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 do not hold an appropriate level of private hospital cover.
If your income for Medicare Levy Surcharge purposes is above the defined income thresholds set by the government, you will be required to pay an additional Medicare Levy Surcharge of up to 1.5% if you, your spouse and all your dependants don’t hold an appropriate level of private Hospital cover. An appropriate level of Hospital cover is one which does not have an excess greater than $750 for single members or greater than $1500 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, with the exception of our high excess product – Gold Hospital 1000.
MEDICARE LEVY SURCHARGE FOR 2023-2024 FINANCIAL YEAR.
| |
Base Tier |
Tier 1 |
Tier 2 |
Tier 3 |
| Single Income |
$0-$93,000 |
$90,001-$108,000 |
$108,001-$140,000 |
$144,001+ |
| Family Income |
$0-$186,000 |
$186,001-$216,000 |
$216,001-$288,000 |
$288,001+ |
| Medicare Levy Surcharge |
NIL |
1.00% |
1.25% |
1.50% |
How is my Medicare Levy Surcharge, calculated?
To calculate your income for Medicare Levy Surcharge purposes, the following items are considered:
- Taxable income
- Reportable fringe benefits
- Total net investment losses
- Reportable super contributions
- If you have a partner or spouse, their share of the net income of a trust on which the trustee must pay tax and which has not been included in their taxable income
- Exempt foreign employment income.
For example, Cindy is 35 years old, single and does not have the appropriate level of private hospital cover. Her taxable income for the 2021-22 financial year is $90,000.
When Cindy completes her tax return, she also declares that she has reportable fringe benefits of $20,000
Cindy’s total income for Medicare Levy Surcharge purposes is $110,000. This makes her a Tier 2 income earner for calculating the Medicare Levy Surcharge.
To calculate Cindy’s Medicare Levy Surcharge: $90,000 taxable income + $20,000 reportable fringe benefits X 1.25% = $1375.
What about if I have a partner or family?
If you have a partner or spouse, your combined income will be used to calculate your Medicare Levy Surcharge.
If you are a family with a combined income of more than $180,000, you may need to hold hospital cover for you, your partner and your dependents to avoid the surcharge . If your partner or one of your dependents is not covered, you will pay the surcharge unless an exemption applies.
If you do have to pay the Medicare Levy Surcharge, it will be included with the Medicare levy and shown as one amount on your assessment called “Medicare levy and surcharge”.
For families with children, the income thresholds increase by $1500 for each child after your first child. For Medicare Levy Surcharge purposes, your child is still a dependent if you are paying child support while the child does not reside with you.
For more information on the Medicare Levy Surcharge, visit www.ato.gov.au
