The Medicare Levy Surcharge was introduced by the Australian Government to encourage people who earn above a certain income to take out private hospital cover, and to use the private system to reduce demand on public hospitals.
If you’re single and earn over $90,000 (or a couple or family earning over $180,000), buying private hospital cover may help you to minimise your tax by avoiding having to pay the Medicare Levy Surcharge.
The Medicare Levy Surcharge is a surcharge of between 1% and 1.5% of your income if you don’t have private hospital cover. The good news is that you can buy a basic level of hospital cover for around the same price as (or even less than) the additional tax you might have to pay.
The Medicare Levy Surcharge is calculated on a daily rate, so if you only have private hospital cover for part of the financial year, you may have to pay Medicare Levy Surcharge for the remaining part of the year.
That could mean long waiting lists, and no choice of doctor or hospital—or if you self-fund, it can mean large out-of-pocket costs
Depending on your level of cover that can mean choice of hospital and doctor, scheduling surgery at a time that suits you, and getting a private room (where available)
That’s extra tax that you could have avoided if you’d bought private hospital cover
Put that $1000 towards the cost of your private hospital cover—and if all you’re after is the basics, you might even end up with some change in your pocket
A reminder from your accountant each year at tax time that you should take out private hospital cover!
Depending on your level of cover you can be treated as a private patient in both private and public hospitals and be covered for emergency ambulance transportation
So it makes good sense to get your private hospital cover sorted out and avoid the Medicare Levy Surcharge.
GET A QUOTEThere are two parts to the Medicare Levy:
The following table shows the Medicare Levy Surcharge income thresholds and rates as set by the Australian Government.
| Singles | Couples & Families | Medicare Levy Surcharge Rate |
|---|---|---|
| $90,000 or less | $180,000 or less | 0.00% |
| $90,001 - $105,000 | $180,001 - $210,000 | 1.00% |
| $105,001 - $140,000 | $210,001 - $280,000 | 1.25% |
| Over $140,000 | Over $280,000 | 1.50% |
Single parents and couples (including de facto couples) are subject to family tiers. If you have dependent children, your income threshold for Medicare Levy Surcharge purposes increases by $1500 for each child after the first. To determine whether your child is a dependent for tax purposes or if you want more information about Medicare Levy Surcharge levels, please contact your registered tax agent or visit the ATO website.
The surcharge is payable for every day for which you don’t have private hospital cover within the financial year.
This means if you buy private hospital cover on 1 July and maintain it throughout the financial year, you won’t pay any Medicare Levy Surcharge. However, if you purchase private hospital cover after 1 July, or do not maintain your cover for the full financial year, you’ll pay the surcharge for every day you don’t have private hospital cover.
If you are subject to the Medicare Levy Surcharge and you have a family, everyone in your family, including all dependent children, must have private hospital cover to avoid having to pay the Medicare Levy Surcharge.
All of Australian Unity’s private hospital covers can help you to avoid paying the Medicare Levy Surcharge. (Note that extras only cover does not exempt you from paying the Medicare Levy Surcharge.)
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