How the Private Health Insurance Tax Offset Works

These days, private health insurance is a necessity; it makes life much easier if you suddenly find yourself facing unexpected health issues. That being said, private health insurance is yet another expense to add to the daunting list of bills that we all face. Luckily, you can reduce the cost of your private health care premiums by claiming them as a tax offset or rebate.

The private health insurance tax offset or rebate is the amount that the government contributes to the cost of your private health insurance premium. Your entitlement to this rebate is dependent on a number of factors; the Australian Taxation Office (ATO) calculates the amount of the rebate you’re entitled to, based on what you enter into your tax return.

Am I Eligible for the Private Health Insurance Tax Offset or Rebate?

The private health insurance tax offset or rebate is income tested. That means, in order to receive the rebate, your income must be classified as lower than tier three. The rebate levels applicable from 1 July 2014 are:rebate-levels-online-tax-australia

You must also satisfy the requirements for entitlement to a Medicare card, which include being either an Australian citizen or resident.

It’s also important to check that your private health insurance policy is recognised by the ATO. It must be:

  • Provided by a registered insurer.
  • Provide hospital or general cover, or provide a combination of the two.

If you don’t have appropriate cover you may have to pay the Medicare levy surcharge. If you’re unsure about your policy eligibility your provider should be able to help. Alternatively, you can visit the Private Health Insurance Administration Council website for a list of registered insurers.

How Much Am I Entitled to Under the Private Health Insurance Tax Offset or Rebate?

The amount to which you will be entitled under the private health insurance tax offset will differ from year to year. The tax offset percentages are automatically adjusted on 1 April each year by the ATO.

Your rebate entitlement also depends on your family status. If you were single on the last day of the income year (June 30) you will be tested against single income thresholds. Your income is based on:

  • Your taxable income
  • Your reportable fringe benefits
  • Your total net investment losses
  • Your reportable super contributions.

If you had a spouse or dependent child/children on the last day of the income year, you will be tested against family income thresholds. If you had a spouse on the last day of the income year, your income is the combined income of you and your spouse. If you had a dependent child but no spouse you’re tested against your sole income.

For more information on family income thresholds, visit the AT) website here.

Where you sit in the income threshold determines how much of a rebate you’re entitled to. For example, a single person under the age of 65 earning $90,000 or less is entitled to claim 27.82% of any private health care insurance premiums paid between the 1 April and 30 June.

Use the ATO Private Health Insurance Rebate Calculator to find out how much you can claim.

How Do I Make a Claim for a Private Health Insurance Tax Offset or Rebate?

To claim a Private Health Insurance Tax Offset or Rebate, simply fill in the appropriate section on your tax return and the ATO will calculate your entitlement. You can claim this rebate in two ways:

  • As a premium reduction, which lowers the price your insurer charges you or,
  • As a refundable tax offset which you receive through your tax return.

The ATO will determine if you have under-claimed or over-claimed based on the information you provide. If you have under-claimed, the ATO will add the outstanding amount to any other tax offset amounts. If you have over-claimed a tax liability will be included as part of the income tax assessment notice.

If you’re unsure about what you can claim head to our Private Health Insurance Rebate Guide and find out about the range of offset and rebates you are eligible for.

Contact Online Tax Australia:
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If you’ve been searching for a reliable, experienced Australian tax agent, then contact the friendly team of professionally qualified, accountants at Online Tax Australia today:

• Call us on (03) 9852 9051
• Email us at support@onlinetaxaustralia.com.au
• Location: Level 1, 278 High Street, Kew

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