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Understanding the Medicare Levy Surcharge
The Medicare Levy Surcharge (MLS) encourages Australians in higher income brackets to take out and retain private Hospital cover.
High income earners (see the table below) who don’t have Hospital cover have to pay an extra 1-1.5% tax, on top of the standard Medicare Levy of 2%. It applies to an individual and his or her dependants, including spouse or partner. A dependent is any child under 21, or any child or children who are full-time students and under 25.
The MLS is paid in any period without Hospital cover. Those who are exempt from the Medicare Levy don’t to pay the MLS.
Suspension of membership
If you choose to suspend your Hospital cover for a short period, and we approve the suspension, this period may affect your MLS liability.
Income thresholds and surcharge levels
If you need to pay the MLS, it will be included with the Medicare Levy on your notice of assessment from the Australian Tax Office (ATO).
The tables below outline current income thresholds and surcharges that apply. The income thresholds are indexed and will remain the same to 30 June 2021.
|Singles earning||Families earning|
|$90,000 or less do not pay the MLS||$180,000 or less do not pay the MLS|
|$90,001 – $105,000 pay 1% in MLS||$180,001 - $210,000 pay 1% in MLS|
|$105,001 - $140,000 pay 1.25% MLS||$210,001 - $280,000 pay 1.25% in MLS|
|$140,001 or more pay 1.5% for MLS||$280,001 or more pay 1.5% in MLS|
If as a couple or a single parent you have two or more children, the family income threshold is increased by $1,500 for every MLS dependent child after the first child. For example, if you have three dependent children, your family income threshold will increase by $3,000.
To work out your annual income for MLS purposes, you can refer to the ATO's Medicare Levy Surcharge Income Calculator.
You can avoid having to pay the MLS by choosing any of our Hospital cover products.
- Australian Taxation Office (ATO) - Medicare Levy Surcharge
- The Department of Health - Medicare Levy Surcharge