Factbox: Health rebate changes

10 Feb 2012, 1:11 pm   -   Source: SBS
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In 2010-11, the Medicare Levy for all taxpayers who earn above $22,163 was 1.5 per cent of their taxable income. (AAP)

In 2010-11, the Medicare Levy for all taxpayers who earn above $22,163 was 1.5 per cent of their taxable income. (AAP)

A guide to how the government's proposed changes to Medicare levies and private health rebates will affect you.

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Here is a guide to how the government's proposed changes to Medicare levies and private health rebates will affect you.

How does Medicare work?

Medicare is a public health care scheme funded by compulsory taxpayer contributions.

The government funds Medicare by charging two levies: the Medicare Levy, and the Medicare Levy Surcharge.

The Medicare Levy

In 2010-11, the Medicare Levy for all taxpayers who earn above $22,163 was 1.5 per cent of their taxable income.

The rate was lower for those who earn less that that figure, and anyone who earned  $18,839 or less was totally exempt from the Medicare Levy.

The thresholds were higher for seniors.

The Medicare Levy Surcharge

The Medicare Levy Surcharge is an extra 1 per cent charged on top of the Medicare Levy for people who earned more than a certain threshold and do not pay for private health insurance.

Taxpayers who earn more than $77,000 a year (with no dependents), and couples whose combined income was more than $154,000 with no children or one dependent child were charged the 1 per cent surcharge.

The threshold rose $1,500 for each additional dependent child.

Those who did pay for private health care on top of Medicare levies received a 30 per cent rebate on their insurance premiums at income tax time.

This is what the government is planning to change.

The new plan

Under the new plan, the government will means-test the private health care rebate, and increase the Medicare Levy Surcharge on those without private insurance.

This means that not everyone will be able to claim 30 per cent back on their private health insurance payments - only those whose incomes fall below a certain figure.

Will you be affected?

The private health rebate will remain unchanged for anyone who earns less than $83,000 a year - that is, 30 per cent.

Over-65s will be eligible for 35 per cent and those aged 70 and over will recieve 40 per cent.

Single people younger than 65 whose income is between $83,000-$96,000 a year, or  couples under 65 who earn a combined income of between $166,000-$192,000 and pay for private health insurance would receive a 20 per cent rebate - rather than the current 30 per cent.

Singles earning between $96,000 and $129,000, and couples earning between $192,000 and $258,000 would receive a 10 per cent rebate.

Individuals who earn more than $129,000, or couples who make $258,000 combined will receive no rebate at all - no matter what their age.

High income earners who do not pay for private health insurance will have to pay a higher Medicare Levy Surcharge, als regardless of their age.

The levy won't rise from its current level of 1 per cent for those in the first income tier ($83,000-$96,000 for singles, and $166,000-$192,000 for couples).

For those in the second tier ($96,000-$129,000 for singles, $192,000-$258,000 for couples), it will rise to 1.25 per cent.

For singles earning more than $129,000 and couples earning $258,000 or more, the Medicare Levy Surcharge will increase to 1.5 per cent.

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