Medicare and tax

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

Australians help pay for Medicare through 2 income taxes:

  1. the Medicare levy
  2. 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. You pay the levy on top of the tax you pay on your taxable income.

Your Medicare levy may reduce if your taxable income is below a certain amount. In some cases, you may not have to pay this levy at all.

Read about the Medicare levy on the Australian Taxation Office (ATO) website.

Who doesn’t pay the levy

You may not 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.

How to get a Medicare levy exemption

If you weren’t eligible for Medicare for all or part of the year, you can apply for an exemption. You do this as part of your tax return. The exemption means you don’t pay the Medicare levy for all or part of that year.

You need a Medicare Entitlement Statement to ask for an exemption. You need a statement for each year you want to get an exemption.

You’ll need to tell the ATO you have a statement when you do your income tax return. You need your statement before you can start. Keep the statement for your records.

Medicare levy surcharge

You may have to pay the levy surcharge if you:

  • earn over a certain income
  • don’t have the appropriate level of private hospital insurance.

Read more about the levy surcharge on the ATO website.

Private health insurance rebate

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

The amount of your rebate depends on your income and comes directly off your insurance premium.

Most people claim the rebate as an upfront reduction to their health insurance premium. If you don’t do this, you can claim it as a tax offset in your annual income tax return.

Check if you can get the private health insurance rebate.

Medicare benefit tax statement

We will no longer issue you a Medicare benefit tax statement.

You can read more about medical expenses on the ATO website.

Page last updated: 11 July 2019

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