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26 February 2018

Medicare Levy, Surcharge & Private Health Care Rebate

Understanding the Medicare Levy, Medicare Levy Surcharge, Private Health Care Rebate & the NDIS Levy  

The Medicare levy, Medicare Levy Surcharge, the Private Health Care Rebate and the new NDIS Levy are all items administered via the taxation system that are affected as your level of taxable income changes

Medicare Levy

  • Medicare gives Australian residents access to health care. It is partly funded by taxpayers who pay a Medicare Levy of 2% of their taxable income
  • If your taxable income falls below the Medicare threshold of $21,655.00, depending on circumstances, you are not required to pay the Medicare Levy
  • The Medicare Levy is deducted as part of your PAYG income tax throughout the year if you are an employee

Medicare Levy Surcharge

  • If you don’t have private hospital health insurance, you may have to pay the Medicare Levy Surcharge (MLS) in addition to the Medicare Levy. This depends on your income for MLS purposes.
  • If your taxable income is greater than the Medicare Levy Surcharge threshold and you do not have private health cover you may be required to pay the Medicare Levy Surcharge
  • The Medicare Levy Surcharge threshold is $90 000.00 for singles and $180 000.00 for families
  • Refer to the ATO for a definition of income for Medicare Levy Surcharge purposes here
  • If you are required to pay the Medicare Levy Surcharge it will be charged to you as part of your assessment when lodging your annual return
  • The Medicare Levy Surcharge is a separate charge to the standard Medicare Levy

Private Health Care Rebate

  • If you do have an appropriate level of private hospital health insurance, you won't have to pay the MLS, and depending on your income you may be eligible for the private health insurance rebate. This rebate is an amount the government contributes towards the cost of your private hospital health insurance premiums.
  • This rebate is income tested, which means your eligibility to receive it depends on your income. If you have a higher income, your rebate entitlement may be reduced, or you may not be entitled to any rebate at all
  • See our table showing the income thresholds and rebate amounts here
  • Most people claim the private health insurance rebate as a reduction in the amount of private health insurance premiums they pay to their insurer. Alternatively, it can be an adjusted tax offset when you lodge your tax return.


  • The National Disability Insurance Scheme gives eligible Australian Residents with a disability access to funded services and assistance
  • From 1 July 2019, the Medicare Levy will increase from 2% to 2.5% to ensure that the National Disability Insurance Scheme is fully funded


Liability limited by a scheme approved under Professional Standards Legislation. Liability is limited in those States where a current scheme applies


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