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Medicare levy and Medicare levy surcharge

What are they?

A Medicare levy is the progressive income tax levy which partly finances Medicare, Australia’s national healthcare scheme. Taxpayers pay the Medicare levy which is 2% of their taxable income to fund the Medicare system.

In addition to the Medicare levy, you may also have to pay the Medicare levy surcharge (MLS) if you don’t have an appropriate level of private patient hospital cover.

The Medicare Levy Surcharge is an extra 1% to 1.5% levy paid by Australian taxpayers who don’t have Private Hospital Cover and are considered by the Government to be high income earners. Medicare gives Australian residents access to health care. It is partly funded by the Medicare levy, which is 2% of your taxable income.

Who does it apply to?

Medicare levy applies to everyone except if you:

  • meet certain medical requirements
  • are a foreign resident
  • are not entitled to Medicare benefits.

The Medicare levy surcharge (MLS) is levied on Australian taxpayers who do not have an appropriate level of private hospital insurance and who earn above a certain income. The base income threshold (under which you are not liable to pay the MLS) is $90,000 for singles and $180,000 for families. If you earn under that, then you’re not subject to the MLS.

Medicare Levy exemption certificate.

You can claim a full exemption for any period for which you have a certificate from the Medicare Levy Exemption Certification Unit of Medicare Australia showing you were not entitled to Medicare benefits because you were a temporary resident for Medicare purposes and either:

you did not have any dependants for that period, or

all your dependents were in an exemption category for that period.

A letter from Medicare is not sufficient. For more information on how to apply for an exemption certificate as a temporary resident, contact Medicare on 1300 300 271 or go to humanservices.gov.au

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