes are combined.
Couples use combined family income for tier determination, against the family thresholds (double the single ones).
Example: your income $90,000 plus your spouse's $110,000 is $200,000 against a $194,000 family threshold — so both of you are Tier 1 at 16.405%.
Each person gets the rebate on their own premium, but the tier comes from the combined income.
Your rebate increases when you turn 65.
Tier 1 example: 16.405% at 64, 20.507% at 65 — an increase of 4.102%. On a $3,000 premium that is an extra $123 a year.
To get it: update your age bracket with your insurer. Most pro-rate from your birthday, so check that your next premium statement shows the increased rebate.
Yes — rebate percentages and income thresholds are reviewed annually and typically change on 1 July.
The 2025-26 rates on this page are current. Always verify the latest with the ATO website, your health insurer, or this guide, which is updated annually.
Income thresholds are indexed to wage growth and typically increase slightly each year. The rebate percentages themselves rarely change; the thresholds do.
Next steps: maximise your rebate.
Three things to do now, and one checklist to run every July.
Calculate your rebate
Set your age bracket, household and income in the calculator above.
Add your annual premium — the same calculator prints the breakdown and the monthly figure.
Automatic reduction for better cash flow, or via your tax return for a lump sum.
Set up or update automatic reduction
Most people benefit from it:
- Log into your insurer's member portal
- Navigate to the rebate or government benefits section
- Confirm or update your income tier and age
- Save — it takes effect from your next billing cycle
Or call your insurer — customer service can update it for you.
Your annual rebate checklist
Every 1 July:
Check these five things
- Review your income — did it cross a tier boundary?
- Update your tier with your insurer if it changed
- Check your age bracket — did you turn 65 or 70?
- Verify the rebate appears correctly on your next premium
- File an accurate tax return with the correct tier
And if you're near a boundary
- Calculate the impact of crossing it — roughly $246 a year on a typical policy
- Review the deductions you're already entitled to
- Consult a tax agent before implementing any strategy
Related guides
External resources
- Rebate rates, income thresholds and the official calculator:Australian Taxation Office
- Private health insurance policy and regulation:Department of Health
- Compare policies:PrivateHealth.gov.au
Not tax advice: this guide provides general information about the Australian Government Rebate on private health insurance. It is NOT tax advice and should NOT be relied upon for making tax decisions. Tax laws are complex, change regularly, and apply differently to individual circumstances. For advice specific to your situation, consult a registered tax agent or qualified financial adviser.
General information only: all information is current as of February 26, 2026, and reflects 2025-26 financial year rates (1 July 2025 – 30 June 2026). Income thresholds and rebate percentages change annually on 1 July. Always verify current rates with the Australian Taxation Office before making decisions.
Data currency: rebate percentages and thresholds shown are for the 2025-26 financial year only and were current as of the publication date. Premium estimates are based on market data as of February 2026. Always obtain current quotes from insurers and verify current rebate rates with the ATO.
Sources: rebate percentages, income thresholds and the income definition are sourced from the Australian Taxation Office. Premium figures are February 2026 market averages.
Independence: we are an independent comparison service. We may receive commissions from insurers when users purchase policies. This does not affect how we present information.
Last updated: February 26, 2026 · Next review: June 2026, before the 1 July rebate update · Found something incorrect or outdated?Contact us
