Private health insurance changes - what it means for medical practitioners and their patients

16 Apr 2013

AMA members in private practice need to be aware that recent changes to government support for private health insurance premiums may impact on their patient’s level of cover for medical services.

The following changes took effect on 1 July 2012 for higher income earners:

  • reduced private health insurance rebates; and
  • increased Medicare levy surcharges.

The following change is currently before the Parliament, and if passed will take effect from 1 July 2013:

  • the private health insurance rebate will not be payable for the component of the private health insurance premium that attracts the Lifetime Health Cover loading.

Finally, from 1 April 2014 the Government’s private health insurance rebate will be indexed by the lesser of the consumer price index or the actual increase in commercial premiums.

The effect of the first two measures on premium costs will become clear to people on higher incomes when their tax returns for the 2012-13 financial year fall due in the second half of 2013 and early 2014. Then people might be motivated to drop their private health insurance altogether or reduce their level of cover to reduce the amount of their premiums.

Medical practitioners providing informed financial consent to their patients will need to remind patients that they should check the details of their insurance policy with their insurer.

Patients may have recently dropped their level of cover and not clearly understood the implications. Patients should be encouraged to check:

  • whether there are any procedures for which they are not covered;
  • the level of their excess; and
  • whether they are covered for treatment in the hospital that thier medical practitioner has nominated.

Means testing of the private health insurance rebate and increases to the Medicare levy surcharge apply as follows.

Single < $88,000$88,001 - 102,000$102,001 - 136,000> $136,001
Families < $176,000$176,001 - 204,000$204,001 - 272,000> $272,001
  < age 65 30% 20% 10% 0%
 age 65 - 69 35% 25% 15% 0%
 age 70+ 40% 30% 20% 0%
Medicare levy surcharge
All ages0.0%1.0%1.25%1.5%

The thresholds will increase annually based on growth in average weekly earnings. Single parents and couples are subject to the family tiers.

Patients can be directed to for more information.