Medicare and tax

Australians help to pay for Medicare. How much you pay depends on your income.

Australians help pay for Medicare through 2 income taxes:

  • the Medicare levy
  • the Medicare levy surcharge.

You may pay these each year as part of your income tax.

Medicare levy

The levy is about 2% of your taxable income if you earn over $27,476. You pay the levy on top of the tax you pay on your taxable income.

Read about the Medicare levy on the Australian Taxation Office website.

Levy reductions

If your taxable income is:

  • below $21,980 you won’t need to pay the levy
  • between $21,980 and $27,475 you’ll pay a lower levy
  • above $27,476 you may still qualify for a reduction based on your family income.

Read Medicare levy reduction for low-income earners on the ATO website.

Levy exemptions

You may not need to pay the levy if you meet any of the following criteria:

  • you are a foreign resident temporarily working in Australia
  • you aren’t eligible for Medicare
  • you have certain medical requirements.

If you weren’t eligible for Medicare for all or part of the year, you can claim an exemption. To do this you need to apply for a Medicare Entitlement Statement. We will assess your application and you will need to send it to the ATO.

Levy surcharge

You may have to pay the surcharge on top of the levy if you meet both of these conditions:

  • earn over $90,000
  • don’t have the appropriate level of private hospital insurance.

Read more about the levy surcharge on the ATO website.

To make it easier to afford private health insurance, you might be able to get the rebate on private health insurance.

The private health insurance rebate

To encourage you to get private health insurance, you may be able to get a rebate. The amount of your rebate depends on your income and comes directly off your insurance premium.

If you don’t claim the rebate as an upfront reduction to your premium you can claim it through your tax return. It may be claimed as a tax offset in your annual income tax return.

Check if you can get the private health insurance rebate.

Example

Peter earns $100,000 a year. This means Peter earns over the $90,000 base income threshold for the Medicare levy surcharge. But he doesn’t have to pay the Medicare levy surcharge. This is because he has private health insurance.

He also saves money by claiming the private health insurance rebate as a reduction on his insurance premium.

Medicare benefit tax statements

Medicare benefit tax statements were available in the past. It helped people claim the Net Medical Expenses Tax Offset (NMETO) in their annual tax return. It showed you the Medicare benefits you got for medical services. Read more about why we had Medicare benefit tax statements.

The NMETO is being phased out and we don’t send out statements now. These are now available through the ATO. Read more about medical expenses on the Australian Taxation Office website.

Page last updated: 19 March 2019