Australian Government Rebate on Private Health Insurance
Back in the day, the Government decided to offer people a rebate to help with the cost of private health insurance (so that more people would take out private cover), and to help take the pressure off the public hospital system.
There are a few things to know about the Government Rebate:
- It’s income tested
- It’s only applied to the standard cost of your cover. If you have a Lifetime Health Cover loading, the Rebate isn’t applied to that portion of your payments
- The Rebate you get is based on the age of the oldest person of your membership, your taxable household income (for Medicare Levy Surcharge purposes), CPI (inflation) and the average health fund industry increase in premiums
- It’s up to you to let us know your Rebate Tier. But don’t worry – if you don’t tell us (or choose the wrong one) the ATO will work out any difference when you do your tax
- If you aren’t sure which Tier to choose, head to health.gov.au or ask your tax agent, financial advisor or the ATO
- You don’t have to take the Rebate as a reduced premium, you can pay the full cost of your health cover and claim any Rebate back at tax time
Work out your Rebate Tier
Lifetime Health Cover (LHC) loading
Lifetime Health Cover is designed to get people to take out private hospital cover earlier in life.
If you have private hospital cover by 1 July after your 31st birthday and keep it, you don’t have to worry about it.
If you decide to get hospital cover later, you’ll pay 2% more for cover for every year you’re over 30. This is called your Lifetime Health Cover loading.
Other things to know about LHC:
- The maximum LHC loading you can have is 70% at 65 years old
- People who were born on or before 1 July 1934 are exempt from the loading
- LHC loadings stay on your cover for 10 years. Once you’ve had hospital cover for 10 years straight the loading is removed (some conditions apply)
Medicare Benefits Schedule (MBS)
The Medicare Benefits Schedule is a list of fees for medical services set by the Government. Medicare pays 75% of the MBS fee for in-hospital medical services and private health cover pays the other 25% (sometimes more if the doctor agrees). Doctors don’t have to stick to the MBS fee for their services, and if they charge above that amount you’ll have an out-of-pocket cost (AKA ‘a gap’) to pay.
Lucky for you we take part in Access Gap, which is a program that aims to reduce the difference between the MBS fee and what doctors charge. Doctors can choose to take part in Access Gap on a case-by-case basis, and if they take part you’ll either have no gap or they’ll tell you exactly what your out-of-pocket costs will be.
Health funds can’t pay benefits for medical services outside of hospital (things like going to your GP), but Medicare pays 85% of the MBS fee for these.
Medicare Levy Surcharge
The Medicare Levy Surcharge is paid by high income earners (that’s singles who earn over $90,000 and families that earn over $180,000 in the 2018/19 financial year) who don’t have private hospital cover.
The surcharge is between 1% and 1.5% (depending on your household income) and is paid on top of the 1.5% Medicare Levy paid by most Australian tax payers.
Work out the surcharge you’ll have to pay if you don’t have hospital cover
The good news is that you won’t have to pay the surcharge if you’ve got hospital cover with us!
Pharmaceutical Benefits Scheme (PBS)
The PBS is a Government subsidy that reduces the cost of some prescription medications. The PBS amount changes on 1 January every year and is $40.30 as at 1 January 2019.
We’re only able to pay benefits on the cost of prescription medication that’s above the PBS amount. For example, if your medication costs $50, we’ll pay a benefit on the difference between the PBS amount and $50.