Understanding Private Health Insurance Rebates in Australia

When Australians think about private health insurance, price is the first concern that most people have. While nobody likes ongoing costs in life, it’s worth understanding how cheap health insurance actually is after rebates available in Australia.

* The price shown is per week and applies to a {LIFESTAGE} living in VIC with a $500 excess. It excludes LHC loading and includes a Base Tier Government Rebate

So What Rebates Exists For Health Cover?

The Australian government for some time has provided rebates to make health cover more affordable. These apply for any policy that has hospital cover from premium to the cheapest health insurance cover.

The rebate percentage is determined by a household’s annual taxable income, be it for a single person, a couple or a family, as well as the policy holder’s age. In the case of families and couples where several people are covered by a single policy, the rebate amount is based on the age of the oldest person covered.

The rebate is not based on the actual policy price so a cheap health insurance vs an premium policy will receive the same percentage back from the Australian government.

There are four income tiers on which the rebate or federal government subsidy is based on. At the time of this writing, the Base or Standard Tier is for single people who earn less than $90,000 of taxable income a year, and for families who earn less than $180,000. People who belong to the Base Tier get the maximum allowable rebate amount, which is directly applied as discounts to their health insurance premiums.

People aged 70 and above, enjoy the highest rebates at 37.09%. Rebates decrease along with the policy holder’s age. Those aged between 65 to 69 years old get a 32.46% rebate, while anyone below the age of 65 get a rebate worth 27.82% of their insurance premiums. Basically, the older you get and the less money you make, the higher your rebate will be which means paying very low premiums.

Tier 1 is for singles who make more than $90,001 up to $105,000 on an annual basis, and for families who make more than $180,001 up to $210,000 a year. Policy holders who are less than 65 years of age get a rebate of 18.55%, while those age 70 and above get the maximum rebate of 27.82%.

Tier 2 is the last tier that qualifies for rebates. Singles who make more than $105,001 up to $140,000 a year, and families with an annual taxable income of more than $210,001 up to $280,000 belong to this tier and can still get discounts on their premiums. Tier 2 people under the age of 65 get a rebate of 9.27% while those aged 70 and above get the highest discount of 18.55%.

Those who belong to Tier 3 no longer qualify for any type of rebate. Single people who make more than $140,001 a year and families who make more than $280,001 are already considered part of the higher income bracket and can reasonably afford private health cover without any financial help from the government.

Rebates In Action

To get a better idea how big an impact rebates have on lowering premiums try Frank’s build your own quote tool. Here you can insert what ‘tier’ you’re on which will then let you know the cover price is. You can the go through this quote section again and change the tier level to get a better understanding of just how much the rebate is helping reduce the policy price.

It’s worth noting the same rebate percentage applies whether you choose Frank Health Insurance’s cheap health cover which the company calls Basic Hospital, or prefer the top level health cover which is aptly named as Best Hospital. Rebates and savings percentages will also be the same if you don’t want any hospital cover and just want to get Extras Cover.

The Frank Health Insurance website also has loads of information to help demystify all the essential details as far as health insurance terminology and jargon is concerned, helping you make a more informed decision about your own health insurance needs.

You may be surprised that after applying rebates to the a cheap health insurance its actually a very small percentage of your annual expenditure. And besides the financial component or even the medical concerns, health insurance is about taking care of yourself and your loved ones’ futures. In the long run, the convenience, peace of mind and security of having private health cover pays for itself in ways that can’t be measured by money.

Get 1 month free + skip 2 & 6 month waits on extras* when you join on combined cover by March 31.

*For new members (if you have been a Frank Health Insurance member in the last 12 months, sorry you don’t qualify). Must pay first month to receive second month free. 12 month waits, annual and sub limits apply. Offer ends 31 March, 2018.