The Medicare Levy Surcharge is an additional surcharge imposed on people earning above defined income thresholds, who are eligible for Medicare but do not hold an appropriate level of private hospital cover.

For families with children, the above income thresholds increase by $1500 for each child after the first. The income thresholds are usually indexed by the Government each year, however, as part of the 2016-17 Federal Budget, the Government paused the indexing of the income thresholds until 30 June 2021. People earning above the threshold amounts may avoid paying the Medicare Levy Surcharge by taking out an appropriate level of private hospital cover with a registered health insurer. An appropriate level of private hospital cover is defined as one that does not have an excess greater than $750 for single members or greater than $1500 for couples, single parents or family members.

MEDICARE LEVY SURCHARGE FOR 2019-2020 FINANCIAL YEAR

Income thresholds
Base Tier Tier 1 Tier 2 Tier 3
Single income $0 – $90,000 $90,001 – $105,000 $150,001 – $140,000 $140,001 +
Family income $0 – $180,000 $180,001 – $210,000 $210,001 – $280,000 $280,001 +
All ages NIL 1.0% 1.25% 1.5%

If a couple’s combined taxable income exceeds the couple’s threshold, both parties must hold appropriate private hospital cover to avoid paying the Medicare Levy Surcharge. If only one of the couple holds private hospital cover and the other does not, the Australian Taxation Office will require both parties to pay the additional levy.

For more information on the Medicare Levy Surcharge, visit www.ato.gov.au

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