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If you are dealing with a Medicare levy, you may find that you have to deal with the Medicare levy surcharge or MLS. This is most likely to happen to those who do not have enough coverage for themselves, their spouse, or their dependent children and they earn a certain income level or higher.
Understanding the Medicare Levy Surcharge
The point of this surcharge is to act as an encouragement for people to have private coverage for hospital visits and for them to utilize the private hospital system. This will help reduce how much demand is placed on the Medicare system and reserves it for those who can’t afford private insurance.
Many individuals find that paying the Medicare Levy Surcharge can get expensive and it may be a surprise when it is owed. The best way to avoid having to pay for it in the future is to take out the right amount of private insurance for everyone in the home.
What are the Income Limits?
The surcharge is not used for everyone who does not have private insurance. Those who make under a certain income level can rely on the public Medicare system and will not be charged for their lack of private insurance.
Only those who make above a certain income level will have to either have private insurance or pay for the surcharge. The goal is to help limit the amount of demand that is on the Medicare system. With private insurance, those with higher income levels are more likely to utilize private hospitals for their medical needs. This frees up space in the public medical facilities for those who make less than the thresholds and are not able to afford private insurance.
For individuals, the base income threshold is $90,000. If you are an individual who earns this amount or less, you will be able to just use the Medicare system without the levy if you would like, though many individuals do choose private insurance to give them more access to great medical care. Anyone above that income will need to have private insurance or pay the levy.
The income level is a bit different for families and is often based on how many children they are responsible for. The base threshold is $180,000 for families, but $1500 is added onto this income for each dependent child after the firstborn before they need to have the insurance.
There are different rules that takes into account various circumstances, such as if individual income is lower, even if the couple’s income combines to $180,000, if you divorced your spouse during the year, and more.
When is the Medicare Levy Surcharge Taken?
You will receive a statement about your private health insurance when you are ready to file your taxes. This will let you know more about the surcharge and other information pertaining to your policy. It can include how many days that the policy provided the coverage. The surcharge is only given if you and the others in your home did not have coverage for the full year. You will be able to use this form to help file your taxes and to prove how long you had insurance. If you did not have insurance, the surcharge will be charged when you are done filing at tax time.
When you are searching for private insurance to avoid the Medicare Levy Surcharge or to give you more options when it comes to helping you pick your doctors and medical providers, you want to get the best deal in the process. At iSelect, you will be able to compare different policies to get the one that works best for your family.
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