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The Medicare Levy Surcharge works like an additional tax and applies to Australian residents for taxation purposes who are high income earners and don't have an appropriate level of hospital cover.he Medicare Levy Surcharge works like an additional tax and applies to Australian residents for taxation purposes who are high income earners and don't have an appropriate level of hospital cover.
You have to pay the Medicare Levy Surcharge if your income is above a certain threshold and you-or any of your dependants-don't have appropriate private patient hospital cover. In 2009-10 the surcharge may apply if your income for Medicare Levy Surcharge purposes is more than:he Medicare Levy surcharge is in addition to the 1.5% Medicare levy. The Medicare levy surcharge is 1% of: 1  your taxable income (can include investment income). 2  your reportable fringe benefits, and.