Private Health Insurance and Taxation
This blog contains information to simplify Medicare Levy and Medicare levy Surcharge. The information is relevant for the 2018 financial year. This is just basic information, please do consult your private health insurance provider for formal advise.
One of the most common questions we get asked is why do I pay Medicare Levy when I have private health insurance. Medicare Levy is payable by all Australian Residents who earn more than $26,668 per year. Medicare Levy is payable regardless of individuals having Private health insurance and is 2% of your taxable income. If new legislation is passed, this levy will be increased to 2.5% from July 2019. For instance, if you are single and have a taxable income of $50,000.00, Medicare Levy is $50,000 x .02 = $1000.00.
Medicare Levy surcharge is payable in addition to the Medicare levy if your income is over $90,000.00 as a single or your family income is over $180,000.00 and you don’t have Private Health Insurance. The amount of surcharge payable depends on your income. The table below simplifies the Medicare Levy surcharge rates based on your income.
MLS income thresholds for 2014–15, 2015–16, 2016–17 and 2017–18
| Base tier | Tier 1 | Tier 2 | Tier 3 | |
|---|---|---|---|---|
| Single threshold | $90,000 or less | $90,001 – $105,000 | $105,001 –$140,000 | $140,001 or more |
| Family threshold | $180,000 or less | $180,001 – $210,000 | $210,001 – $280,000 | $280,001 or more |
| Medicare levy surcharge | 0% | 1% | 1.25% | 1.50% |
Note:
Family income threshold is increased by $1,500 for each Medicare levy surcharge dependent child after the first child.
For example, as a family if your income is between $180,001.00 and $210,000.00 and you don’t have private health insurance, Medicare Levy Surcharge is payable in addition to Medicare Levy at 1% of your taxable income.
If you would like to know more about the Medicare Levy and Medicare Levy Surcharge, please don’t hesitate to get in contact with us on 0433 50 40 41.
Reference
Australian Taxation Office: https://www.ato.gov.au/individuals/medicare-levy/medicare-levy-surcharge/
Australian Taxation Office:https://www.ato.gov.au/individuals/medicare-levy/medicare-levy-surcharge/income-thresholds-and-rates-for-the-medicare-levy-surcharge/