What is the Medicare Levy?

June 16, 2019

I recently received my Wondersmile aligners and it got me thinking about private health insurance and health care in Australia, more commonly known as Medicare. So I thought I’d give you a quick rundown.

What’s the Medicare Levy? And how does it get calculated? What happens if I have private health insurance? What happens if I don’t?

Medicare in Australia

Medicare gives us access to health care here in Australia. Medicare gives us access to:

  • free or subsidised treatment by health professionals such as doctors, specialists, optometrists, dentists and other allied health practitioners (in special circumstances only).
  • free treatment and accommodation as a public (Medicare) patient in a public hospital.
  • 75% of the Medicare Schedule fee for services and procedures if you are a private patient in a public or private hospital (not including hospital accommodation and items such as theatre fees and medicines).

Medicare levy

The Medicare levy is an additional tax, which is not included in the individual income tax rates. The current Medicare rate is 2% of your taxable income.

Medicare levy surcharge

If your income reaches a certain threshold and you don’t have appropriate level of private health insurance, you may have to pay the Medicare levy surcharge. The additional surcharge ranges from 1% to 1.5% of your taxable income.

As a single with no private health insurance and your taxable income is less than $90k per year, you won’t have to pay the Medicare levy surcharge. If you are between $90k to $105k you will get charged a surcharge 1% of your taxable income, increasing to 1.25% if you are between $105k to $140k and increasing again to 1.5% over $140k.

For family and family’s with dependents the threshold goes up for each dependent child.

Note: The family income threshold is increased by $1,500 for each Medicare levy surcharge dependent child after the first child.

Medicare levy example 

Let’s run through an example on how to calculate the Medicare levy on your taxable income. We have James. He’s self employed builder, who doesn’t have private health insurance, is single with no dependents.

If James had adequate private health insurance, he wouldn’t have to pay the 1.5% Medicare levy surcharge of $2,250.

In relation to your specific tax scenario, you are going to have to do your own research and work out the cost of private health insurance per year and the cost of the Medicare levy surcharge.

Private Health Insurance

What benefits does private health insurance give me?

Aside from the fact that you won’t have to fork out money for extra tax to pay, it’s going to give you a multitude of benefits. I’m not a health insurance expert, so I’ll leave the nitty gritty details up to them. Definitely shop around and go with a provider that suits your health needs.

Can I claim Wondersmile?

This will depend on the type of private health cover you have. Again, I’m no expert, so definitely do you research around getting the right private health insurance for the health procedures you need!

I hope this blog was helpful. Remember, tax legislation is changing all the time, so please double check the current Medicare levy rates before making any calculations.

If you have specific questions about your own tax when it comes to the Medicare levy, contact your trusted accountant to get the right advice. Also speak with a trusted health care provider if you have any question in relation to insurance cover and benefits.

Let’s get in touch!


Nothing makes me happier than implementing time-saving tools and systems that help small businesses get ahead. Instead of being a cog in a large corporation, freelance consulting lets me be the adaptive Bookkeeper on the Sunshine Coast you need. Whatever your financial situation, I’ll help you find new approaches to cut unnecessary costs and alleviate undue pressure. If you’re ready to watch your business grow, let’s start a conversation