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Medicare Levy Surcharge

The Medicare Levy Surcharge (MLS) is levied on payers of Australian tax who do not have private hospital cover and who earn above a certain income. The surcharge aims to encourage individuals to take out private hospital cover, and where possible, to use the private system to reduce the demand on the public Medicare system.

The surcharge covers you and your dependents.  Your dependents include your spouse, any of your children who are under 21 years of age, or any of your student children who are under 25 years of age.

The surcharge is calculated at the rate of 1% to 1.5% of your income for Medicare Levy Surcharge purposes. It is in addition to the Medicare Levy of 2.0% (from 1 July 2013), which is paid by most Australian taxpayers.

The thresholds

Singles

Families

<$90,000

<$180,000

$90,001-105,000

$180,001-210,000

$105,001-140,000

$210,001-280,000

>$140,001

>$280,001

All ages 0.0% 1.0% 1.25% 1.5%

Single parents and couples (including de facto couples) are subject to family tiers. For families with children, the thresholds are increased by $1,500 for each child after the first.

The surcharge income threshold is indexed annually. Currently, you have to pay the surcharge if you are:

  • a single person with an annual taxable income for MLS purposes greater than $90,000 in the 2015-16 financial year; or
  • a family or couple with a combined taxable income for MLS purposes greater than $180,000 in the 2015-16 financial year. The family income threshold increases by $1,500 for each dependent child after the first;
  • and do not have an approved hospital cover with a registered health fund.

You must also pay the surcharge if you are a prescribed person with a taxable income over the threshold, and have any dependents who are not prescribed persons and who are not covered by an approved health cover policy as described above.

This means if you are a family, have a combined income of more than $180,000, and don’t have hospital cover for you, your partner, and your children, you will pay the MLS.

To be exempt from the surcharge, your hospital cover can be provided by Navy Health. General treatment cover without hospital cover will not provide an exemption; and overseas visitors cover, overseas student health cover or cover held with an international insurer will not provide an exemption.

 

More Information

To work out your annual income for MLS purposes, you can refer to the Australian Taxation Office’s website or contact the ATO directly.

 

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