Changes to Private Health Insurance Rebate

Written on the 10 June 2012

From 1st July, 2012 the private health insurance rebate and Medicare levy surcharge will be income tested against the income thresholds in the table below. 


  Unchanged Tier 1 Tier 2 Tier 3
Singles $84,000 or less $84,001-$97,000 $97,001-$130,000 $130,001 or more
Families* $168,000 or less $168,001 - $194,000 $194,001 - $260,000 $260,001 or more
Aged under 65 30% 20% 10% 0%
Aged 65-69 35% 25% 15% 0%
Aged 70 or over 40% 30% 20% 0%
Medicare Levy Surcharge        
Rate 0.0% 1.0% 1.25% 1.5%

*The family income threshold is increased by $1,500 for every child after the first child


NB: The definition of “income” for this test is the sum of your:

1) taxable income (including net capital gains, and including the net amount on which family trust distribution tax has been paid)
2) reportable fringe benefits (as reported on your payment summary)
3) total net investment losses (both net financial investment losses and net rental property losses)
4) reportable super contributions (includes reportable employer super contributions and deductible personal super contributions)
5) exempt foreign employment income

6) (if you are aged 55-59 years old) any taxed element of a super lump sum, other than a death benefit, which you received that does not
exceed your low rate cap.

If your “income” in 2012/13 is shown in the “Unchanged” category above, then the above means testing will not apply to you.

However, if your income in 2012/13 puts you in either of the Tier 1, 2, or 3 categories above, then you could save hundreds or thousands of dollars by pre-paying your private health insurance premiums. Pre-paying means that you pay your premiums, for some or all of the 2012/13 tax year, on or before 30 June 2012. The ATO has confirmed that you can effectively receive the current 30% rebate for any private health insurance premiums that you pre-pay by 30 June 2012.

NB: The ATO has confirmed that a premium payment occurs when the insurer receives the amount. The time of physical receipt of the amount by the insurer is the relevant time, not the date the payment was made to the insurer or when the insurer allocates the amount to the member's account.






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