Private ruling: Medicare levy surcharge - exemption
Date of advice: 16 April 2026
Published: 6 July 2026
Ruling period: Year ended 30 June 20YY
Date scheme commenced: 1 July 20YY

Ruling: Q1: Are you eligible for an exemption from paying the Medicare levy surcharge for the 2024-2025 income year? | A1: No.

Relevant facts and circumstances: Background On DD MM YYYY, you were granted a permanent Australian visa. On DD MM YYYY, you and your spouse arrived in Australia and took up residency. During the 20XX-20XX income year, you lived in Australia. During the 20XX-20XX income year, you treated yourself as an Australian resident for tax purposes. During the 20XX-20XX income year, you were not an Australian citizen. During the 20XX-20XX income year, you had a spouse. During the 20XX-20XX income year, you did not have any dependent children. During the 20XX-20XX income year, you did not have any other dependants. Private Health Insurance Cover On DD MM YYYY, you took out a health insurance policy for yourself and your spouse. The policy is renewed annually. From DD MM YYYY to DD MM YYYY, you held private health care cover for yourself and your spouse for the entire income year. The policy provided worldwide cover under a base-level plan. The health care cover was accessed through an overseas fund arrangement. The policy was underwritten and administered by overseas entities as part of an international arrangement. Medicare Entitlement During the 20XX-20XX income year, you held a Medicare card. Income For the 20XX-20XX income year, you estimate your income was approximately $X, comprising overseas pension income. For the 20XX-20XX income year, your spouse received approximately $X from an overseas pension. For the 20XX-20XX income year, you estimate your combined income for Medicare levy surcharge purposes was approximately $X.

Relevant legislative provisions: Income Tax Assessment Act 1936 subsection 251R | Income Tax Assessment Act 1936 subsection 251U | Income Tax Assessment Act 1936 subsection 251U(2) | Income Tax Assessment Act 1936 section 251VA | Medicare Levy Act 1986 subsection 3(5) | Medicare Levy Act 1986 section 8B | Medicare Levy Act 1986 section 8C | Medicare Levy Act 1986 section 8D | Private Health Insurance Act 2007 subsection 45-1 | Private Health Insurance Act 2007 subsection 63-5(1) | Private Health Insurance Act 2007 subsection 63-5(2) | Private Health Insurance Act 2007 subsection 63-10 | Private Health Insurance (Prudential Supervision) Act 2015

Reasons for decision: Detailed Reasoning - Medicare Levy Surcharge: The Medicare Levy Surcharge (MLS) is imposed under sections 8B to 8D of the Medicare Levy Act 1986 (MLA 1986) and is payable in addition to the Medicare levy. It applies to taxpayers whose income for surcharge purposes (including taxable income and reportable fringe benefits) exceeds the relevant threshold and who do not hold adequate private patient hospital cover. For a person who is married during the whole or part of the financial year, the Medicare surcharge is imposed by Section 8D of the MLA which states: (1) This section applies to a person during a period if during the whole of the period: (a) the person is a married person, (b) the person or at least one of the person's dependants (other than a dependant who is, or would, apart from subsection 251U(2) of the Income Tax Assessment Act 1936 (ITAA 1936), be taken to be, a prescribed person) is not covered by an insurance policy that provides private patient hospital cover; and (c) the person is not, or is taken under section 251VA of the ITAA 1936 not to be, a prescribed person. (2) For the purposes of paragraph (1)(b), a person to whom section 251VA of the Assessment Act applies is taken to be covered during the whole of the period by an insurance policy that provides private patient hospital cover. Where a person satisfies all the above tests for the whole of the year of income and their combined family taxable income exceeds the relevant threshold, they will be liable for a surcharge in addition to the amount of Medicare Levy otherwise payable. For the purposes of the 20XX-20XX income year the Medicare levy surcharge threshold is as follows: | Detailed Reasoning - Single threshold: $X or less $X - $X $X - $X | Detailed Reasoning - Family threshold: $X or less $X - $X $X - $X | Detailed Reasoning - Medicare levy surcharge: X% X% X% Under section 251R of the ITAA 1936, for MLS purposes, a married or de facto couple who live together are treated as a family. Each spouse is treated as a dependant of the other for MLS purposes, even if each spouse receives income from different sources. | Detailed Reasoning - Prescribed persons: Section 251U of ITAA 1936 defines prescribed persons as the following: • the person was entitled to free medical treatment during the whole of that period in respect of every incapacity, disease or disabling condition because the person was a member of the Defence Force or was a relative of, or was otherwise associated with, a member of the Defence Force; or • the person was entitled under the Veterans ' Entitlements Act 1986 , the Military Rehabilitation and Compensation Act 2004 , the Australian Participants in British Nuclear Tests and British Commonwealth Occupation Force (Treatment) Act 2006 or the Treatment Benefits (Special Access) Act 2019 to free medical treatment during the whole of that period in respect of every incapacity, disease or disabling condition; or • the person was, during the whole of that period, a recipient of: - an age pension under Part 2.2 of the Social Security Act 1991 ; or - a disability support pension under Part 2.3 of the Social Security Act 1991 ; - where the rate of the pension was calculated under section 1065 of the Social Security Act 1991 ; or • during the whole of that period the person was a non-resident; or • during the whole of that period the person was: - the head of a diplomatic mission, or the head of a consular post, established in Australia; or - a member of the staff of a diplomatic mission, or a member of the consular staff of a consular post, established in Australia; or - a member of the family of a person referred to in subparagraph (i) or (ii), being a member who forms part of the household of that person; - and was not an Australian citizen and was not ordinarily resident in Australia; or • the Health Minister has certified that, had any service, treatment or care to which Medicare benefits under the Health Insurance Act 1973 relate been rendered to the person or to another person during that period, the first-mentioned person would not have been entitled to Medicare benefits in respect of that service, treatment or care. | Detailed Reasoning - Insurance policy: The meaning of an insurance policy that provides private patient hospital cover is provided by the subsection 3(5) of MLA 1986 which states: (a) the policy is a complying health insurance policy (within the meaning of the Private Health Insurance Act 2007 (PHIA 2007)) that covers hospital treatment (within the meaning of that Act); and (b) any excess payable in respect of benefits under the policy is no more than the applicable amount set out in subsection 45-1 of that Act in any 12-month period. | Detailed Reasoning - Complying Health Insurance Policies and Products: A complying health insurance policy is defined in subsection 63-10 of the PHIA 2007. It is an insurance policy that satisfies a number of statutory conditions, including that it provides private patient hospital cover. Private patient hospital cover is cover that provides benefits in relation to some or all of the fees and charges for hospital treatment. Policies that provide cover only for extras or general services, for example, ambulance services or medicines do not constitute health insurance that provides private patient hospital cover and therefore are not complying health insurance policies for this purpose. An up-to-date register of all private health insurers offering complying health insurance policies is available on the PrivateHealth.gov.au website. | Detailed Reasoning - Complying Health Insurance Products: Under subsection 63-5(1) of the PHIA 2007, a complying health insurance product is defined as a "product made up of" complying health insurance policies. Further, subsection 63-5(2) of the PHIA 2007 provides that a product consists of all insurance policies issued by a private health insurer that: . cover the same treatments . provide benefits that are worked out in the same way . have the same other terms and conditions. In practice, health insurance funds will normally indicate which of their policies together constitute a complying health insurance product. | Detailed Reasoning - Registration of Private Health Insurers: Accordingly, for an insurer to be regarded as a private health insurer providing a complying health insurance policy for the purposes of the MLA, the insurer must be registered with the Australian Prudential Regulation Authority (APRA). Under the Private Health Insurance (Prudential Supervision) Act 2015 (PHIPSA), APRA is required to maintain a register of currently registered private health insurers, which is publicly available on its website apra.gov.au. | Detailed Reasoning - Application to your circumstances/Conclusion: In your circumstances, you are not eligible for an exemption from the MLS for the 20XX-20XX income year. During the 20XX-20XX income year, you were a married taxpayer and an Australian resident for tax purposes. Under section 251R of the ITAA 1936, you and your spouse are treated as a family for MLS purposes. Your estimated combined income for surcharge purposes was approximately $X, which exceeded the relevant family base threshold for that income year. Accordingly, the surcharge applies unless appropriate private patient hospital cover was held. Although you and your spouse held health care cover for the entire income year, the policy was issued and administered under an overseas arrangement and was not provided by an Australian private health insurer registered with APRA. For MLS purposes, subsection 3(5) of the MLA 1986 requires that private patient hospital cover be provided under a complying health insurance policy within the meaning of the PHIA 2007. On the information provided, your policy is not established to be a complying Australian private patient hospital policy and is therefore not taken to be appropriate private patient hospital cover for MLS purposes. As a result, the condition in section 8D(1)(b) of the MLA 1986 is satisfied, as you or your spouse were not covered by appropriate private patient hospital cover for the income year. You also do not satisfy any of the prescribed person categories under section 251U of the ITAA 1936, and section 251VA does not apply to you. Accordingly, the condition in section 8D(1)(c) of the MLA 1986 is satisfied. As all requirements of section 8D of the MLA 1986are met for the 20XX-20XX income year, you are liable to pay the Medicare levy surcharge and are not entitled to an exemption. The Commissioner has no discretion under the legislation to waive or reduce liability for the MLS where the statutory conditions for its imposition are satisfied.