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Medicare Levy Surcharge

Want to know more about the Medicare Levy Surcharge?

The Medicare Levy Surcharge

The Medicare Levy Surcharge is an additional surcharge imposed on people earning above defined income thresholds, who are eligible for Medicare but who do not hold an appropriate level of private hospital cover. This surcharge is in addition to the normal Medicare Levy. On 1 July 2012 the income thresholds changed in line with the introduction of income testing for the Australian Government Rebate.

The table below shows the Medicare Levy Surcharge that applies for the 2017-2018 and 2018-2019 financial years - based on the corresponding income level.

  Base Tier            Tier 1        Tier 2 Tier 3
 Single income   $0 - $90,000  $90,001 - $105,000    $105,001 - $140,000  $140,001 +
 Family/Couple income   $0 - $180,000   $180,001 - $210,000   $210,001 - $280,000  $280,001 +

Medicare Levy Surcharge Nil  1.00% 1.25% 1.50%


St.LukesHealth acknowledges that the opportunity to avoid paying the Medicare Levy Surcharge, however, is limited in its scope to the proportionately few people, including individuals and families, who fall into the Tier 1, Tier 2 and Tier 3 income tiers.

For families with children, the above income thresholds are increased by $1,500 for each child after the first. The income thresholds are usually indexed annually to keep pace with changes to average wages. 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 hospital cover is one which does not have an excess greater than $500 for single members or greater than $1,000 for couples, single parent or family members.

If you take out private hospital cover with St.LukesHealth you may be exempt from paying the Medicare Levy Surcharge from the date the policy is effective on all hospital covers except for our high excess product - Hospital 1000 (JT).

It should be noted, if a couples combined taxable income exceeds the couples threshold, both parties must hold appropriate 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 (ATO) will require both parties to pay the additional levy.

The additional Medicare Levy Surcharge will also apply to members earning above the income thresholds during any period of policy suspension.

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

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