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 21

  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

  6. Good Day Shane,

    This has been my 5th year living outside Aus, and my medicare card has already expired. The question I have is for my foreign resident status for tax purposes only, if my child moves back to Aus as a domestic student by himself only, whilst rest all of the family members are still foreign residents. Also will he be able to enrol for medicare with no impact to my residency status. Thank you

    1. Post
      Author

      Hi Sherry,

      Thanks for your question. Firstly, children over the age of 15 can receive their own Medicare Card I believe so assuming that your child is over 15yo then this should not be a problem. A Medicare Enrolment form will need to be completed and various certified documents (passport etc) will need to be supplied. Additionally, you’ll need to provide documents and proof that your child is living in Australia.

      Regarding residency, the fact that your child will be living in Australia is a factor for your Australian tax residency status as it shows that you willl have a stronger durability of association with Australia, a fact that is weighed more heavily under Australia’s ‘Domicile Test’ of residency.

      Although I don’t know enough about your circumstances, I don’t think that fact would be likely to change your residency status, particularly if your child will stay with relatives, friends or school accommodation etc.

      If your child were to stay in your family home, that would have a greater bearing on your residency status. However that last scenario is probably unlikely so as I mentioned above, your residency status is unlikely to be affected.

      If you seek more clarity on that, feel free to book a “Residency – Am I a tax resident” consultation with us via our Book an Appointment page as we’d be more than happy to run you through all of the issues and provide you with an opinion.

      Thanks again for your message.

      Regards

      Shane

  7. HI Shane,
    i have found your website extremely helpful. thanks for the posting. Just some clarification if i may ask. We are currently living in Dubai as a non residents in Australia for less than 5 years. My husband has recently been diagnosed with some health issue in relation to brain, we will like to seek 2nd medical opinion in Australia before we seek any treatment in Dubai.

    As a measure of that, we have recently reactivated our private health insurance in Australia (while living oversea) in hope of seeking private medical consultation and treatment. Will this affect our tax residency status? In event if we have to, can we claim claim from both medicare and private health insurance as non resident?

    Would appreciate your advice on this. Many thanks.

    1. Post
      Author

      Hi Sherry,

      Firstly, we’re so sorry to hear of your husband’s health issues and from all of the team here at Expat Tax Services, we hope for a successful outcome for him and a speedy recovery.

      Residency sadly is a complicated issue that is very much based around the facts and circumstance of your lives, most details of which, I simply don’t know. As such I really can’t say for sure that it won’t change your residency status as I don’t know all the facts and circumstance of your lives.

      Regarding taking out private health insurance however, unfortunately, the reality is that taking out an Australian policy shows a stronger durability of association with Australia (i.e. it shows that you have a stronger connection to Australia) and that is indeed a factor FOR tax residency of Australia.

      Having said that however, given the length of time that you and your household have remained in Dubai among other factors, it is unlikely that taking out Australian private hospital/health cover would tip you over the edge and change your residency status, particularly if you continue to intend to reside in Dubai on an ongoing basis.

      As I mentioned earlier however i can’t say for sure that it won’t affect your residency status because I don’t know all the facts of your lives.

      if you wanted to be sure, then I’d highly recommend booking in for an ‘Expat Already Overseas’ appointment via the Book an Appointment page on our website. In that appointment we’ll be able to run through everything and answer any and all questions that you have.

      Thanks again for your message. Hopefully my reply helps however.

      Regards

      Shane

  8. HI Shane,
    Great article, thanks very much. However, I’m not sure I’ve seen (or understood) the answer to my particular situation. I have recently become a non-resident for tax purposes. Do I need to continue paying for private health insurance in Australia to avoid the 2% annual increase for lack of cover if/when I return to live in Australia? (I’m definitely over 30!) Or is this unnecessary if you have a period of non-residency for tax? Would it be worth continuing private health insurance for the first five years of non residency while you are still eligible to claim on Medicare or are you unable to use private health insurance in Australia as a non resident for taxation purposes.
    Many thanks.

    1. Post
      Author

      Hi Susan,

      Perhaps it’s best if you drop us an email or message via our contact us page and book a short appointment with me so that I can explain how this all works for you as the answers really depend upon your circumstances (most of which I don’t yet know) plus I think it will be easier to explain that way.

      To help though, take a look at https://www.privatehealth.gov.au/health_insurance/surcharges_incentives/lifetime_health_cover.htm#exempt as this should help explain things for you. Without knowing your circumstances fully, I suspect that the short answer will likely be, that you do not need to continue paying for private health insurance to avoid the 2% Lifetime Health Cover premium loading.

      The main reason to keep private health cover in Australia is generally just so that you have some cover somewhere, in the event that you do not have an overseas health cover policy. In that instance it may make sense to keep your Australian health cover if you are in a location that is relatively quick and easy to travel from (back to Australia should the need arise to utilise your health cover, such as in the event of an accident or emergency).

      Just bear in mind though that maintaining your policy is a factor for residency so the decision really needs to be made by bearing in mind all the other facts and circumstances of your life to ensure that maintaining an Australian heath cover policy does not tip you over the edge and thus change your residency status.

      As to whether you are able/unable to use private health insurance in Australia when you are a non-resident for Australian taxation purposes, ultimately the answer will depend upon the terms, conditions of the particular health insurance policy that you take out. I can[t really answer that question beyond that because each company’s policies terms and conditions are different.

      Hopefully that helps?

      Regards

      Shane

  9. Hello, May be a little off topic, but I’ve been o/s for more than 5 years and plan to head back to OZ. I’ll be a low income earner. Do you know if there is a waiting period to get the low income health care card? Wanting to use it to avoid stamp duty on a small property. thanks!

    1. Post
      Author

      Hi Luna,

      Thanks for your message. Unfortunately I’m not sure whether there is a waiting period or not as I don’t know enough about your circumstances. Having said that I have found some information that should assist you – take a look at the links below as this is where you should be able to find your answer:

      If you take a look at that last link, under the heading of “Periods of Qualifying Residence” it states:

      “The qualifying residence period begins from the date the person starts residing in Australia as a permanent visa holder. Time spent in Australia on a temporary visa is not counted towards the qualifying residence period.”

      Accordingly, as a citizen and former resident of Australia, I think that for waiting period purposes will probably have been satisfied because it appears that your earlier periods of residence are likely to count towards the qualifying residence period. Thus, as an Australian citizen, all that remains is that you must ensure that you are residing permanently in Australia, and not just for some temporary period.

      Whilst I think I’m on the right track with all of the above, there’s a good chance that I may be wrong! Accordingly, I highly recommend that you reach out and contact the Department of Human Services to confirm the above and/or to learn more.

      Sorry that I couldn’t be much more help.

      Regards

      Shane

  10. That is truely an informative article for anyone who is just starting to look into this topic. I wish I found this article before we moved to Singapore, would’ve saved me a lot of time and effort determining our eligibility to use Medicare once we become non-residents for tax.

    1. Post
      Author

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