Proposed Private Health Insurance Rebate Changes for Over-65s
Proposal status — 5 September 2026 The change is not yet law. The Private Health Insurance Amendment (Modernising the Private Health Insurance Rebate) Bill 2026 was introduced on 25 June 2026 and is before a Senate committee, which is due to report on 7 October 2026. If enacted as proposed, the change would start on 1 April 2027.
Australians aged 65 and over in the base, Tier 1 or Tier 2 income bands currently receive a higher private health insurance rebate than under-65 policyholders in the same tier. Tier 3 receives a 0% rebate at every age. The 2026–27 Federal Budget proposes removing that age-based uplift from 1 April 2027.
The rebate would not disappear. People aged 65–69 and 70 or older would move to the under-65 percentage for their income tier. The Department of Health, Disability and Ageing estimates an average additional cost of $252 a year for affected policyholders, with more than 3 million Australians aged 65 and over holding cover.
What does the Government propose?
Using the published percentages for 1 July 2026 to 31 March 2027, the age-based differences look like this:
Rebate income tier | Under 65 | Age 65–69 | Age 70+ | Proposed rate for all ages* |
|---|---|---|---|---|
Base tier | 24.118% | 28.139% | 32.158% | 24.118% |
Tier 1 | 16.079% | 20.098% | 24.118% | 16.079% |
Tier 2 | 8.038% | 12.058% | 16.079% | 8.038% |
Tier 3 | 0% | 0% | 0% | 0% |
*These percentages illustrate the proposed alignment. Rebate percentages can be updated, so the actual rates applying from April 2027 should be checked once the law and annual settings are final.
For 2026–27, the published income tiers are:
Base tier: up to $105,000 for singles or $210,000 for families.
Tier 1: $105,001–$123,000 for singles or $210,001–$246,000 for families.
Tier 2: $123,001–$164,000 for singles or $246,001–$328,000 for families.
Tier 3: above $164,000 for singles or above $328,000 for families.
Family thresholds may increase for families with more than one dependent child. Income for rebate purposes is an adjusted-income calculation, so it is not always the same as taxable salary.
Who would be affected?
The proposal affects policyholders aged 65 and over who receive a non-zero rebate. Under-65 rates would be unchanged, while Tier 3 already receives no rebate.
The financial effect may show up in one of two places:
If your insurer applies the rebate as a premium reduction, your net premium may increase.
If you claim the rebate through your tax return, the available tax offset may fall.
The proposal does not remove private hospital cover, change the Medicare levy surcharge rules or alter Lifetime Health Cover loading. Those are separate parts of the private health system.
A practical example
Pat is 72, sits in the base income tier and pays a $3,000 annual eligible premium before rebate.
Using the currently published percentages, Pat’s 32.158% age-based rebate is about $965. At the proposed all-age base-tier rate of 24.118%, the rebate would be about $724. That is a difference of approximately $241 a year, or about $20 a month.
This is an illustration only. The actual result depends on the eligible premium, policy composition, income tier, insurer timing and the rebate percentage applying after 1 April 2027.
What should policyholders do now?
There is no need to change cover simply because a proposal has been announced. Wait for Parliament to decide, then review your insurer’s premium notice if the law passes.
It is also worth checking your expected rebate income. Moving between tiers can change the percentage, and claiming too much rebate through reduced premiums can create a private health insurance adjustment in the tax return.
For couples, the age of the oldest person covered can affect how an insurer applies the rebate. A major income or family change is a good reason to update the nominated rebate tier with the fund.
Frequently asked questions
Has the private health insurance rebate change passed into law?
No. At 5 September 2026 the bill was still before the Senate, with a committee report due on 7 October 2026. The proposed 1 April 2027 start depends on the legislation passing.
Is the Government abolishing the rebate for everyone over 65?
No. The proposal removes the additional age-based percentage. Eligible people aged 65 and over would generally receive the same income-tested percentage as an under-65 policyholder.
Should I change my health cover now?
Not based on this proposal alone. Review cover for value and health needs, then reassess the net premium if the bill passes and your insurer confirms the new amount.
Talk to Regans Accountants
If you are approaching retirement or managing private cover on a fixed income, Regans Accountants can help estimate your rebate tier and explain how the proposed change may flow through to your tax return and household budget.
General information only, current at 5 September 2026. Speak with us about your own circumstances.
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