2014 Decreased Private Health Rebate caused problems for insurees

With the Private Health Insurance Rebate now tied to the CPI & average increases to premiums, you should expect your private health rebate to decrease in the coming years.

In 1999, the federal government introduced a private health insurance rebate to help Australians with the cost of private health insurance premiums. In July 2012 this rebate began to be means-tested and the proportion of rebate that you receive is now dependent on your income threshold and your age. The rebate was initially set at 30% of premiums for those aged under 65 (and a higher amount for those over 65 years of age).

…but the rebate is no longer 30%.

Changes Made to the Private Health Insurance Rebate

In April 2014, a second amendment was made to the private health insurance rebate, so that the rebate is adjusted every year by the difference between the Consumer Price Index (CPI) and the industry average increase in premiums. This was a way for the government to slow the growth in its expenses and save its ailing Budget, but it’s not exactly kind to the average citizen.

In the 2014-2015 financial year, the standard policy owner received a 29.04% rebate, and that percentage will likely only decrease in the future. The rebate is tiered so that people earning more money than average will receive a lower rebate or no rebate.

This meant that in 2014-2015, customers paid this much more for their health insurance than before:

Tier Standard Tier 1 Tier 2
Rebate rate 29.04% 19.36% 9.68%
Single $17.07 $11.38 $5.69
Family $34.18 $22.79 $11.39

Based on the current formula, we expect the rebate to decrease as follows, inflation figure stays around 2.75% and average premiums increase by 6.20% per year.

Year Financial Year Rebate (listed by tier)
2013/14 30.0% 20.0% 10.0%
1 2014/15 29.04% 19.36% 9.68%
2 2015/16 28.11% 18.74% 9.37%
3 2016/17 27.21% 18.14% 9.07%
4 2017/18 26.34% 17.56% 8.78%
5 2018/19 25.50% 17.00% 8.50%
6 2019/20 24.68% 16.45% 8.23%
7 2020/21 23.89% 15.93% 7.96%
8 2021/22 23.13% 15.42% 7.71%
9 2022/23 22.39% 14.92% 7.46%
10 2023/24 21.67% 14.45% 7.22%

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