The Medicare Levy Surcharge (MLS) is a tax set by the Australian Government. The income tiers will change each year and we’ll update you once we hear from the government on what they are.

In Australia, the Tax Man encourages high-income earners to take out a Private Patient Hospital Cover. 

 

  • What is the Medicare Levy Surcharge (MSL)?

The Medicare Levy Surcharge is a tax supplement charged by the Australian Taxation Office on Australian Taxpayers whose income exceeds the relevant threshold. 

This tax was designed to encourage individuals to take out Private Patient Hospital Cover and use the private hospital system to reduce the demand on the public Medicare system.

 

  • Who is liable to pay the Medicare Levy Surcharge?

When your income for Medicare Levy Surcharge purposes exceeds the relevant threshold and if you do not have an appropriate Private Patient Hospital Cover for the full year, you will be liable to pay the surcharge.

If you had a Private Patient Hospital Cover part of the year, you will be liable for the Medicare Levy Surcharge only for the relevant period where you were not covered.

Income Thresholds and Rates:

ThresholdBase TierTier 1Tier 2Tier 3
Single Threshold$90,000 or less$90,001 - $105,000$105,001 - $140,000$140,0001 or more
Family Threshold$180,000 or less$180,001 - $210,000$210,001 - $280,000$280,001 or more
Medicare Levy Surcharge0%1%1.25%1.5%

If you have two or more dependent children, the family income threshold is increased by $1,500 for each dependent child after the first child.

 

  • How to avoid the Medicare Levy Surcharge?

You need to ensure that your Private Patient Hospital Cover is provided by a Local Registered Health Insurer for hospital treatment provided in an Australian hospital or day hospital.

The appropriate level of cover varies according to your status:

  • For singles, an appropriate level of cover must have an excess of $750 or less
  • For couples or families, it must have an excess of $1,500 or less

If your private health insurance policy doesn’t provide an appropriate level of private patient hospital cover, and your income for Medicare Levy Surcharge purposes is above a certain threshold, you may have to pay the MLS.

 

ATTENTION: General Cover Extras are not considered as Private Patient Hospital Cover.