Medicare Levy Surcharge: What It Is and How You Can Save Money

Posted: Apr 20 2022

Most Australian residents are eligible for Medicare, but that doesn’t mean everyone understands the ins and outs of this important healthcare program. There may be aspects of Medicare that you would like to learn more about, such as the Medicare levy surcharge. What is this surcharge and how does it impact you as an Australian resident? How do you make sure you get sufficient hospital cover for your needs? Here is what you should know about the levy surcharge and what you can do to save money on your healthcare cover costs.

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Understanding Medicare

Before diving into the Medicare levy surcharge, here is a brief overview of what Medicare is (and what it isn’t). Residents of Australia and Norfolk Island can get a Medicare card if they meet certain criteria. Most Australian and Norfolk Island residents do meet these criteria and are eligible for Medicare.

What Is Covered by Medicare

Those who qualify for Medicare can be treated in a public hospital as public patients at no charge. The treatment must come from a doctor appointed by the hospital. Even those who are privately insured can choose to be treated as public patients.

It is important to note that public patients cannot choose their own doctors. They are placed on a public hospital waiting list and have no control over when hospital admittance takes place.

Medicare also reimburses up to 85% of the Medicare Benefits Schedule fee for specialist services and 100% of the MBS fee for general practitioner services. Refer to your policy to see additional benefits and coverage options provided under Medicare.

What Is Not Covered by Medicare

Medicare does not cover emergency department facility fees or administration fees, ambulance services, private patient hospital costs, hospital and medical services that are deemed unnecessary or solely for cosmetic purposes, or hospital and medical costs incurred overseas. Refer to your policy to see other medical expenses Medicare does not cover.

Overview of the Medicare Levy Surcharge

The Medicare levy surcharge is an additional tax that is intended to reduce demand on the public Medicare system by encouraging people to take advantage of private patient hospital cover through the private hospital system. A levy surcharge may apply to you if you, your dependent children and your spouse do not have sufficient private patient hospital cover and your income is above a certain amount ($90,000 for singles and $180,000 for families with some exceptions).

If applicable, the MLS of 1%, 1.25% or 1.5% is levied on your:

  • Total reportable fringe benefits
  • Taxable income, and
  • Any amount on which payment has been made to family trust distribution tax

There are variations to the Medicare levy surcharge rates and thresholds based on your income, marital status, and how many dependent children you have. If your income, marital status, private health insurance, or dependants change during the year, you may become liable to pay the MLS if you do not have a sufficient level of private patient hospital cover.

Learn More About the Medicare Levy Surcharge and How To Save Money

To avoid the Medicare levy surcharge and save money, it is important to make sure you have sufficient private patient hospital cover. At Health Partners, we offer confusion-free healthcare cover options. Contact us today for an obligation-free quote.

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Posted: Apr 20 2022


The information contained here is of a general nature and does not take into account your personal medical situation. The information is not a substitute for independent professional medical advice and is not intended to diagnose, treat, cure or prevent any disease or used for therapeutic purposes. Should you require specific medical information, please seek advice from your healthcare practitioner. Health Partners does not accept any liability for any injury, loss or damage incurred by use of or reliance on the information provided. While we have prepared the information carefully, we can’t guarantee that it is accurate, complete or up-to-date. And while we may mention goods or services provided by others, we aren’t specifically endorsing them and can’t accept responsibility for them.

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