Medicare Levy Surcharge

The Medicare Levy Surcharge has been in place since 1 July 1997 with the aim of encouraging high income earners to take out private hospital cover, and where possible, to use the private system to reduce the demand on the public system.

Where high-income earners do not take out private health insurance, they are charged an additional 1% on their taxable income on top of the usual 1.5% Medicare Levy.

For the 2009-2010 Financial Year, high-income is defined as:

• a single person with an annual taxable income greater than $73,000; or
• a family or couple with a combined taxable income greater than $146,000. The family income threshold increases by $1,500 for each dependent child after the first.

For the 2010-2011 Financial Year, high-income is defined as:

• a single person with an annual taxable income greater than $77,000; or
• a family or couple with a combined taxable income greater than $154,000. The family income threshold increases by $1,500 for each dependent child after the first.

If you are a high income earner and seek to avoid the additional 1% Surcharge you need to make sure you have purchased hospital cover with an excess less than or equal to $500 per annum for single contributors or $1,000 per annum for couples and families.

All hospital products with ACA Health Benefits Fund give exemption from the Medicare Levy Surcharge. Ancillary cover only does not constitute private patient hospital cover for the purposes of the Surcharge.

For more information, please contact us. You may also like to contact the Department of Heath and Aged Care, or the Australian Taxation Office