The Australian Government Rebate on Private Health Insurance is a Government incentive that applies towards the cost of Private Health Insurance cover as a reduction of premiums based on your age and income.

The table below details the different rebates:

The above rebate levels are applicable 1 July 2023. Income thresholds are indexed and will remain the same until 30 June 2024. Single parents and couples (including defacto couples) are subject to Family tiers. For families with children, the thresholds are increased by $1,500 for each child after the first.

There are a couple of ways you can claim the Government Rebate:

If you nominate the incorrect tier when claiming the Rebate as a reduction in your premiums, either by mistake, or you miscalculate your estimated income for the year, it will all be adjusted when you lodge your tax return.

If you are unsure of which Government Rebate you are eligible for, you should contact the Australian Tax Office on 132 861.

For more information about the Australian Government Rebate, please visit privatehealth.gov.au or the ATO website ato.gov.au.

Most Australian pay a 2% Medicare Levy on their tax to help fund the public health system.

The Medicare Levy Surcharge (MLS) is an additional levy paid by Australian tax payers who earn in excess of the thresholds below and do not hold private hospital cover.

The table below details the different Medicare Levy Surcharges:

Source: Australian Tax Office. These thresholds apply for the 2023/2024 financial year. For families, and single parent families the threshold increases by $1,500 for each dependant child after the the first. There are specific rules for calculating income for Medicare Levy Surcharge purposes.

If you’re going to be impacted by the MLS you can look at what this will cost you in two ways… Your money can be used toward private hospital cover giving you some value and peace of mind; or your money will end up as an additional surcharge when you lodge your tax return.

The surcharge aims to encourage individuals to take out private hospital cover, and where possible, to use the private system to reduce the demand on public hospital admissions.

For more information on the Medicare Levy Surcharge and how it may apply to you, visit the ATO website.

Lifetime Health Cover (LHC) is a Government initiative designed to encourage people to take out private hospital cover earlier in life and keep it up.

If you purchase hospital cover before your 31st birthday and keep it, you will pay lower premiums compared to someone who joins when they are older. The extra amount is called ‘LHC loading’.

If you take out private hospital cover after the 1st July following your 31st birthday, you’ll pay 2% extra per for each year you are over 30 for your hospital cover (up to a maximum Loading of 70%).

Lifetime Health Cover Loadings are transferrable between all Australian Private Health Insurers, so when you transfer to ExtrasJar , we’ll need a copy of your Transfer Certificate from your previous fund to confirm your LHC details.

Certified Age of Entry (CAE)
In most cases, your CAE is the age you were on the 1st of July before you first joined private hospital cover and is used to calculate your Loading.

The minimum Certified Age of Entry for Lifetime Health Cover purposes is 30 (0% Loading) and the maximum CAE is 65 (70% Loading).

Exemptions
There are some circumstances in which you may be exempt from the LHC loading:

If any of these exemptions apply, we’ll require proof of your exemption – for example an International Movement Statement if you’ve been overseas, or Statement of Medicare Eligibility if you’re a new migrant to Australia.

Permitted Days
Once you have taken out hospital cover and locked in your CAE, you are able to drop your hospital cover for up to 1094 days (3 years less one day) before you will be charged an additional Loading – these days are called Permitted or Absent Days.

Once you have used your 1094 days, you’ll then be charged an additional 2% for each year you don’t have hospital cover.

There are some situations where you can drop your hospital cover without using your Permitted Days or affecting your Certified Age of Entry or Lifetime Health Cover Loading:

Removal of LHC Loading after 10 years
LHC Loadings can be removed from your hospital cover after being paid for 10 continuous years – you won’t have to pay it forever!

Once your Loading is removed, it will be reduced to 0%, however your Entry Age will remain the same, so if you cancel your hospital cover in the future and use all of your Permitted Days, a Loading will again be applied when you take out hospital cover again and will need to be paid for 10 continuous years again.

How to avoid the Lifetime Health Cover Loading
Join any ExtrasJar Hospital cover before 1 July following your 31st birthday. As long as you keep your private hospital cover, you can avoid paying the 2% annual loading. Lifetime Health Cover loading only applies to the hospital portion of your premiums on a combined cover and does not apply to Extras cover.

If you are aged between 18-29 you may be entitled to a discount of up to 10% on the hospital component of your premiums. This discount was introduced to private health insurance on 1 April 2019 and is optional for all insurers and does not apply to all ExtrasJar Hospital covers.

The Age-based discount is calculated at 2% to a maximum discount of 10% depending on the age you join an eligible hospital cover and it is retained until the age of 40. After the age of 40 the discount will reduce by 2% per year.

On Couples or Family policies, the discount is calculated as an average between the individual discount of the two adults. For example, if one person has a 10% discount and the other person has a 6% discount, the total discount applied to the policy is 8%.

Please contact the ExtrasJar Team if you would like to know more about the Age-based discount.