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The ATO advises that from 1 July 2012, the private health insurance rebate and the Medicare levy surcharge will be income tested against three new income thresholds. This means that if a taxpayer:

  • has private health insurance, the amount of rebate they will be entitled to receive will reduce if their income is over a certain amount
  • does not have an appropriate level of private patient hospital cover, and their income is over a certain amount, the rate of Medicare levy surcharge they will be charged will increase.

The ATO will determine the amount of private health insurance rebate a taxpayer is entitled to receive when they lodge their tax return. This may result in a refund or a liability.

Note that in relation to the question "Does the income testing of the rebate apply to premiums paid in the 2011-12 income year?", the ATO gives the following answer:

"No. The legislation to income test the private health insurance rebate starts from 1 July 2012 and will apply to premiums paid on or after that date. We will determine your private health insurance rebate entitlement for the 2012-13 income year (Tax Time 2013) and later years."


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