Government incentives and surcharges

The federal government offers a range of financial incentives and penalties to encourage Australians to take out private health insurance.

We have compiled a range of information around these initiatives to help you understand the financial factors regarding private health insurance.

Australian Government Rebate

The Australian Government Rebate on private health insurance is a way to help offset the cost of private health insurance premiums for policyholders. The rebate is income tested and applies to hospital, extras and ambulance policies. The rebate can be claimed in the form of a regular premium reduction through your private health insurer or can be claimed with your annual Income Tax Return.

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Medicare Levy Surcharge

Australians may choose to take out a hospital policy in order to avoid paying the Medicare Levy Surcharge (MLS). MLS applies to Australian tax payers who do not have private hospital cover and who earn over a certain amount, with the aim of reducing the demand on the public system by encouraging those in higher income brackets to purchase and use private cover.

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Age-Based Discounts

The federal government has introduced a range of reform measures aimed at making private health insurance more transparent and affordable for consumers. As part of these reforms, private health insurers are now able to implement premium discounts of up to 10 per cent on eligible hospital cover for people aged between 18 and 29 years of age.

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Lifetime Health Cover

Lifetime Health Cover (LHC) was implemented to encourage younger people to take out hospital cover earlier in life and to maintain that cover. LHC works by applying a financial penalty to those who choose to take out hospital cover after they turn 31 in the form of a two per cent loading for each year your age exceeds 30 when you do choose to join.

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