Budget 2016: Changes to health

The Federal Budget 2016 contained some important changes that could impact what you pay for health insurance or a trip to the doctor.

budget 2016 changes to health

Let’s take a closer look at two changes that could impact your health costs, depending on your situation.

Freeze on the indexation of Medicare rebates

The Government is extending its freeze on the indexation of Medicare rebates by another two years.

What does this mean?

The cost of your visit to the GP could rise, along with potentially higher out-of-pocket expenses for healthcare.

The rebate is normally indexed to allow for inflation. The freeze means the amount of money patients are rebated will remain the same until 2020. This could have an impact on bulk-billing practices and their patients.

Extending the freeze on the Medicare Levy Surcharge and Private Health Insurance Rebate thresholds

From 1 July 2018, the Medicare Levy Surcharge (MLS) and Private Health Insurance (PHI) rebate thresholds will remain paused for three more years.

The same current income thresholds apply for 2015/16, 2016/17 and 2017/18 and will continue for another three years.

Not adjusting the income thresholds for three years could result in people with incomes just below each threshold moving into a higher income threshold sooner if their income increases.

What does this mean?

If you receive a pay rise over the next three years, it could impact what you pay for health insurance or in extra tax through the Medicare Levy Surcharge.


  • If you have PHI and you receive a pay rise, your PHI rebate percentage entitlement may decrease, i.e., you will pay more out-of-pocket costs for health cover.
  • If you don’t have the appropriate hospital cover and your boss grants you a pay increase, you may have to start paying the Medicare Levy Surcharge. If you have already paid the surcharge in previous years, your rate may increase.

You can use the Australian Taxation Office’s Private health insurance rebate calculator to help you work out your entitlement to the private health insurance rebate, including the rebate percentage. For those who don’t have private hospital cover, you can also use this calculator to estimate your Medicare Levy Surcharge rate that you would be charged.

What are your thoughts on the health changes? Please share your thoughts below.

This post is sponsored by Health Deal. Health Deal compare Australian private health insurance policies to find you a better Health Deal from their panel of health funds.