medicare for Australian citizens overseas

Medicare for Australian citizens overseas

Am I entitled to use Medicare when I return home to Australia for short visits?

Moving overseas is daunting. There is new work, trying to find a decent place to live, new maps to scrutinise, new cities to get used to and a whole new set of rules when it comes to the country’s you’ve moved to.

But learning about your new country isn’t all, there’s a lot of things that you’ll need to learn about Australia and how things work when you’re an Australian expat living and working overseas.

And so in this article, I want to take you through a question about Medicare for Australian citizens overseas, that’s very commonly asked by many of our expat clients – are you entitled to use Medicare when you return home for short visits (e.g. for work or to visit family and friends)?

Medicare for Australian citizens overseas – clearing up the confusion

For any Australian expat who is confused about the Medicare for Australian citizens overseas, take a look below.

An Australian resident (i.e. a resident of Australia for Australian tax purposes), living and working overseas as an expat will remain liable for a 2% Medicare Levy (i.e. 2% of their taxable income), if their taxable income exceeds $27,475 (for singles) and $46,361 (for couples) plus $4,257 for each dependent child for 2017-18.

In addition to the Medicare Levy, if the income of an Australian tax resident exceeds $90,000 (singles) or $180,000 (couples) a further Medicare Levy Surcharge of between 1 – 2% applies if they do not maintain private health cover for all their dependents, even when they are not living in Australia.

Note that the Australian Taxation Office (ATO) uses a special definition of income called “Income for Medicare Levy Surcharge purposes” in determining who is required to pay the surcharge. For the purposes of this email I won’t run through every element of income that is included in that definition as too much detail is required, but you might be surprised to learn that tax losses (e.g. losses made on negatively geared rental properties) are added back in as income, as are any tax exempt income that you may have earned (e.g. income earned from government approved foreign aid projects where you’ve worked overseas for 91 days or more).

So what are the implications if I am an Australian tax resident whilst living and working overseas?

In short, if you’re working overseas, you’ll remain liable for the Medicare Levy. And since you are liable for the levy, it also means that you remain eligible to use Medicare as and when you need it, whenever you are present in Australia.

What about the Medicare Levy Surcharge? Do I have to pay that too?

If you’re a relatively high income earner, earning above $90,000 as a single or $180,000 combined as a couple, then it’s highly recommended that you maintain an appropriate level of Australian private health insurance.

The key word to note here is the word “Australian”, because in order to qualify as appropriate private health insurance your health cover MUST be provided by a health fund registered under the Private Health Insurance Act 2007 – to check your fund, take a look at the list of registered funds on the Private Health Insurance Ombudsman’s website.

If you do maintain an appropriate level of Australian private health insurance, although you will still be required to pay the Medicare Levy, you’ll be exempt from paying the Medicare Levy Surcharge.

Take Care: – Don’t assume that just because your overseas employer provides you with health insurance that you are exempt from paying the Medicare Levy Surcharge. Most, if not all overseas health funds ARE NOT registered funds under the Private Health Insurance Act 2007. So if that’s the case, then you should consider taking out some basic Australian health insurance cover in addition to your overseas health cover.

Note: ‘Extras Cover’ also known as ‘General Cover’ (including items such as optical, dental, chiropractic treatment and physiotherapy etc) is not private patient hospital cover. So there’s no need to purchase ‘Extras Cover’ as this will just increase your costs unnecessarily. Similarly, travel insurance is not private patient hospital cover for the purposes of the Medicare Levy Surcharge.

What is an appropriate level of health cover?

As stated on the ATO website, for singles, an appropriate level of cover must have an excess of $500 or less. Couples or families must have an excess of $1,000 or less.

What if I am a non-resident?

If you are a non-resident for Australian taxation purposes, then you will NOT be required to pay the Medicare Levy, and neither will you be liable to pay the Medicare Levy Surcharge.

Can I still use Medicare when I am a non-resident?

There are so many misconceptions about a non-resident’s entitlement to Medicare, particularly from the Australian accounting profession, but also among expat circles generally.

In fact most expats and their accountants will emphatically state that if you are a non-resident and you’re not required to pay the Medicare Levy then, under no circumstances will you be eligible to claim Medicare benefits.

However, that advice is nonsense. In fact, if you’ve ever received that advice, then your advisor has done you a great disservice as that advice it is INCORRECT.

So let’s lay this question to rest once and for all.

If you are an Australian citizen who is a non-resident expat, living and working overseas, although you can’t use Medicare forever, you CAN use Medicare and claim Medicare benefits for a period of up to 5 years from the date that you first left Australia.

So let me just reiterate that again . . . the bottom line is, that non-resident Australians who are living abroad, are eligible to use Medicare and claim Medicare services on trips back to Australia for a period of up to 5 years after departing Australia originally. For further information, take a look at the Department of Human Services website where you can confirm this fact.

Note though that if your Medicare card has an expiry date of less than the 5 years, practically speaking you won’t be able to renew your Medicare card whilst living overseas and so in that instance, you will be limited in claiming Medicare benefits to the date of expiry of your card.

Can I access Medicare services outside of Australia?

Typically you won’t be able to access Medicare services from outside of Australia unless you live in (or a visiting) a country that has a Reciprocal Health Care Agreement with Australia.

In that case, you may be able to access to medically necessary care however you’ll need to check the eligibility rules of that specific Reciprocal Health Care Agreement. If seeking access to medical care under a reciprocal Health Care Agreement, you’ll also need to take with you, your passport and your Medicare card.

Additionally, if you live overseas for longer than 5 years you’ll no longer be eligible for Medicare and you’ll need to re-enrol in Medicare when you eventually move back to Australia to live.

What countries does Australia have a Reciprocal Health Care Agreement with?

As at the date of writing, Australia has Reciprocal Health Care Agreements with 11 countries around the globe – take a look below:

I’ve heard that if I claim Medicare benefits whilst I am a non-resident, this may affect my residency status. Is that true?

As much as I’d truly love to give a definitive answer, the only answer that I can give is “possibly”.

Unfortunately, residency is a very complex topic that hinges around the facts and circumstances of a your life, along with constantly evolving principles laid down in precedential court cases, court ruling and ATO tax rulings. So unfortunately the answer is not as easy as it seems.

But, let me try and answer it this way.

Non-residents who claim Medicare benefits whilst visiting Australia, will show a stronger connection, or durability of association with Australia than those that don’t. The durability of association that a person has with Australia is a key factor in determining a person’s residency status and so claiming Medicare benefits will be a stronger indicator for residency.

However, it should be noted that this factor alone will not mean that you are a resident for Australian taxation purposes. Combined with a bunch of other factors that also support lean towards the residency side of the equation, claiming Medicare benefits could tip you over the edge, in which case you could be found to be a resident of Australia.

However, just because you’ve claimed Medicare benefits whilst in Australia it doesn’t necessarily mean that you will lose your non-residency status.

If you want to learn more about how these rules affect you, or if you are nervous about your losing your non-residency status by claiming Medicare benefits, I highly recommend that you book in for a tax consultation (below) so that we can run through all the issues for you and set your mind at ease:

Book an Appointment

One last thing

If you feel that the information in this article was useful, please feel free to share this with any other expat Australians that you feel my benefit from this information.

Thanks for reading.

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Shane Macfarlane

CEO & Founder at Expat Tax Services
Shane's an Australian Chartered Accountant and Australian expat tax specialist who's also an expat himself (based in Asia). Shane's passionate about tax and legitimate tax minimisation, tax-planning and structuring, particularly as it relates to Australian expats who are often subject to high rates of tax back home in Australia.
Shane Macfarlane
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Comments 11

  1. Thanks Shane. This was very helpful reading after needing to go to emergency for my son over the Christmas holidays. I was of the impression I would get a huge tax bill.

    1. Post
      Author

      Hi Cam,

      Thanks so much for your positive comments. I hope that you son pulled through okay and that the emergency wasn’t too serious. I’m also glad you found our article to be helpful so thanks once again for your kind comments.

      Cheers

      Shane

  2. Great read and thanks for the clarification Shane – I now need to find out if registering my newly born son complicate my residency status determination more! Maybe I just wait until we come back in a few years…

    1. Post
      Author

      Thanks Gavin.

      Regarding your newly born son, firstly congratulations and secondly, it’s probably safer to simply register your son when you come back (as the alternative is likely to be a factor towards residency).

      Thanks

      Shane

  3. Hi Shame I am an Australian expat living and working in Thailand over 5 years. From my understand I will not be able to use medicare. I will need to apply when I come back to live in Australia. How long will it take to get cover. Is there a waiting perod?

    1. Post
      Author

      Hi John,

      There’s no waiting period as you will be able to re-apply for a Medicare card on day 1 of your return. The Medicare office should be able to let you know your Medicare number and theoretically you should be able to use services straight away. The main issue that you will need to satisfy is that you must be an Australian resident at the time of applying for the card, otherwise they will not issue one to you.

      Hope that helps.

      Cheers

      Shane

  4. Thanks for this site – brilliant and clear.
    On returning from an overseas posting of 4 years, do i face a penalty under the Medicare Surcharge if i haven’t maintained private health cover in Australia over the time away?
    I would organize private health insurance to commence prior to my return.

    1. Post
      Author

      Hi Darren,

      Thanks for your message – there’s not really any penalty as far as the Medicare Levy Surcharge goes if you haven’t maintained cover. There is however a penalty loading that gets added to the price of your private hospital cover premium, compared to other taxpayers (over the age of 30yo) who have been fully covered throughout that same period.

      I believe a loading of 2% is added per year that you are not covered. For example, if you are over the age of 30 and if you have been outside of Australia for say, 10 years and you have were not covered by an appropriate private hospital policy, then when you return and take out a new policy, your premiums would be 20% higher (2% x 10 yrs) than the next person’s (who had been covered the whole time).

      Hopefully that all makes sense?

      Thanks

      Shane

      1. We previously lived overseas, and live OS again now. In our first stint overseas the loading for private health insurance was introduced. We didn’t need to pay this even though we were over 30, as we could prove that we were not in the country, and therefore not requiring private health cover in Australia. You will need to show proof to your insurer, such as a copy of re entry at immigration. Not sure if that is helpful.

  5. Hi

    I have been living and working in dubai for 17 years. I have fixed term deposits back home and a I pay a % on my deposit as a non resident. I fly back home two times a year and I have been using Medicare… is this wrong? AM I not entitled to this? I also noticed this time when I was in melb that I wasn’t there on the electrol poll to vote.. So I take it that the government knows I’m not living back home. Am I wrong by using Medicare? I plan to move back to aus in a few years and I don’t want to have any issues.. Also I’m pregnant if I go home and give birth AM I covered by Medicare? Thank u so much for your assistance!

    1. Post
      Author

      Hi – thanks for your message.

      Based on what you’ve written (i.e. that you have been living and working in Dubai for 17 years), you are not entitled to use Medicare. Unfortunately, Australia’s medical system under Medicare doesn’t reconcile with the electoral roll or the ATO unfortunately, so when you have used Medicare incorrectly, you’ve simply flown beneath the radar.

      Be careful though because given that Medicare is typically only available for up to 5 years (maximum) after becoming a non-resident, or until the expiry of your Medicare card, whichever is the earlier, by using Medicare, you are in effect declaring to the ATO that you are an Australian tax resident (as only Australian residents and non-residents within that 5 year window) are entitled to use Medicare.

      Additionally, you should also bear in mind that it is actually quite equitable that you are not entitled to use Medicare. Why? Because for the last 17 years you have not been paying the Medicare levy so that alone is a big reason why you are not entitled to use Medicare.

      Given that your income in Dubai is tax-free in the UAE, being treated as an Australian tax resident would be devastating because it would mean that ALL of your Dubai income (and any other income that you earn from anywhere in the world) would become subject to Australian taxes at extremely high Australian tax rates (potentially up to 47%). And it should also be noted that the Medicare Office cannot issue Medicare cards to non-residents, therefore to have updated your card 2 or 3 times during the last 17 years you have probably declared to Medicare that you are in fact a resident, because like I said, if my understanding is correct the Medicare office cannot issue cards to non-residents. That does not bode well for your Australian tax residency status.

      If I were in your shoes I would avoid using Medicare, I wouldn’t update my card until such time that I regained my Australian tax residency status and more generally I would avoid doing anything that may cause the ATO to have a stronger argument for treating you as an Australian tax resident. You may think that you are saving a few dollars by utilising Medicare, but it’s just not worth it.

      Regarding pregnancy or any other condition, in order to utilise Medicare you will need to regain your Australian tax residency status. That will entitle you to a new Medicare card, and you’d potentially be covered from the date that you regained your residency status, meaning that from that date, you’d be eligible to utilise Medicare.

      I hope that helps.

      Thanks

      Shane

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