Tax and rebates for health insurance
What is the Medicare Levy Surcharge?
The Medicare Levy Surcharge (MLS) is a surcharge applied to people who don’t have an appropriate level of hospital cover and earn over $97,000 as a single or over $194,000 as a couple/family*.
The surcharge is designed to encourage Australians to get hospital cover and use private hospitals to reduce demand on the public health system. Income thresholds for the private health insurance rebate update on July 1 every year and can be viewed on the Australian Government Website. You can avoid this surcharge by getting hospital cover. It's good to note that the cost of the Medicare Levy Surcharge often exceeds the cost of getting hospital cover.
Medicare Levy Surcharge Calculator
Without hospital cover, your estimated surcharge is $0
This is a guide only. You should speak to a financial advisor who will be able to take into account your income and personal situation, including any changes that occur during a tax year.
How the Medicare Levy Surcharge works
How much is the Medicare Levy Surcharge?
It can start at about $970 per year for singles earning just over $97,000.
It can increase to over $2,265 per year for singles earning over $151,000.
Use the calculator above to estimate how much you might pay.
To calculate your MLS, the Australian Tax Office (ATO) uses a special definition of income (called ‘income for MLS purposes’). Your ‘income for MLS purposes’ is different from your regular taxable income.
How is the MLS calculated?
To calculate your MLS, the Australian Tax Office (ATO) use your income for MLS purposes. Your income for MLS purposes is different from your regular taxable income. If you have a partner, the ATO will combine both of your incomes for MLS purposes.
Depending on your income for MLS purposes, if you don’t have hospital insurance, you could pay between 1% - 1.5% more tax.
How to avoid the MLS?
You can avoid the MLS by getting an appropriate level of hospital cover.
All of HBF's hospital cover options qualify as an appropriate level of hospital cover.
If you only buy extras cover, you’ll still have to pay the MLS.
When you do get hospital cover, you’ll still pay the MLS for the part of the year you weren’t covered. You’ll only avoid the MLS completely if you’ve held hospital cover for the full financial year.
There are also some special cases where you’d be exempt from paying the MLS, which you can read about on the ATO’s website.
What’s the difference between the Medicare Levy and the Medicare Levy Surcharge?
There’s often confusion between the Medicare Levy and the MLS – they are two different charges.
The Medicare Levy is a charge that helps fund the public health care system. Most Australian taxpayers pay this charge. The MLS is an extra charge (or surcharge) on top of the Medicare Levy, which only applies to high income earners who don’t have hospital insurance.
For more information on how the MLS works, head to the Private Health Insurance Ombudsman.
Medicare Levy Surcharge thresholds
Learn more about how the MLS is calculated on the ATO website.
*Single parents and couples (including de facto couples) are subject to family tiers. If you have more than one child, your family income threshold increases by $1,500 for each child after your first. The income thresholds are indexed annually and are updated each year on 1 July.
| Income thresholds from 1 July 2024 - 30 June 2025 | ||||
|---|---|---|---|---|
| Base Tier | Tier 1 | Tier 2 | Tier 3 | |
| Singles |
$97,000 or less |
$97,001 – $113,000 |
$113,001 – $151,000 |
$151,001 or more |
| Families |
$194,000 or less |
$194,001 – $226,000 |
$226,001 – $302,000 |
$302,001 or more |
| Medicare Levy Surcharge |
0% |
1% |
1.25% |
1.5% |
| Income thresholds from 1 July 2023 - 30 June 2024 | ||||
|---|---|---|---|---|
| Base Tier | Tier 1 | Tier 2 | Tier 3 | |
| Singles |
$93,000 or less |
$93,001 – $108,000 |
$108,001 – $144,000 |
$144,001 or more |
| Families |
$186,000 or less |
$186,001 – $216,000 |
$216,001 – $288,000 |
$288,001 or more |
| Medicare Levy Surcharge |
0% |
1% |
1.25% |
1.5% |
Medicare Levy Surcharge explained
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