Health Cover for Australian Expats: The Insurance, and the Tax Bits Nobody Mentions

It often takes leaving Australia to realise how good we had it. Medicare, with all its quirks, is a genuinely fine system, and our private health setup, for all the grumbling, is reasonable by world standards. Then you move somewhere like the United States, Switzerland or Norway, get a glimpse of a hospital bill, and develop a sudden, deep appreciation for the green-and-gold card you left in a drawer back home.

Getting your health cover sorted before you go is one of those unglamorous tasks that matters enormously the one time you need it. But there’s a second half to this story that almost every “expat health insurance” article skips entirely: the Australian tax side. Your move overseas changes your Medicare position, your Medicare levy, and a surcharge you may not even know exists, and that’s the part where we can actually help.

First, our lane

Quick bit of honesty. We’re registered tax agents and chartered accountants, not insurance brokers or financial advisers. So we’re not going to tell you which policy to buy, and nothing here is a recommendation to take out any particular cover. What we can do is set out, in general terms, what’s worth thinking about on the insurance side, and then get properly stuck into the tax side, which is genuinely ours.

The bit nobody tells you: Medicare doesn’t pack its bags with you

Here’s the thing that surprises a lot of departing Australians. Your access to Medicare is tied to being an Australian resident, not to your citizenship. When you move overseas permanently and stop being a resident, you generally lose your entitlement to use Medicare, even though you’re still as Australian as a pie and sauce at the cricket.

That’s exactly why private cover overseas matters: for a chunk of time, the safety net you grew up with simply isn’t under you anymore. (Australia does have reciprocal health care agreements with a handful of countries that cover some essential treatment, but they’re limited, they’re not a substitute for proper cover, and the United States, notably, isn’t one of them.)

The flip side: you may not have to pay the Medicare levy either

Now the good news, and it’s the part that puts money back in your pocket. Because the Medicare levy (that 2% of taxable income most residents pay) is also tied to residency and Medicare entitlement, leaving can take you out of it.

Broadly:

• If you’re a foreign resident for Australian tax purposes for the full year, you’re generally exempt from the Medicare levy, and you claim that exemption in your tax return. It hinges on your tax residency, not your passport, which is where a lot of people get confused: plenty of Australian citizens overseas wrongly assume they’re still on the hook.
• If you’re a tax resident but not entitled to Medicare (for example, certain people here on temporary visas), you can claim a full exemption too, but you’ll need a Medicare Entitlement Statement from Services Australia to prove the period you weren’t entitled. You apply for that through myGov/Services Australia, and it can take several weeks, so don’t leave it until the night before your return is due.

Working out your residency correctly is the linchpin for all of this, and it’s not always obvious. We walk through how it’s actually determined in our guide to being an Australian resident for tax purposes.

The Medicare Levy Surcharge, and why it usually won’t chase you overseas

There’s a second, lesser-known charge worth understanding: the Medicare Levy Surcharge (MLS). This is an extra impost on higher-income earners who are eligible for Medicare but don’t hold an appropriate level of private hospital cover. It’s designed to nudge people into private cover and take pressure off the public system.

For 2025-26 it kicks in for singles with income for surcharge purposes above $101,000 (the family threshold is higher), and it runs from 1% up to 1.5% as income climbs through the tiers. Note two things: it only applies if you’re eligible for Medicare in the first place, and only “hospital” cover counts (extras-only policies don’t get you off the hook). The practical upshot for expats is reassuring: if you’re a foreign resident or otherwise not entitled to Medicare, the surcharge generally doesn’t apply to you, for the same reason the levy doesn’t. These thresholds and rates are tweaked most years, so check the current ATO figures for the year you’re lodging rather than trusting numbers from an old article.

Choosing expat health cover: what’s generally worth a look

With the tax side covered, here’s a general checklist of things people tend to weigh when comparing international health cover. Again, this is background, not advice, and the right answer depends entirely on you, where you’re going, and your own circumstances, so read the policy wording carefully and consider getting proper advice from a qualified insurance professional.

• The provider’s network and reputation: international insurers operate through networks of hospitals and clinics. It’s worth understanding how good that network is in the specific country (and city) you’re actually moving to, not just on paper globally.
• Medical evacuation: if you’ll be somewhere remote, or somewhere the local facilities are limited, cover that pays to get you to a properly equipped hospital (or home) can matter enormously. It’s the kind of thing you never think about until it’s the only thing you’re thinking about.
• What’s actually included: many international policies cover hospital and emergencies but skimp on the everyday stuff. Check whether things like GP visits, dental, optical, physiotherapy, vaccinations and preventive screening are in or out.
• Pre-existing conditions: some policies exclude them, some load them, some cover them after a waiting period. Disclose everything honestly up front (a bad back, diabetes, a pregnancy, whatever it is), because a non-disclosed condition is how a claim gets denied at the worst possible moment.
• Where you’re covered: many policies ask you to pick worldwide cover with or without the USA (which is dramatically more expensive to include, for obvious reasons). Think about not just where you’ll live, but where you’ll travel and visit, so you’re not caught out by a geographic exclusion.

Coming home? Watch the Lifetime Health Cover loading

Here’s a trap that catches returning expats, and it’s pure tax-and-policy admin rather than anything to do with your health. Australia has something called Lifetime Health Cover (LHC) loading: broadly, if you don’t take out private hospital cover by the 1 July following your 31st birthday, then a 2% loading is added to your premium for every year you were without it once you do take it out, up to a maximum of 70%. The loading drops off again after you’ve held continuous cover for 10 years.

The good news for expats is that time spent living overseas is generally accommodated rather than penalised, and returning Australians typically get a window after re-registering for Medicare to take out hospital cover without copping a loading for their time away. The rules around exactly how overseas periods are treated, and how long that window is, are specific, so if you’re heading home it’s worth checking the current detail with your insurer or the private health information resources before you assume anything. Get the timing right and you avoid an entirely unnecessary surcharge on your premiums for years.

One reassurance while we’re here: not having held private cover while you were overseas doesn’t create a Medicare Levy Surcharge “catch-up” bill when you get back. The thing to manage on return is the LHC loading, not a retrospective surcharge. And if you do take out hospital cover, the income-tested private health insurance rebate may reduce your premium, depending on your income. We cover the broader money side of coming home in our tax guide for returning Australians.

The bottom line

Sort your health cover before you fly, because the gap between leaving Medicare behind and getting yourself properly covered overseas is exactly where an unlucky accident turns into a financial disaster. But don’t stop at the insurance. Your move changes your Medicare levy position, can take you out of the Medicare Levy Surcharge, and (when you eventually come home) sets up a Lifetime Health Cover decision worth getting right.

The insurance choice is yours, ideally made with a good insurance professional. The tax side, the levy, the surcharge, the exemptions and the residency question underneath them all, is where we come in.

Sorting your tax while you’re overseas?

We help Australians all over the world keep their tax affairs straight while they’re away and when they come home: working out your residency, claiming the Medicare levy exemptions you’re actually entitled to, and making sure you’re not paying surcharges that don’t apply to you. We work remotely with expats everywhere, and our fee is always an upfront quote.

Book an appointment with our specialist team today, wherever in the world you are. Your bank balance will quietly thank you.

General information only. This article includes general background about international health insurance for convenience; it isn’t insurance, financial or tax advice, isn’t a recommendation to take out any particular cover, and doesn’t consider your personal circumstances. We’re registered tax agents, not insurance brokers or financial advisers, so seek advice from a qualified insurance professional about cover. Medicare, levy, surcharge and private health rules and figures change regularly and are administered by the ATO and Services Australia, so confirm the current position before acting. For your Australian tax position, speak to our specialist expatriate tax team today, or to another registered tax agent.