Tax·Cluster guide
The Australian Government Rebate on private health insurance, explained
Income-tested, age-tested, and adjusted every 1 April — here is exactly what you get back in 2026–27.
Victor Mourad
Co-Founder, Comparify
Published
Last reviewed
9 min read
The Australian Government Rebate is a direct subsidy on the cost of private health insurance. It is not a discount your fund chooses to give you — it is a percentage of your premium the Commonwealth pays on your behalf, and almost every Australian with cover receives it. The two things that decide how much you get are your income and your age, and the percentages adjust every 1 April.
How much is the rebate in 2026–27?
The rebate is set as a percentage of your premium. Older members receive a larger share, and the percentage steps down as income rises. These rates apply from 1 April 2026.
Rebate percentage from 1 April 2026, by age of the oldest person on the policy
| Age | Base tier | Tier 1 | Tier 2 | Tier 3 |
|---|---|---|---|---|
| Under 65 | 24.118% | 16.079% | 8.038% | 0% |
| 65 to 69 | 28.139% | 20.098% | 12.058% | 0% |
| 70 and over | 32.158% | 24.118% | 16.079% | 0% |
- Base tier
- 24.118%
- Tier 1
- 16.079%
- Tier 2
- 8.038%
- Tier 3
- 0%
- Base tier
- 28.139%
- Tier 1
- 20.098%
- Tier 2
- 12.058%
- Tier 3
- 0%
- Base tier
- 32.158%
- Tier 1
- 24.118%
- Tier 2
- 16.079%
- Tier 3
- 0%
The income thresholds
The rebate is income-tested against exactly the same tiers as the Medicare Levy Surcharge, so the one income figure decides both what you get back and whether you'd be taxed for going without cover.
Income for surcharge purposes, 2026–27
| Household | Base tier | Tier 1 | Tier 2 | Tier 3 |
|---|---|---|---|---|
| Singles | Up to $105,000 | $105,001 – $123,000 | $123,001 – $164,000 | $164,001 and above |
| Families | Up to $210,000 | $210,001 – $246,000 | $246,001 – $328,000 | $328,001 and above |
- Base tier
- Up to $105,000
- Tier 1
- $105,001 – $123,000
- Tier 2
- $123,001 – $164,000
- Tier 3
- $164,001 and above
- Base tier
- Up to $210,000
- Tier 1
- $210,001 – $246,000
- Tier 2
- $246,001 – $328,000
- Tier 3
- $328,001 and above
How to claim it
There are two ways to receive the rebate, and they are worth the same amount of money.
- As a premium reduction (what most people do). You nominate your income tier with your fund, the fund bills you the discounted premium, and claims the rebate from the government directly. Nothing to do at tax time.
- As a tax offset. You pay the full premium through the year and claim the rebate in your tax return. Same total, received later.
The 1 April annual adjustment
The rebate percentages are re-indexed every year and take effect on 1 April — the same date most funds increase premiums. Because the indexation formula compares premium growth against CPI, the percentages tend to drift down slightly each year rather than hold flat. That is why a rebate quoted as 24.608% one year appears as 24.118% the next: the policy has not changed, the arithmetic has.
The age step-ups at 65 and 70
The rebate increases twice in later life, at 65 and again at 70. The step-up is based on the age of the oldest person covered by the policy, and your fund applies it automatically from your next premium cycle.
Worked examples at 45, 67 and 72
- Age 45, single, income $98,000 (base tier). Rebate 24.118%. A $2,400 premium becomes about $1,821 — around $579 of subsidy.
- Age 67, couple, combined income $230,000 (Tier 1). Rebate 20.098%. A $4,800 premium becomes about $3,835 — around $965 of subsidy.
- Age 72, single, income $150,000 (Tier 2). Rebate 16.079%. A $3,000 premium becomes about $2,518 — around $482 of subsidy. Note how much the tier costs this member compared with the base-tier example above.
Nominating your income tier — and getting it wrong
Your fund asks you to nominate a tier so it knows what rebate to apply. There is no penalty for getting it wrong. The ATO reconciles the rebate you actually received against your assessed income when you lodge: claim too much and the difference is added to your assessment, claim too little and it comes back to you.
The rebate does not apply to LHC loading
If you're carrying a Lifetime Health Cover loading, the rebate is calculated on your base premium only. The loading portion attracts no rebate at all, so a 20% loading costs you full price on top of a subsidised premium — one of the strongest financial arguments for clearing a loading rather than living with it.
See your premium after the rebate, not before it
Our advisors quote every policy net of your rebate tier and age band, across 14 Australian funds — same price as joining direct.
Where to go next
- The Medicare Levy Surcharge — the tax the same income thresholds trigger.
- Lifetime Health Cover loading — the 2% a year rule and how it interacts with the rebate.
- Cover for over 60s — where the age step-ups make the biggest difference.
- Health insurance explained — the hub for hospital, extras and combined cover.
Frequently asked questions
About the author
Victor Mourad
Co-Founder, Comparify
Victor co-founded Comparify to make Australian private health insurance genuinely easy to compare — no upsells, no inflated premiums, no jargon.
He's spent his career inside health funds and insurtech, and writes Comparify's guides to help everyday Australians make confident decisions about their cover.
Get in touch: victor@comparify.au
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