The Medicare Levy Surcharge was introduced by the Federal Government to encourage individuals to take out private health insurance, and to reduce the load on the public hospital system. The surcharge is applied to higher income earners that don't have a private health insurance policy.

The income threshold where the Medicare Levy Surcharge kicks in is over $90,000 for singles and over $180,000 for families. For families with children, the threshold increases by $1,500 for each child after the first. This surcharge is in addition to the standard 2.00% Medicare Levy paid by most Australian taxpayers.

All Territory Health Fund hospital covers exempt you from the additional surcharge, meaning you’ll pay less tax.

The below table outlines the income thresholds and applicable Medicare Levy Surcharges.

Rebate Tier Base Tier Tier 1 Tier 2 Tier 3
  Income threshold 2015/16 to 2020/21 Financial Years
Singles $90,000 or less $90,001 - $105,000 $105,001 - $140,000 $140,001 or above
Families $180,000 or less $180,001 - $210,000 $210,001 - $280,000 $280,001 or above
Medicare Levy Surcharge 0.00% 1.00% 1.25% 1.50%

More information about the Medicare Levy Surcharge can be found by visiting the Australian Taxation Office’s website, or by calling the ATO Helpline on 13 28 62.