Australians enjoy a high-quality, comprehensive public health care system. However, quality comes at a price, and the Australian government incentivises participation in private health insurance programmes to reduce the country's health care costs.
Residents are required to pay a Medicare levy to fund the public system to which they have access. If you're unsure of the specifics of exactly what you're funding and who your contributions are covering, read on.
What is the Medicare levy?
The Medicare levy is imposed on all Australian residents who have access to public health care. Foreign citizens – who do not have public health benefits – do not have to pay the levy, as they do not benefit from the system.
The amount you must pay is determined by your personal income. As of July 2014, taxpayers are charged 2 per cent of their annual income.
Of course, there are some individuals who do not have to pay into the system. Those below a certain income threshold are not liable to pay. That threshold is made higher for senior Australians.
What does it fund?
The levy pays for the Medicare system, a public health insurance programme that ensures all Australian citizens receive a basic level of coverage for routine doctor appointments, emergency visits and accidents. It does not pay for health insurance for non-residents, who are in charge of securing their own medical coverage. It also doesn't cover any medical treatments that are not part of the Medicare Benefits Schedule (MBS).
What is the Medicare levy surcharge?
Because public health care is expensive, the Australian government encourages citizens to purchase private health insurance if they have the means to do so. For this reason, an additional fee is placed upon Australian residents above a certain income level who have opted not to purchase private coverage.
These individuals pay a fee equivalent to 1 to 1.5 per cent of their income on top of the 2 per cent they pay for the standard Medicare levy. The fee they pay covers them as well as their dependents.
Single individuals making more than $90,000 in 2014-15 will be liable to pay the surcharge. For couples, that figure is $180,000. If a family has more than one child, that threshold increases by $1,500 for every dependent in the family after the first.
If you are currently paying the Medicare levy surcharge, you may want to purchase private health insurance so you avoid having to pay extra fees. Work with professionals to compare health insurance and determine the best plan for you and your family.