Over-65s would lose their bigger health insurance rebate
People 65 and over now get a bigger government discount on private health insurance than younger people on the same income. This bill would give everyone the same discount, based only on income. It is the government's second try, after the Senate dropped the first bill.
Official name: Private Health Insurance Amendment (Modernising the Private Health Insurance Rebate) Bill 2026 [No. 2]
- The government pays part of the cost of private health insurance for most people. This is called the rebate.
- People aged 65 to 69 and 70 and over now get a bigger rebate than younger people on the same income.
- From 1 April 2027 the rebate would depend on income alone, so older people would get the same rate as everyone else.
- About 3.2 million older people would get a smaller rebate. The government says that is about $250 a year on average.
- The government says it would save about $3 billion over four years, to spend on aged care.
Who it affects
- People aged 65 and over with private health insurance: Your rebate would drop to the same rate as younger people on your income. The average cost is about $250 more a year.
- People under 65: Your rebate stays the same.
- High earners: People in the top income group already get no rebate. That does not change.
- Health insurers: They would need to change their systems and answer calls from customers whose costs go up.
Why it exists
About 15.4 million people in Australia use private health insurance. It helps pay for care in a private hospital. It can also cover extras like dental, glasses and physio.
Health insurance here works on a rule called community rating. Everyone pays the same price for the same policy, whatever their age or health. That means younger people help pay for the claims of older people, who tend to claim more.
The government pays part of the cost of a policy for most people. This is the private health insurance rebate. Its aim is to get people to take out cover and keep it. The government expects to spend $7.9 billion on it in 2026-27.
The rebate started in 1999 as a flat 30 per cent off for everyone. In 2005 older people got more, 35 per cent at ages 65 to 69 and 40 per cent at 70 and over. From 2012 it was linked to income, so people who earn more get less or nothing.
The government says the rebate is now too complex. It says it gives older people more help even when they earn the same as younger people. It says older people are likely to keep their cover anyway, because they get back more in claims than they pay.
How the rebate works now
The rebate depends on your income and your age. There are four income groups. For a single person the cut-offs are $105,000, $123,000 and $164,000 a year. For families they are double, at $210,000, $246,000 and $328,000.
In the lowest income group, people under 65 get about 24 per cent off. People aged 65 to 69 get about 28 per cent. People 70 and over get about 32 per cent.
In the next two groups the rates are lower, but older people still get more. In the top group, nobody gets a rebate.
Most people get the rebate as a lower price from their insurer. Others claim it back when they do their tax.
Same rebate for every age
Part 1 of the bill changes the Private Health Insurance Act 2007. It removes the higher rates for people aged 65 and over. Their rebate would be worked out the same way as for people under 65.
So in the lowest income group, everyone would get about 24 per cent. In the next group it would be about 16 per cent, and in the one after that about 8 per cent.
The income groups do not change. They still rise each year in line with wages. The rebate rates also still change each year by a set formula, but not on 1 April 2027. They would next change on 1 April 2028.
Say you are 72, single and earn $60,000 a year. You get about 32 per cent off your policy now. From 1 April 2027 you would get about 24 per cent, the same as a 40 year old on your income.
Others on the same policy
Under the old rules, the older person's higher rate could carry on for others on the same policy. For example, it could keep going after the older person left the policy.
The bill removes that rule, since the higher rate for older people no longer exists.
Part 2 makes a small fix to the Age Discrimination Act 2004. That law had let the old rule treat people differently by age. The fix removes that reference, since the rule is gone.
The first bill and why it came back
This is the second copy of this bill, so it has [No. 2] in its name. The first one was brought in on 25 June 2026 and was the same word for word.
A Senate group checked the first bill. It got 665 written comments and held four public hearings. It said the bill should pass. The Greens and the Liberal and National parties (the Coalition) wrote reports saying it should not.
The House of Representatives passed the first bill on 16 September 2026. But on 14 October 2026 the Senate dropped it from its to-do list. Senator Jacqui Lambie and Senator Anne Ruston moved that it be dropped.
That vote was backed by the Coalition, the Greens, One Nation and independent senators Ralph Babet, Fatima Payman, David Pocock and Lidia Thorpe. Health Minister Mark Butler then said the government would bring it back the next day.
Waiting in the House
The whole bill would start on 1 April 2027. The new rates would apply to cover for days from that date.
The government brought this bill into the House of Representatives on 15 October 2026. Health Minister Mark Butler asked the House to start debating it that day.
The House must now debate it and vote. If it passes, it goes to the Senate, which must also pass it before it can become law.
Its journey through Parliament
| 15 Oct 2026 | House of Representatives: Introduced and read a first time |
| 15 Oct 2026 | House of Representatives: Second reading moved |