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Breaking Down the Private Health Insurance Rebate

The private health insurance rebate is the Australian Federal Government's contribution toward the cost of your health insurance premiums. Depending on your insurance company and your qualifications, this amount might be lower or higher. This is also known as an "income-tested" rebate. 
Depending on your health care provider, your insurance policy, and your overall income, this means your rebate may be reduced or you may not even qualify for one at all. Of course, this is just one of the many quirks of the health insurance rebate that you should be familiar with. 

Private Health Insurance Rebate Essentials

This health coverage rebate is present in many countries, including the United States. It differs from government-sponsored programs like Medicare and Medicaid as it's only applicable for private health plans and network providers. This rebate can be claimed for a variety of health insurance plans and can reduce out-of-pocket costs. 
It applies to policies from private insurance companies that provide both hospital cover and general cover as well as a combined cover. However, if you (or your family) don't have an adequate level of private medical insurance and your income for Medicare surcharges passes a certain amount, you may be liable for additional charges. 

Your use of the rebate will either be calculated when you lodge your tax return or will appear as a reduction in your deductible bill and premiums. This is similar to how the US Government handles their rebates, whether they're a result of a special enrollment period or open enrollment period. It's important to note that, if your income isn't verified correctly, you could owe money back during the next year. 
This is because, on occasion, you can be overpaid for your health insurance coverage. If this is the case, you may have to return that money. This is a rare occurrence, though. However, if you experience a layoff or a loss of income, you need to contact the holder of your health insurance policy to adjust your premiums. There are seldom exclusions to this rule but if you're concerned, your best bet is to discuss it directly with your insurance company. 

Appropriate Levels of Coverage

Unlike the US, where plans through Blue Shield companies or a Humana Insurance Company typically qualify as appropriate coverage under the Affordable Care Act, it can be harder to select the right level of coverage in both Australia and New Zealand. For couples, an appropriate level of coverage must denote an excess of $1,500 or less. For singles, this number is reduced to $750. General cover (extras) or travel insurance do not qualify as private individual health insurance plans or family coverage. Again, it can impact your tax return greatly if you don't have the right level of coverage from your insurance company.

You're also directly responsible for arranging for and paying for your coverage with your insurance company. While the federal government will provide the rebate to all eligible parties, they won't facilitate the purchase of insurance. On top of that, there are penalties for not maintaining an appropriate level of coverage. For instance, if you don't purchase and retain hospital cover, you may be liable for the loading penalty which is assessed for every year without appropriate coverage. 
Selecting the right policy to maximize your rebate eligibility can be complicated. If you need assistance, you can compare health insurance providers with iSelect. Their comparison tool makes it easy to review insurance companies, deductibles, and monthly premiums. 
The private health insurance rebate can be a major asset for singles and families. However, you need to ensure that you maintain eligibility and always report your income correctly. Otherwise, the consequences for your tax return and your coverage could be problematic.

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