What is Medicare Levy Surcharge?
Medical and health cover is considered to be of great importance in Australia. It is necessary to be covered under medical protection. The government ensures that citizens are covered under the authorized registered health insurance policy, so that in case of medical contingency they are not under the stress of paying huge medical expenses. Those people, who are not covered under any private hospital, they have to pay certain amount of money to cover such expenses in the form of Medical Levy Surcharge.
If you want to know what is the Medicare Levy threshold in Australia, read on.
Who has to pay this surcharge?
Those people who are not covered by any health insurance policy need to pay this surcharge. On the income parameter if you earn almost $90,000 a year then you have to pay this surcharge. If the combined income of you and your spouse or for that matter all the earning members of the family is over $1,80,000 per annum then also you shall fall in the category of the payment of medical surcharge. Government ensures this surcharge is duly paid as it reduces the burden of medical expenses borne by the Government.
Is there any difference between Medicare levy and Medicare Levy Surcharge?
Yes. There is a difference between both. If you are not covered by any private health insurance cover then you will have to pay a Medicare Levy which is around 2% tax on your income earned over and above $27,069. Medical levy Surcharge is the additional tax of 1 to 1.5% for high income earners. The amount varies as per your earning capacity and potential, and if the earnings of the entire family are combined then there is a further increment in the amount of Medicare surcharge.
What factors are considered for calculating the Taxable Income to know the Medicare Surcharge slab?
The Australian government considers the following factors for calculating the MLS.
- Your Gross Income
- Fringe benefits
- Other Contributions made to the government departments
- Investment Gains and Losses
- Any payment done for medical or health Insurance cover
As per the calculation of your Net Taxable Income, you will be categorized into a three tier slab system and your Medicare Levy Surcharge shall be calculated.
How important is MLS and can it be avoided?
Australian Government takes due care of all its citizens and emphasizes that their due care should be taken in all the aspects. Medical protection is one of the biggest challenges for any government and this is the reason why public health expenditure is highest here. To mitigate the huge burden of medical expenses the government makes it compulsory for all the citizens to get secure a private hospital health cover.
Those who do not get this cover need to pay the Medicare Levy which is around 2% of their net taxable income. High net worth individuals end up paying an additional 1% surcharge. If you want to avoid this surcharge and do not want to pay any Medicare Levy then you need to get the health insurance cover for you and your family.