How does the Medicare Levy Surcharge work?

The Medicare Levy Surcharge works like a tax and applies to Australian residents who are high income earners. If your taxable income is over an amount set by the government, and you don’t have an appropriate level of hospital cover for you and your dependants, you may have to pay the Medicare Levy Surcharge. This will add up to an extra 1% to your tax bill, so having hospital cover could help you pay less tax.

The annual taxable income thresholds for the 2009/2010 financial year are:

$73,000 for singles
$146,000 for couples and most families (for families, the threshold increases by $1,500 for each dependent child after the first).

These thresholds are reviewed and indexed annually by the Federal Government for each subsequent financial year. For the 2010/2011 income tax year the income thresholds are as follows:

$77,000 for singles
$154,000 for couples and most families (for families, the threshold increases by $1,500 for each dependent child after the first).

The following Medibank covers exempt members from paying the MLS:

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