The Medicare Levy Surcharge Act is a tax law in Australia that mandates individuals and families who do not have the appropriate level of private hospital care insurance for all or a portion of any given year and who earn over an income limit to pay an additional tax. The law is intended to encourage Australians to carry hospital care insurance and to use the country's private medical system.
Role in the Medicare System
The Medicare levy surcharge falls under Australia's Medicare system. In Australia, citizens can receive free or subsidized health insurance through Medicare. They also can receive insurance through a private insurer, or they can receive a combination of both Medicare and private insurance. Medicare is paid for by the citizens of Australia with 1.5 percent tax on their income called the Medicare levy. Hospital coverage is one of three types of coverage available from Medicare and private insurance providers in Australia.
Free Hospital Care
The Medicare levy surcharge helps provide public funding for free hospital care. Regardless of whether they have hospital care insurance, all Australians can be treated at a public hospital for free if they are admitted as a Medicare patient, known in Australia as a public patient. They also receive after-hospital care for free. They cannot choose the doctor who provides the treatment, however. The doctors who provide treatment at public hospitals are nominated to do so by the hospital.
Costs
As of the 2010-2011 Australian fiscal year, individuals who earn more than $77,000 and families who earn more than $154,000 who do not have the appropriate amount of private hospital insurance coverage during any part of the year must pay the additional tax. The tax for families increases by $1,500 for every dependent in the home after the first child. Appropriate hospital coverage has a deductible of less than $500 for singles and $1,000 for families. The surcharge is 1 percent of the individual's or family's taxable income and is in addition to the 1.5 percent Medicare levy.
Background
Australia's Medicare system was established in 1984. The Medicare levy surcharge was created in 1997 for individuals earning more than $50,000 in taxable income and families with a combined taxable income of $100,000 who do not have private hospital insurance. The income limits have changed several times in recent years. In 2008, the income limits were increased to $100,000 for individuals and $150,000 for families. In 2009, they were lowered to $73,000 for individuals and $146,000 for families. About 43 percent of Australians are covered by hospital care insurance.
Tags: hospital care, care insurance, hospital care insurance, individuals families, Medicare levy, Medicare levy surcharge
