MEDICARE LEVY SURCHARGE & PRIVATE HEALTH INSURANCE

What is the medicare levy?

The Medicare Levy is paid by most Australian taxpayers to fund Medicare. It's calculated at 2% of your taxable income but this rate may vary depending on your circumstance. For tax purposes, people who are not Australian residents generally do not pay the Medicare Levy as they are not entitled to Medicare benefits.

What is the medicare levy surcharge?

The Medicare Levy Surcharge (MLS) is an additional levy on top of the Medicare Levy that is payable by Australian taxpayers who do not have an appropriate level of private patient hospital cover and earn above an income threshold. The MLS ranges from 1.0% to 1.5%, depending on a person’s income.

For the 2014/2015 financial year income thresholds start at $90,000 for singles and $180,000 for couples and families. Single parents and de-facto couples are subject to family income thresholds. For families with children, the thresholds increase by $1,500 for each child after the first. The thresholds are effective 1 July each year and are indexed annually.

What is the Government rebate on private health insurance?

The Australian Government Rebate on private health insurance  is an initiative whereby the Government may contribute to a percentage of the cost of a member’s private health insurance. If you’re an Australian resident who qualifies for Medicare and holds private health insurance, you may be entitled to receive the rebate depending on your income. The rebate is indexed annually from 1 April each year.

The level of rebate you’re entitled to is based on the age of the oldest person covered by the policy and by annual earnings.

How does the rebate work?

The Government rebate on private health insurance is based on your age and income.

If you're single and earning $90,000 or less or a couple or family earning $180,000 or less then the rebate is based only on your age. If you earn more than this, the rebate is based on your age and income

You can find more information on the ATO or the Department of Health websites.