PHI 14/12

This circular issued by the Private Health Insurance Branch contains information about the Private Health Insurance Incentive Tiers

Page last updated: 12 September 2014

Printable version of 14/12 (PDF 105 KB)

17 March 2012

Means Testing the Private Health Insurance Rebate and Medicare Levy Surcharge (Fairer Private Health Insurance Incentive Tiers)

This Circular supercedes information provided in Private Health Insurance (PHI) Circular 28/09 (2 June 2009). The Medicare levy surcharge (MLS) information supercedes information provided in PHI Circular 28/11 (released 13 April 2011).

From 1 July 2012, the Government will, subject to Royal Assent, introduce three new ‘Private Health Insurance Incentives Tiers’:

Private Health Insurance Incentives Tiers (2011-2012) with effect 1 July 2012
Singles≤ $84,000$84,001 - 97,000$97,001 - 130,000 $130,001
Families≤ $168,000$168,001 - 194,000$194,001 - 260,000≥ $260,001


< age 6530%20%10%0%
Age 65-6935%25%15%0%
Age 70+40%30%20%0%

Medicare Levy Surcharge

All ages0.0%1.0%1.25%1.5%
Note: The thresholds increase annually, based on growth in Average Weekly Ordinary Time Earnings (AWOTE). Single parents and couples (including de facto couples) are subject to the family tiers. For families with children, the thresholds are increased by $1,500 for each child after the first.

Singles earning $84,000 or less and families earning $168,000 or less will continue to receive the existing 30, 35 and 40 per cent rebate, depending on their age.

The three Acts passed by Parliament governing the tiers are:
  • the Fairer Private Health Insurance Incentives Act 2012;
  • the Fairer Private Health Insurance Incentives (Medicare Levy Surcharge) Act 2012; and
  • the Fairer Private Health Insurance Incentives (Medicare Levy Surcharge – Fringe Benefits) Act 2012.
The Acts will be available for access on the Parliamentary and Commonwealth Legislation websites soon.

Enquiries by insurers on claiming the private health insurance rebates should be referred to the Department of Human Services on 1300 554 463.

Rebate claiming information can also be accessed at the Department of Human Services website.

The Department of Health and Ageing, in conjunction with Australian Taxation Office and the Department of Human Services, will soon be contacting relevant stakeholders to discuss implementation.

Information is also available on the Department of Health website.

Medicare levy surcharge (MLS)

For the 2011-12 income tax year, the income thresholds for the Medicare levy surcharge were increased to $80,000 per year for singles and $160,000 per year for couples/families.

The Australian Taxation Office (ATO) has advised the three separate income thresholds for the 2012-13 income tax year (as shown in the above table).

It is important to note that under the Tax Laws Amendment (Medicare Levy Surcharge Thresholds) Act (No 2) 2008, the income thresholds are indexed each year by using indexation factors calculated for full time adult average weekly ordinary time earnings.

Enquiries by insurers on the MLS and rebate income thresholds should be referred to the Australian Taxation Office (ATO) helpline on 13 28 61.

The ATO website has an Income for MLS purposes calculator.

If you require further information please telephone: (02) 6289 9853/24 hr answering machine or email the enquiry to Private Health Insurance Branch

For more information visit 2012 Private Health Insurance (PHI) Circulars.

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