The Australian Government has proposed changes to the Australian Government Rebate on private health insurance (AGR) for Australians aged 65 and over.
In the 2026-27 Budget, the Australian Government proposed changes to the Australian Government Rebate on private health insurance (AGR) for Australians aged 65 and over.
Update:
On 14 October, the Senate voted to reject the Federal Government's proposal to cut private health insurance rebates for Australians aged 65 and over. On 15 October, the Health Minister reintroduced the bill to parliament.What is happening?
The change proposes that Australians aged 65 and over will receive the same rebate rate as other people in the same income tier.
The legislation, if passed, will come into effect from 1 April 2027.
The legislation has not yet passed, and all information is a proposed change to the AGR by the Australian Government.
We want to share this information now so you can understand what's being proposed and what it could mean for you.
What is changing under the proposal?
If the proposal is approved, members aged 65 and over who currently receive an Australian Government Rebate (AGR) will receive a lower rebate than they do today. This means the Government would contribute less towards the cost of their health insurance, so members would pay more towards their premium.
Currently, the rebate is based on both age and income. Under the proposal, it would be based on income only, meaning the higher rebate available to members aged 65 and over would no longer apply.
Example: A member aged 70 or over on the Base Tier would see their rebate reduce from 32.158% to 24.118%.
The following tables compare the current Australian Government Rebates with the proposed rebate structure from 1 April 2027.
Table 1: Current rates for PHI Rebate (1 July 2026 – 31 March 2027)
| PHI Rebate % | ||||
| Singles Tier threshold | Up to $105,000 | $105,001 - $123,000 | $123,001 - $164,000 | $164,001 and above |
| Families Tier threshold | Up to $210,000 | $210,001 - $246,000 | $246,001 - $328,000 | $328,001 and above |
| Base tier | Tier 1 | Tier 2 | Tier 3 | |
| Less than 65 years | 24.118% | 16.079% | 8.038% | 0% |
| 65 - 69 years | 28.139% | 20.098% | 12.058% | 0% |
| 70 years+ | 32.158% | 24.118% | 16.079% | 0% |
Income tier thresholds presented are current for 1 July 2026 to 30 June 2027 and are subject to annual indexation on 1 July based on changes in AWOTE.
Table 2: Proposed rates for PHI Rebate (from 1 April 2027)
| PHI Rebate % | ||||
| Base tier | Tier 1 | Tier 2 | Tier 3 | |
| Less than 65 years | 24.118% | 16.079% | 8.038% | 0% |
| 65 - 69 years | 24.118% | 16.079% | 8.038% | 0% |
| 70 years+ | 24.118% | 16.079% | 8.038% | 0% |
The Rebate rates will be subject to annual indexation through the Rebate Adjustment Factor (RAF) on 1 April 2028 and subsequent years based on the difference between the CPI and the industry weight average premium increase. However, the RAF will be set to 1 for 1 April 2027 so the percentages remain unchanged from the prior year, to provide certainty of the rates to apply on 1 April 2027.
Why is the Government proposing this change?
Currently, people on the same income can receive a different rebate depending on their age. The Government believes people in the same income tier, irrespective of age, should receive the same level of support.
Savings from this change will be invested in aged care services, including more residential aged care beds and improved access to home care support services.
When would the proposed changes take effect?
If the bill passes, the intended start date for these proposed changes is 1 April 2027.
Timeline of activity
Any change needs to go through the full Government approval process before it comes into effect. This process involves many steps.
May 2026
In the 2026-27 Budget, the Government announced proposed changes to the private health insurance rebate for Australians aged 65 and over.
October 2026
The hearing of the Senate Community Affairs Legislation Committee takes place.
A Senate Committee reviewed the Government proposal and recommended it to go ahead.
Medibank continues to have discussions with the Australian Government about how these proposed changes will affect our members.
October/November 2026
We will contact affected members directly with more information if the proposal becomes law.
1 April 2027
The legislation, if passed, will come into effect from 1 April 2027.
What does this mean for Medibank members?
You don’t need to do anything at this stage. Remember, these are proposed changes and the legislation has not yet passed. The intended start date for these changes is 1 April 2027.
We understand that you may have concerns about the Australian Government’s proposed changes. Medibank will continue to seek clarification from the Australian Government about how these proposed changes will affect our members in the lead up to 1 April 2027.
We’ll continue to update this page with information as it becomes available and provide our members with support.
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