Before we look at the Medicare Levy Surcharge, lets better understand the Medicare Levy.
What is the Medicare Levy?
The Medicare Levy funds Australia’s healthcare system which is called, Medicare. The federal government partially fund it and we cover the rest!
Medicare covers the following services in summary:
- subsidised and free treatment when you visit a medical professional such as a doctor, optometrist or other specialist,
- free treatment and accommodation when you’re a public patient in a public hospital (subject to waiting lists),
- 75% of your treatment and procedure costs when you’re a private patient in a public or private hospital (not including accommodation fees and other costs), and
- reduced costs for prescription medications in some cases.
To enrol for Medicare, visit the Services Australia website.
For more information about Medicare, visit the Health Direct website.
What are the Medicare Levy Thresholds?
The Medicare Levy of 2% is payable on all your taxable income once you exceed your threshold:
Singles $26,000
Families $43,846 (plus $4,027 for each dependent child)
Single Seniors and pensioners $41,089
Family Seniors and pensioners $57,198
What is the Medicare Levy Surcharge?
The Medicare Levy Surcharge is a supplement tax charged to high income earners who do not have private health insurance. It is only charged once you hit a certain threshold of income. Currently over $93,000 for singles, and $186,000 for families.
If your income exceeds the threshold you will need to pay the medicare levy surcharge on all your income. Check out the medicare levy surcharge table below.
Medicare levy surcharge thresholds 2024
| Base Tier | Tier1 | Tier2 | Tier 3 | |
| Singles | $93,000 or less | $93,001-$108,000 | $108,001-$144,000 | $144,001 or more |
| Families | $186,000 or less | $186,001-$216,000 | $216,001-$288,000 | $288,001 or more |
| Medicare levy surcharge rate | 0% | 1% | 1.25% | 1.5% |
For families, the income thresholds increase by $1,500 for each dependent child after the first.
Medicare levy surcharge thresholds 2025
| Base Tier | Tier1 | Tier2 | Tier 3 | |
| Singles | $97,000 or less | $97,001-$113,000 | $113,001-$151,000 | $151,001 or more |
| Families | $194,000 or less | $194,001-$226,000 | $226,001-$302,000 | $302,001 or more |
| Medicare levy surcharge rate | 0% | 1% | 1.25% | 1.5% |
For families, the income thresholds increase by $1,500 for each dependent child after the first.
How do you avoid the Medicare levy surcharge?
If you don’t have Private Health Insurance you may need to pay the Medicare Levy surcharge. If you have Private Health Insurance to an appropriate level, you DO NOT need to pay the surcharge. The tax system basically encourages wealthier Aussies to maintain private health insurance.
You will need to obtain private patient hospital cover provided by a health insurer. You must arrange and pay for your cover directly with the insurer. This can be done via One Click Life (backed by AIA).
For singles, an appropriate level of cover must have an excess of $750 or less. Couples or families must have an excess of $1,500 or less to qualify.
Private Health Insurance Extras Cover
Whilst this can be beneficial to you from a health and well being perspective, it wont help you avoid the Medicare Levy Surcharge at all. If you earn over the threshold and only have “Extras” cover, you’re still going to pay the surcharge.
One Click Life can assist with your online tax return and Private Health Insurance
Working with an online tax agent like One Click Life can help minimise the stress involved with understanding the Medicare Levy Surcharge and Private Health Insurance. If you lodge your online tax return with One Click Life, you are entitled to free tax advice all year round!
One Click Life provides easy-to-use online tax returns on a platform operated by tax professionals. One Click Life is designed to make your financial life simple. Online Wills, lending, health insurance, and online taxes can all be simplified by using One Click Life. One Click Life gives you a hassle-free method to arrange, monitor, and manage all your life’s administrative tasks in one location.