Do I need private health insurance for tax purposes?

Is private health insurance tax deductible?

Strictly speaking, no, you cannot claim private health cover as a tax deduction.

That said, there are several government incentives and rebates that may help you save at tax time depending on your circumstances.

What is the Australian Government Rebate (AGR) on private health insurance?

The AGR is an amount the government puts towards your health cover to make it more affordable. It's designed to encourage people to take out health insurance and keep it.¹

If you’re earning an income of less than $151,000 as a single, or less than $302,000 as a couple, family, or single parent, you can claim the AGR. The rebate amount depends on your age and income but generally, the higher your income, the lower your rebate, and vice versa:
 

You can claim the AGR as a percentage reduction on your health cover premium, meaning your premium is lower, or you can claim as a tax offset when you lodge your tax return. Although the AGR is not a tax, if you claimed too much AGR as a premium reduction (or too little), it will be reconciled at tax time.²  

What is the Medicare Levy Surcharge?

To encourage Australians to take out private hospital cover and relieve stress on the public system, the government applies an additional levy for those without private hospital cover, depending on your annual income. This is known as the Medicare Levy Surcharge.

You could save money on tax with hospital cover if you earn more than $97k as a single or $194k as a family, couple or single parent. You could be paying an additional tax surcharge of 1% (up to 1.5%) of your income, if you or any of your dependants don’t hold an appropriate level of hospital cover for the full financial year.⁺

You can use our Medicare Levy Surcharge Calculator to find out how much extra tax you could be paying without hospital cover.

Do I need health insurance for tax?

Whether you need health insurance for tax is only a decision you can make, possibly with the help of a registered tax agent, but we can tell you that thanks to the Australian Government Rebate and the Medicare Levy Surcharge, health insurance may help.

What health insurance do I need for tax?

To avoid the MLS, you and any of your dependants would need to take out eligible hospital cover for the full financial year. Any level of hospital cover will do, so long as the excess is not greater than $750 for singles or $1,500 for couples or families.³

If you want to register and claim for the AGR, you can take out hospital cover, extras cover, or both. (Just remember that you can’t register or claim for the AGR if you have overseas visitors cover). You can register for the AGR via your My Medibank account, in-store or over the phone on 132 331.

While the tax benefits of private health insurance certainly are worth thinking about, these incentives are ultimately there to help more Australians look after their health and wellbeing. Learn more about the benefits of private health insurance.

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