The rebate change that could add hundreds to your health cover – and what happens next

A rebate that has helped older Australians afford private health cover for more than 20 years is set to be wound back. Here’s what it could actually cost you, and the date to watch.

For most of the past two decades, turning 65 came with a small but valuable financial benefit. The private health insurance rebate – the slice of your premium the federal government contributes – increased when you hit 65, and increased again at 70.

That is now on the table.

Under legislation currently before Parliament, those age-based increases would be removed altogether, leaving the rebate to be determined by income rather than age.

If the legislation passes, the change would begin on April 1, 2027.

It is a proposal aimed squarely at older Australians, and one worth understanding beyond the headlines. Here is what is being proposed, what the numbers could mean for your household, and where the legislation stands right now.

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What is actually being proposed

The legislation is called the Private Health Insurance Amendment (Modernising the Private Health Insurance Rebate) Bill 2026.

Its central change is straightforward: remove the two higher age-based rebate rates that currently apply from age 65.

At present, your rebate depends on both your income and your age. For a base-tier policyholder, the rebate is currently 24.118 per cent of the premium if you are under 65, 28.139 per cent if you are aged 65 to 69, and 32.158 per cent if you are 70 or over.

Under the proposal, people aged 65 and over would instead receive the same rebate rate as someone under 65 in the equivalent income tier. Your income would still determine which tier you sit in. Your age would no longer increase the rebate.

The federal government expects the change to save about $3 billion over four years, with the savings to be invested in aged care.

There are two details worth understanding because they can make a significant difference to what households receive.

The first is how the income test works for couples. If you are part of a couple or family, the rebate is tested against the family income thresholds, rather than treating each partner as a single person.

The second is that the rebate percentage for a policy is currently determined by the oldest person covered by it. So if one partner is 71 and the other is 66, for example, the higher 70-plus rebate rate can currently apply to the policy.

What it could cost you

This is where the numbers become more complicated, because the impact depends heavily on the type and cost of cover you hold.

The government estimates the average increase for affected older Australians will be around $250 a year.

Canstar modelling published on April 30 estimated the rebate change alone could add about $205 a year to the average Gold hospital policy for someone aged 65 to 69, and about $410 for someone aged 70 or over.

National Seniors Australia, which has been campaigning against the proposed change, says the impact could exceed $1,000 a year for a couple holding Gold cover.

Why such a big difference?

Because the rebate is a percentage of your premium. The more expensive the policy, the greater the dollar impact when that percentage falls.

An average taken across millions of policyholders and different levels of cover can therefore produce a much smaller figure than the increase facing someone in their seventies paying for comprehensive Gold cover.

Check your own numbers: Use the private health insurance rebate calculator to estimate how the proposed changes could affect your premium.

There is another cost to keep in mind.

Private health insurance premiums generally change each April regardless of what happens to the rebate. The industry-wide average premium increase approved for April this year was 4.41 per cent – the largest average increase in a decade.

Mildura Health Fund chief executive Gerard Op de Coul told the ABC in August that, once the proposed rebate reduction and rising medical costs were combined, premiums for some older Australians could rise by as much as 12 per cent next April.

That does not mean everybody’s premium will rise by 12 per cent. Individual increases will depend on the fund, policy and rebate entitlement.

The rebate also applies to eligible extras cover, not just hospital cover.

And because the rebate is set by the federal government rather than individual insurers, simply changing health funds does not avoid the proposed change. What another fund charges for comparable cover, however, may be a different story.

Where it actually stands right now

This part is important because the change is not law yet.

As things stand, the Bill remains before the House of Representatives and has not passed Parliament.

It was referred to the Senate Community Affairs Legislation Committee, which has been examining the proposal and is due to report by October 7, 2026.

The Coalition has opposed the measure. The government therefore faces a further political hurdle before the legislation can pass Parliament, with support elsewhere in the Senate likely to be required.

There is another date worth keeping in mind.

Health insurers typically submit their proposed premium changes for the following year to the government later in the year, ahead of the annual April premium round. That will begin to give policyholders a clearer picture of what their overall costs could look like in 2027.

So the position today is relatively simple: the change has been proposed, it remains contested, it has not become law, and the Senate committee examining it is due to report in early October.

What to do between now and then

There is nothing you need to do immediately. There is no deadline to meet, no form to fill out and no decision required this month.

But the months before April do provide an opportunity to look closely at the cover you already have.

If you are one of the many Australians who has held the same policy for a decade or more, this may be a useful time to find out what you are actually paying for.

Cover chosen at 55, when your priorities may have been quite different, can include services you no longer need – or leave out ones that have become more important.

Before dropping or downgrading hospital cover, however, it is worth checking carefully what you would lose as well as what you would save.

The proposed rebate change itself is out of your hands. The policy you choose, what it covers and how much you pay for it are decisions you can review.

Worth knowing where you stand?

You can compare your health insurance with Starts at 60, or talk it through with an Australian adviser on 1800 31 23 60. There is no obligation and no pressure to switch – plenty of people call simply to find out whether their current cover still stacks up.

We’ll be following the legislation through to the Senate committee report in October and will come back to what it means from there.

If you have a question about your own situation, leave it in the comments below. We read them, and they help shape what we cover next.

IMPORTANT LEGAL INFO This article is of a general nature and FYI only, because it doesn’t take into account your personal health requirements or existing medical conditions. That means it’s not personalised health advice and shouldn’t be relied upon as if it is. Before making a health-related decision, you should work out if the info is appropriate for your situation and get professional medical advice.