Tax Return: 2022FY Private Health Insurance Rebate and Offset

Hello, this is your tax and super specialist, P&C Tax Professionals.

In today’s blog post, we will go through the private health insurance rebate and offset that is currently available in Australia.

To start off our discussion, let’s begin with the basics.

<What is a private health insurance rebate?>

The private health insurance rebate is basically what the government contributes to cover the cost of your private health insurance premiums. The rebate is also income tested which means that the higher your income, the less rebate you will be entitled to.

There are two ways in which you can claim for a rebate if you do happen to be eligible for the rebate:

> Via your nominated private health insurance provider in the form of a reduced private health insurance premium.

> Upon lodging your annual tax return in the form of a refundable tax offset.

Please note that each year, the rebate percentage is adjusted on 1 April.

<What is considered an “appropriate level of private patient hospital cover?”>

An appropriate level of cover must have:

- For singles: an excess of $750 or less

- For couples/families: an excess of $1,500 or less

If your private health insurance policy only consists of a general cover (i.e., commonly known as your extras cover) and your income for the purposes of your Medicare levy surcharge (MLS) is above the threshold, you will most likely have to pay for the MLS. This is because the general cover is NOT considered to be a private patient hospital cover. Same goes for a travel insurance or any covers offered by a foreign/overseas fund.

<Income Thresholds>

As mentioned earlier on, the private health insurance rebate is income tested which unfortunately means that if you go over the given income threshold, you may no longer be eligible to receive a rebate at all. The income thresholds that are used to calculate the MLS and the private health insurance rebate will stay the same beginning from 2015-16 to 2022-23 income year.

Single Income Thresholds

> If you are single as of the last day of the income year (i.e., 30th June) and you do not have any dependents, you will be income tested based on the single income thresholds that are currently in place. The single income thresholds would still apply even if you had a partner/spouse for the majority of the income year as long as you were single as at 30th June. This would mean that if you are separated from your spouse sometime during the income year and you stay single with no dependents on 30th June, your rebate entitlement would solely be calculated based on your own individual income.

> On the other hand, if you were single as at 30th June but had dependents, you will then be classified as a family and you will consequently be income tested in line with the family income thresholds.

Family Income Thresholds

> If you did have a spouse on the last day of the income year (30th June), your income will effectively be tested against the family income thresholds as shown in the table below. This basically means you and your spouse’s combined income for surcharge purposes will be used to ultimately assess your entitlement to a private health insurance rebate.

The family income thresholds will also apply in the following circumstances:

> as at 30th June you are a single parent with one or more dependents

> as at 30th June you do not have a spouse and you have dependent(s) who are under your care and maintenance.

Please also note that if you have more than one dependent, the family income threshold increases by $1,500 for each dependent child after the first child.

Table 1: 2014-15 to 2022-23 Income Thresholds

<Rebate Rates>

Rebate rates refers to the percent that you get back either in the form of a reduction of your private health insurance premium or as a refundable tax offset upon the lodgement of your tax return. Obviously, your rebate entitlement will depend on whether you are single or not as at the end of the income year (30 June).

If the oldest person on your policy is under 65 years old, the rebate is as follows for the 2021-22FY:

If the oldest person on your policy is 65 to 69 years old, the rebate is as follows for the 2021-22FY:

That sums it up for now, but as always, if you have any other questions or enquiries, you can contact us through our Facebook Page (P&C Tax Professionals – Australia) or through our email address at pnctax@naver.com.

Thank you and bye for now!