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Understanding Private Health Insurance

With the upcoming April 1 Private Health reforms and annual price increases now is the time to have a closer look at Health Insurance...

One of the most common questions we are asked is “Do I need Health Insurance”

The first thing to understand is that we have both a MEDICARE LEVY and a MEDICARE LEVY SURCHARGE


Medicare gives Australian residents access to health care and is partly funded by taxpayers who pay a Medicare levy of 2.0% of their taxable income. Your Medicare levy is reduced if your taxable income is below a certain threshold and, in some cases, you may not have to pay the levy at all.

In 2017-18 you do not have to pay the Medicare levy if your taxable income is equal to or less than:

  • $21,655 for singles

  • $34,244 for seniors and pensioners

  • $36,541 for families plus $3,356 for each dependent child or student

You will pay only part of the Medicare levy if your taxable income is between:

  • $21,655 and $27,068 for singles

  • $34,244 and $42,805 for seniors and pensioners entitled to the seniors and pensioners tax offset

  • $36,541 and $45,676 family threshold ($59,587 if you are entitled to the seniors and pensioners tax offset) plus $4,195 for each dependent child or student

Please note the levy figures above will vary slightly for the 2018-19 year, these will be published when released by the ATO


The Medicare levy surcharge (MLS) is designed to reduce the demand on the public Medicare system. You will be required to pay the MLS if your income for MLS purposes is above the base income threshold and you or your family do not have an appropriate level of private patient hospital cover.

Income Thresholds for Medicare Levy Surcharge:

Singles - $90,000 - Couples and Families - $180,000.00

For singles, an appropriate level of cover must have an excess of $500 or less. Couples or families must have an excess of $1,000 or less. General cover, commonly known as 'extras', is not private patient hospital cover. It covers items such as optical, dental, physiotherapy or chiropractic treatment.

For more information on Medicare Levy Surcharge and private health insurance please see here

Please be aware that in a lot of cases Private Health Insurance is a lifestyle choice and will not affect the level of taxation that you pay, UNLESS you are over the income threshold.

Also be aware that most advertisements entice people to purchase Private Health Insurance before June 30, unless you have paid the policy in full prior to June 30 you will not be able to claim the full benefit. Private Health Insurance can be purchased and claimed at any time throughout the year.

The only point to keep in mind prior to June 30 is the Lifetime Health Cover Loading (LHC) that kicks in after you turn 30

For more information on The Australian Government Private Health Insurance reforms please see here


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