Private Health Insurance & Tax – No-Fluff Aussie Guide

Why Does Private Health Insurance Matter for Tax?

Two big reasons:

1. Private Health Insurance Rebate

The government chips in to help cover your premiums. You can get this:

• As a discount on your policy, or

• As a refundable tax offset when you lodge your return

Who gets it?

Anyone with eligible hospital or extras cover. The higher your income, the smaller your rebate. High-income earners might not get any rebate.

How do you get it?

• Let your insurer reduce your premiums, OR

• Claim it back at tax time — the ATO will sort it out when you lodge

2. Medicare Levy Surcharge (MLS)

Don’t have hospital cover and earn too much? You’ll cop extra tax.

Who pays it?

• Singles earning over $97,000

• Families earning over $194,000 (2024–25 rates)

How much is it?

• Between 1% and 1.5% of your income — based on how much you earn

What counts as "the right cover"?

• Must be hospital cover

• Excess can’t be more than $750 (single) or $1,500 (family)

• Must be with an Australian-registered fund

Extras-only cover, travel insurance, or overseas health insurance don’t count

What If You Cancel or Suspend Your Cover?

Even a gap in cover during the year can trigger the surcharge if you earn above the threshold. You’ll pay the MLS for that period.

What Records Do You Need?

Your private health insurer will send you a statement that shows:

• What type of cover you had

• How much rebate you received

Keep this handy for your tax return.

FAQ – Real Questions, Real Fast

Q: I have extras-only cover. Will I avoid the MLS?
A: No — you need eligible hospital cover.

Q: My income is under the threshold. Do I need private health?
A: Not for tax reasons. The surcharge only applies to higher earners.

Q: Can I get both the rebate and a tax offset?
A: You get one or the other, not both. The ATO adjusts it at tax time.

Q: What if my partner and I both have cover?
A: If you have dependants or a spouse, the family threshold applies.

Bottom line:
Private hospital cover might save you tax if you earn a bit more, and most Aussies get help covering the cost. Just make sure your cover ticks the right boxes and check your statement at tax time.

Let GoTax Help You Keep Your Refund

We’ll check your cover, apply your rebate, and make sure you don’t pay the MLS if you don’t have to. It’s what we do best.

Start your return now: www.gotax.com.au/guest-user