No.19: Means testing of the private health insurance rebate

As advised in our Client Alert No 9, the Federal Government introduced legislation from 1 July 2012 to means test an individual’s entitlement to the private health insurance rebate.

For the 2013-14 income year, the means testing applies as follows –

  • Singles – Medicare Levy Surcharge Income of more than $88,000
  • Couples/family – Combined Medicare Levy Surcharge Income of more than $176,000

For details of Medicare Levy Surcharge Income please follow this link –

For clients who are affected by the means testing, your entitlement to the rebate changes depending on where your circumstances fall within one of three income tiers, whereby each tier lowers your rebate eligibility percentage by 10%.

You may recall from the prior year, as a transitional measure, you had the option to prepay your health insurance premiums for up to 30 months in advance (depending on your health provider) from 1 July 2012 to ensure that the means testing did not affect your circumstances until the period under the prepayment lapsed.

Irrespective of whether you prepaid your premiums or not, for those clients who have the rebate claimed by a reduction in your private health insurance premiums, it is particularly important and recommended that your Private Health Insurance provider is aware of your personal/family income levels, so that you are placed in the correct Income Tier. Doing so will enable your Private Health Insurance provider to deduct the appropriate rebate percentage from your premiums that you pay in the future.

Any differences between the rebate percentage that you were entitled to and what you claimed through your health insurance provider will be adjusted through your annual income tax return and this difference will either be recouped from you or you will receive a tax offset.

Should you have any questions or require any assistance in estimating your Medicare Levy Surcharge Income to determine your applicable Income Tier for the means testing, please contact your Blaze Acumen adviser.