What is the Private Health Insurance (PHI) rebate?  Taxpayers that have sufficient hospital cover may be eligible for a rebate on their health insurance premiums.  The percentage of the rebate is adjusted each year based on the taxpayer and their partner's combined income based on tiered levels and based on the age of the oldest person covered in the policy - the rates may be found on this link.

The reason for the PHI is to encourage and reward taxpayers with private health cover (including hospitals) for taking the burden off the Medicare system by maintaining private health cover.

There are 2 options to claim your share of the PHI by either:

1. Reduced PHI premiums: if you advise your health fund that you want to claim the rebate by paying lower premiums each month; or
2. Tax return rebate: if you prefer not to claim it during the year, then when you lodge your tax return the ATO will assess your entitlement and you will receive this as a rebate.

The sting in the tale is that if you choose option 1 and claim the full rebate monthly (by means of reduced health insurance premiums) you may receive a PHI adjustment in the form of an additional payable in your income tax return assessment.

Read the full details on the ATO website - just click here.