Medicare is the Australian healthcare scheme which is partly funded by resident taxpayers who pay a Medicare Levy. From 1 July 2014, the rate of the Medicare levy is 2% of the taxable income.
Medicare for low-income earners
If your income is below a certain threshold, your Medicare Levy is reduced. Some Australians don’t need to pay the Levy at all whose income is below the minimum threshold. In 2017-2018 you don’t have to pay Medicare levy if your taxable income is below $21,655 ($34,244 for seniors).
You will have to pay part of the Levy if your taxable income is higher than $21,655 but doesn’t exceed $27,068 ($34,244 and $42,805 for seniors).
If you are not eligible for the Medicare Levy reduction, you may still be eligible for Medicare Levy exception. In order to be Medicare Levy exempt, you have to meet certain medical requirements, be a foreign resident or to be not entitled to Medical benefits.
Medicare Levy Surcharge (MLS)
High-income earners who don’t have private health insurance, have to pay Medicare Levy Surcharge (MLS). The purpose of this surcharge is to encourage taxpayers to take out private hospital cover and use private hospital system in order to reduce demand on the public Medicare system.
MLS is an additional charge on top of the regular rate. Individuals with below $90,000 annual income or families below $180,000 don’t have to pay MLS. Individuals with annual income between $90,001 and $105,000 or families with annual income between $180,001 and $210,000 have to pay 1%. Individuals with annual income between $105,001 and $140,000 annual income or families with annual income between $210,001 and $280,000 have to pay 1.25%. Individuals whose annual income exceeds $140,001 or families whose annual income exceeds $280,001 have to pay 1.5%.