What is the Medicare Levy Surcharge?

The Australian Government introduced the Medicare Levy Surcharge to encourage higher income earners to take out private hospital cover. The surcharge is between 1% to 1.5% of annual income and is collected by the government at tax time.

Doesn't everyone pay the Medicare Levy?

There are two parts to the Medicare Levy:

1. Most of us pay 2% of our annual income as a Medicare Levy to help fund Medicare.
2. Higher income earners are also charged an additional Medicare Levy Surcharge of 1% to 1.5% of their annual income if they don’t have private hospital cover.

Both are collected by the government at tax time.

The Australian Government sets the Medicare Levy Surcharge income thresholds. The following table shows the thresholds, which are valid until 30 June 2023.

Important information for couples and families

Single parents and couples (including de facto couples) are subject to family tiers. If you have dependent children, your income threshold increases by $1,500 for every child after the first. To determine whether your child is a dependant for tax purposes, please contact your registered tax agent or visit the Australian Taxation Office (ATO) website.

Do you need to have private hospital cover for the full financial year to avoid paying the surcharge?

The surcharge is calculated daily, so you need to have hospital cover for the entire financial year to avoid paying the surcharge.

Does everyone in a family need private hospital cover?

To avoid paying the surcharge, everyone in your family—including all dependent children—must have private hospital cover.