Every Australian Resident Taxpayer pays a medicare levy. The levy is 1.5% of the taxable income. Medicare is a scheme which gives the Australian residents access to the public health care system. The levy is charged so that the Australian Government can fund the public health care system.

To reduce the demand on public health system, the government encourages people who earn above a certain income level to take up private health insurance. The government charges a levy of 1% on taxable income for the people who earn above certain income level but don’t take up the private health insurance. The only way to escape this medicare levy surcharge is to take up private health insurance. This surcharge is on top of the Medicare Levy.

Income Levels Thresholds For Surcharge:
Single Person - $50,0000 per annum
Family/Couple - $100,000 per annum combined income…From the second child onwards this threshold increases by $1500 per annum.

So What Kind Of Cover Do You Need?

• Your private health insurance has to be from a registered health benefits organisation. You need to have the hospital cover.
• You will not be eligible for surcharge exemption if you are only covered for extras or ambulance.
• If you are single your excess payments cannot be more than 500 dollars per year and for family it can’t be more than 1000 dollars per year. To understand this properly you first need to understand what excess is. An excess is the amount you would pay to the hospital if and when you are admitted to a hospital.

  When you choose a cover you can either opt for 100% cover or you could opt for a cover with some excess amount. If you opt for a cover with excess amount you will pay less contributions to the health insurance company but if and when you are admitted to the hospital, the health insurance will not cover you for the full amount - you would have to pay some amount…This amount is the excess.

  Now going back to the eligibility of surcharge exemption criteria - ‘If you are single your excess payments cannot be more than 500 dollars per year and for family it can’t be more than 1000 dollars per year.’

 

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