A Senate committee recommended on October 7, 2026, that the Private Health Insurance Amendment (Modernising the Private Health Insurance Rebate) Bill 2026 be passed, which would remove the higher private health insurance rebate rates paid to Australians aged 65 and over. The next day, research by iSelect found that 47% of Australians were very or somewhat confident they could rely solely on the public health system without private cover.
For brokers, that second finding is the objection waiting in the next renewal conversation with an older client.
The bill passed the House of Representatives on September 16, 2026. It would apply a single, income-tested rebate rate to all ages from April 1, 2027, the same date as the industry’s annual premium adjustment. More than 3 million Australians aged 65 and over held private health insurance as at December 31, 2025, according to Private Healthcare Australia (PHA), the peak body for health funds.
The Senate has not yet voted, and the outcome is uncertain. The Coalition has vowed to block the bill. The Australian Greens have said they will not support it in its current form and are reportedly considering amendments, including an exemption for pensioners, according to the ABC on October 7, 2026.
Read next: Senate committee backs rebate cut as health funds urge senators to reject it
Not every policyholder aged 65 and over is affected. The rebate is income-tested across four tiers, and the highest earners already receive nothing. Under the Department of Health, Disability and Ageing’s summary of the changes, Tier 3 policyholders (singles earning over $164,000 and families over $328,000 in 2026-27) receive a 0% rebate before and after the change.
For everyone else, the age-based uplift disappears. At the base tier, policyholders under 65 receive 24.118%, those aged 65 to 69 receive 28.139% and those aged 70 and over receive 32.158%. From April 1, 2027, all three groups would receive 24.118%. Rates in Tiers 1 and 2 fall by the same margin, about 4 percentage points for 65 to 69-year-olds and about 8 points for those aged 70 and over.
Estimates of the dollar impact vary. The department puts the average additional cost for affected people at $252 a year. PHA calculates increases of up to $600 a year for some policyholders. Either figure comes on top of the 4.41% average premium rise in the April 2026 round. Gold hospital cover rose an average of about 13.3% at major funds in the same round, which compounds the pressure on older clients holding top-tier products.
PHA CEO Dr Rachel David said the burden falls hardest on those least able to absorb it. “About 39% of Australians with private health insurance earn less than $55,000 a year. This includes more than 900,000 older Australians who will be affected by the government's proposed changes,” David said.
She added: “There is a large cohort of older Australians with chronic conditions who rely on the private system and already devote a significant share of their limited incomes to healthcare. It is economically counterproductive to reduce the rebate and push high-needs patients out of private cover.”
The 47% figure will come up with clients. Disputing it won’t help, because Medicare does cover serious and acute care. A more useful framing is what the public system does not reliably provide, which is timely access to elective procedures.
The Australian Institute of Health and Welfare (AIHW) reported in December 2025 that the national median wait for elective surgery from a public hospital waiting list was 45 days in 2024-25, and 6% of patients waited longer than a year. Cataract surgery, among the procedures most common in older age groups, had a median public wait of 106 days.
Many older clients have held cover for decades and are approaching the years when joint replacements, cataract surgery or specialist treatment become more likely. For them, those waits are the concrete cost of relying on Medicare alone.
Forecasts vary widely, and they measure different things. The Department of Health modelling cited in the committee process projects about 44,000 fewer adults aged 65 and over holding cover by 2028-29. PHA projects 62,000 people will drop cover if the bill passes as drafted. PHA’s figures carry advocacy intent, given its role as the industry's peak body.
The bigger risk may be downgrading rather than cancelling. Catholic Health Australia modelling, cited in the Coalition’s dissenting report, estimates about one in five affected over-65s, roughly 665,000 people, will change their level of cover within three years, mostly moving from Gold to lower tiers. National Seniors Australia warned in its submission that a move from Gold to Silver may remove cover for joint replacements and cataract surgery.
The Parliamentary Budget Office estimates about 1.5 million age pensioners will be affected and will bear around half the cost of the change.
Read next: PHI rebate forecasts diverge on older Australians leaving cover
The latest quarterly private health insurance statistics from the Australian Prudential Regulation Authority (APRA), released on August 27, 2026, showed 45.8% of Australians held hospital treatment cover at June 30, 2026, a slight increase on March 2026. General treatment coverage was 55.5%. APRA’s data also shows net membership declines among people aged 60 and over, even as overall participation rose.
That growth came before the proposed rebate change entered the 2027 pricing cycle. Whether it continues after April 2027 is the question insurers are now trying to answer as they prepare their 2027 premium applications. That work is happening before the Senate votes.
The legislative outcome is uncertain, but the timetable for clients is not. If the bill passes in its current form, the reduced rebate applies from April 1, 2027, the same day the 2027 premium increases take effect. Both cost changes would reach older clients on a single renewal notice.
Brokers have between now and then to help clients see what is coming. Clients aged 65 and over in Tiers 1 and 2 and at base tier should know what a 4 or 8 percentage point rebate reduction means for their own premiums. Where a client on Gold cover is weighing a downgrade, it is better to work through what the lower tier excludes before a price shock forces a quick decision.
For clients who cite the 47% figure or question the value of their cover, the useful question is not whether Medicare exists. It is whether Medicare delivers what they currently have: a choice of specialist, a predictable wait, and access to the procedures most common in their age group. That conversation is more productive before April 1, 2027, than after a premium notice prompts a cancellation call.
