Which statement about the Medicare Levy Surcharge is true?

• A. It applies to all income earners regardless of private insurance
• B. It is 2% of taxable income for most Australian taxpayers
• C. It funds only cosmetic therapies
• D. It applies to high income earners who do not have private health insurance

Answer: (D)

The Medicare Levy Surcharge is an extra levy aimed at encouraging higher-income Australians to take out private hospital cover and to reduce demand on public hospitals. It only applies to those who earn above certain income thresholds and do not have private health insurance. If you have private hospital cover, you’re generally exempt from the surcharge even if your income is above the threshold. The charge is not a universal 2% of taxable income for most taxpayers; the rate is nuanced and depends on income and family situation, but it rises with higher income. It doesn’t fund cosmetic therapies, and it’s not applicable to everyone regardless of private insurance. So the true statement is that it applies to high-income earners who do not have private health insurance.