How does the Medicare levy work in Australia?

How the Medicare Levy Works in Australia

The Medicare levy is a tax you pay to fund Australia's public healthcare system (Medicare). Here's how it works:

Basic Rate

Most Australian residents and citizens pay 2% of their taxable income as the Medicare levy. This is calculated on your annual income and collected through the tax system.

Who Must Pay

• Australian citizens
• Permanent residents
• Most visa holders (including temporary residents)
• People with an Australian tax file number (TFN)

Exemptions and Reductions

You may be exempt or get a reduction if you:

• Earn below the tax-free threshold ($18,200 in 2023–24)
• Are on a temporary visa with certain conditions
• Have a valid exemption certificate
• Are eligible for a Medicare levy reduction (low-income earners)

Medicare Levy Surcharge

If you earn above a certain income threshold and don't have private hospital insurance, you may pay an additional Medicare levy surcharge (1–1.5% of income). This encourages people to take out private health cover.

What It Covers

The Medicare levy funds:

• Free or subsidised visits to doctors
• Hospital treatment in public hospitals
• Prescription medicines through the Pharmaceutical Benefits Scheme (PBS)

How to Check Your Status

You can check your Medicare levy details through the Australian Taxation Office (ATO) website or your tax return. If you're unsure whether you need to pay, contact the ATO or Medicare directly.

ATO Medicare Levy Information

Services Australia Medicare

This is general information only. Check official sources before acting.