What is a Medicare Levy Surcharge?

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  • Written By: Jim B.
  • Edited By: Melissa Wiley
  • Last Modified Date: 27 August 2019
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The Medicare Levy Surcharge is an extra tax levied on Australian citizens who earn above a certain amount of income and do not have private health insurance. This tax is intended to encourage such citizens to purchase private coverage, which in turn lessens the burden on the Australian Medicare system. Citizens who earn more than the minimum amount and do not have private courage must pay the Medicare Levy Surcharge at a rate of 1 percent of their income. Such citizens must also have coverage for all of their dependents to avoid this levy.

Governments around the world have had to deal with the difficulties presented by rising health care costs, both in terms of citizens trying to afford coverage and the governments themselves trying to cover the indigent. One such solution often chosen by governments is to penalize the wealthier individuals of the country who do not have health insurance. In Australia, the Medicare Levy Surcharge is just such a method, as it taxes high-earning citizens who have not purchased private insurance.


Although the limits are subject to change depending on the prevailing economic situation, the minimum as of 2010 for one-year earnings for a single person in Australia to qualify for the Medicare Levy Surcharge was $77,000 Australian Dollars (AUD). This limit rises to $154,000 AUD for a married couple, and any earnings above that would incur the levy if no private insurance is purchased. In addition, coverage is required for each dependent of the person or couple. After the first child, each subsequent child adds $1,500 AUD to the limit, giving a little more leeway for larger families to avoid the tax.

Most Australian citizens must pay a Medicare tax each year, which as of 2010 stood at 1.5 percent of the taxpayer's income. By contrast, the Medicare Levy Surcharge stands at 1 percent of income if there is no private insurance. For example, a taxpayer who earned $100,000 AUD in a year and had no private health insurance would be forced to pay a tax of $1,000 AUD.

Dependents included in determining whether the Medicare Levy Surcharge is warranted include spouses, all children under 21 years of age, as well as children under the age of 25 who are still students. All of these limits and rules are not applicable if the person or persons in question are in possession of private health insurance. Those who don't have it must pay the levy or be subject to the scrutiny of Australian tax officials.


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