medicare levy surcharge

The Medicare Levy Surcharge is an additional surcharge of 1% of taxable income 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 1.5% Medicare Levy.

For the 2009-2010 financial year, the taxable income thresholds were:

• $73,000 for a single person; or

• $146,000 for families and couples. The family income threshold is adjusted by $1,500 for each dependant child after the first.

For the 2010-2011 financial year, the taxable income thresholds are:

• $77,000 for a single person; or

• $154,000 for families and couples. The family income threshold is adjusted by $1,500 for each dependant child after the first.

These thresholds are indexed annually to keep pace with changes to average wages.

People earning above the threshold amount can 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 will 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 1% Medicare Levy Surcharge will also apply to members earning above the income thresholds during any period of policy suspension.