Salary Packaging Health Insurance & Wellness Benefits: 2026 Guide
How to salary package health insurance in Australia, which workplace wellness benefits are FBT-exempt, and how to negotiate better health benefits in your next role. Complete 2026 guide.
How salary packaging health insurance works
Salary packaging health insurance means your employer deducts your health insurance premiums from your gross (pre-tax) salary and pays the insurer on your behalf. Because the payment comes from your pre-tax income, your taxable income is reduced, which can lower the amount of income tax you pay. Here is a practical example: on an $85,000 salary with $2,500 in annual health insurance premiums, salary packaging reduces your taxable income to $82,500. At the 32.5% marginal rate, you save $812.50 in income tax compared to paying premiums from your after-tax income. However, this arrangement triggers Fringe Benefits Tax for most private sector employers, which can negate the benefit. The exception is if you work for an FBT-exempt employer — public hospitals, registered charities, and some not-for-profits — where you can salary package up to $15,900 or $30,000 per year in FBT-exempt benefits. For employees of these organisations, salary packaging health insurance is highly effective and can save thousands per year. To set up salary packaging, speak to your payroll department or your employer's salary packaging provider, who will walk you through the process and confirm your FBT-exempt cap.
FBT-exempt wellness benefits your employer can provide
Certain workplace wellness benefits are exempt from Fringe Benefits Tax, making them cost-effective for employers to provide. Work-related preventive health care — such as flu vaccinations, health assessments, and immunisations — is FBT-exempt when provided on the employer's premises or as a work-related benefit. Employee Assistance Programs (EAPs) providing counselling and mental health support are generally FBT-exempt when they relate to work-related issues. Minor and infrequent benefits under the $300 minor benefits exemption can include things like occasional wellness sessions, healthy food at work events, or small wellbeing gifts. Some employers provide on-site gym facilities, which can be FBT-exempt if located on the business premises and available to all employees. However, gym memberships at external facilities are generally subject to FBT. First aid and emergency training provided by the employer is FBT-exempt. Employers can also provide work-related medical examinations — such as pre-employment health checks, annual fitness-for-duty assessments, and workers compensation medical reviews — without triggering FBT, as these directly relate to the employment relationship.
Corporate health insurance discounts: what to look for
Many medium and large employers have corporate health insurance arrangements with one or more health funds, offering discounted premiums to employees. These corporate rates typically offer 5-15% savings compared to individual retail premiums and may include additional benefits like waived waiting periods for new employees or enhanced extras cover at no extra cost. Some of Australia's largest health funds — including Medibank, Bupa, HCF, and nib — offer corporate plan options. To find out if your employer has a corporate health deal, check with your HR department, your company intranet, or your employee benefits platform. Even if your employer does not have a formal corporate arrangement, some funds offer industry-based or professional association discounts that you may qualify for through your occupation. Defence Health covers ADF members and families, Teachers Health covers education sector workers, and Nurses & Midwives Health covers healthcare workers. Union membership sometimes includes access to discounted health cover as a member benefit. When comparing corporate rates to retail rates, make sure you are comparing equivalent cover levels — a cheaper corporate policy is not a better deal if it provides less coverage than what you currently hold.
EAP and mental health support in the workplace
Employee Assistance Programs are confidential counselling and support services funded by employers and available to employees and often their immediate family members at no cost. Most EAPs provide between 3 and 8 free sessions per issue per year with a qualified psychologist or counsellor. Under the Fair Work Act, employers have a duty of care to provide a safe and healthy work environment, which extends to psychological safety. While there is no specific NES requirement to provide an EAP, work health and safety laws in every state and territory require employers to manage psychosocial risks, and providing mental health support is considered best practice compliance. Beyond EAPs, many employers now offer mental health first aid training for managers, R U OK? Day participation, and mental health awareness programs. Some enterprise agreements include dedicated mental health or wellness leave days separate from personal/carer's leave. If your workplace does not currently offer an EAP or mental health support, this is a reasonable request to make to your employer — the cost of providing EAP services is typically $50-$100 per employee per year, which is minimal compared to the cost of absenteeism, presenteeism, and turnover caused by unmanaged mental health issues.
Negotiating health benefits in your next role
When evaluating a job offer or negotiating a role change, health and wellness benefits should be part of your total remuneration assessment — not an afterthought. Start by asking your prospective employer what health benefits are currently available: corporate health insurance discounts, salary packaging options, EAP services, wellness allowances, and any other health-related perks. If the employer does not currently offer health-related benefits, you can propose them. A common approach is to request a wellness allowance — a fixed annual amount (typically $500-$2,000) that can be used toward health insurance premiums, gym memberships, or other health-related expenses. Frame this as a retention and productivity investment rather than a cost. For senior roles, you may be able to negotiate employer-paid health insurance as part of your package, similar to how company cars or phone allowances work. If salary packaging is available, ask about the FBT status of health insurance under your employer's arrangements and get the details in writing. Use our Take Home Pay Calculator to model the after-tax impact of different benefit structures, and our Salary Converter to compare packages that include different benefit mixes. Remember that health benefits are part of your total compensation — a role paying $5,000 less in base salary but offering $3,000 in health benefits plus salary packaging advantages could deliver better net value.
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Official resources
General information and estimates only — not legal, financial, or tax advice. Always verify with the Fair Work Ombudsman (13 13 94) or a qualified professional.
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