What is the Medicare Levy?
The Medicare Levy is a 2% public health tax paid by most Aussies earning over $28,501, with a few exceptions.
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The Medicare Levy is charged at 2% of your annual income and goes towards funding Australia's public health system, Medicare. You usually need to pay the full 2% if you earn over $28,501, though you might be entitled to a reduction if you earn less or are a senior citizen.
Medicare Levy vs the Medicare Levy Surcharge?
The Medicare Levy is a 2% tax that goes towards funding the public health system. You pay a Medicare Levy in addition to the tax you pay on your taxable income. Most of us have to pay it unless we earn less than $22,801 a year.
The Medicare Levy Surcharge, on the other hand, is a tax that only applies if you earn over $90,000 a year and don't take out private hospital cover. It was put in place to encourage more Australians to take out private health insurance and alleviate the strain on the public healthcare system.
How much is the Medicare Levy?
The Medicare Levy is a flat 2% income tax for any earning above the threshold. The 2019-20 upper threshold is $28,501 per year. For example, if you earned $75,000 your Medicare Levy would be $1,500.
You will only have to pay part of the Medicare Levy if your taxable income is between $22,801 and $28,501 (or between $36,056 and $45,069 for seniors and pensioners entitled to the seniors and pensioners tax offset). The amount you pay will be based on your income but it will be smaller than 2%. For example, if your income is $25,000, your Medicare Levy would be $219.90. If your income is below the lower threshold of $22,801, you won't have to pay it at all.
To find out how much you'll need to pay, check out the ATO's Medicare Levy calculator. This allows you to estimate your Medicare Levy for the past four income years. Just have the following details handy:
- Your taxable income
- Your spouse or partner's taxable income (if any)
- If you're eligible for a Medicare Levy exemption
Medicare Levy exemption
The Medicare Levy exemption is open to some Australians. Depending on your circumstances, you may be entitled to a full or partial exemption.
Who is exempt from the Medicare Levy?
You're exempt from paying the Medicare Levy if:
- You are a foreign resident for tax purposes
- You are not entitled to Medicare benefits
- You earn under the lower threshold of $22,801
- You qualify for a medical exemption
- Your taxable income is greater than the lower threshold but less than the upper threshold
- Your taxable income is greater than the lower threshold amount but you had a spouse
- Your taxable income is greater than the lower threshold amount but you're entitled to an Invalid and Invalid Carer tax offset
- Your taxable income is greater than the lower threshold amount but you were the sole carer of one or more dependent children
Full and half exemptions are available for blind pensioners, those on a Centrelink sickness allowance, and people who are entitled to full free medical treatment for all conditions under Defence Force arrangements or a Veterans' Affairs Repatriation Health Card (Gold Card). The requirements you must meet to qualify for this exemption vary depending on whether you are married or single, and whether you have any dependents.
How to claim Medicare Levy exemption
You can claim the Medicare Levy exemption when you lodge your tax return. You'll be asked:
- What your annual income was (which will help determine your Medicare Levy exemption entitlements)
- How many dependent children you had during the year
- How many days you can claim a full exemption and how many days you can claim a half exemption
- If you had a spouse at any time in 2019–20, married or de facto
- If you're entitled to any seniors tax offset
Should you get private health insurance on top of Medicare?
Unfortunately, Medicare doesn't cover everything – but private health insurance can help fill in the gaps. It can cover you for things like ambulance transportation, dental and optical, and often gives you access to treatment quicker than the public system.
If you want cover for those things and more, take a look at some of the health insurance policies below.
We update our data regularly, but information can change between updates. Confirm details with the provider you're interested in before making a decision.
*Quotes are based on single individual with less than $90,000 income, living in Sydney and a $750 excess.
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