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To encourage Australians to take out private hospital cover and relieve stress on the public system, the government imposes an additional levy on the income of those without private hospital cover. This levy is known as the Medicare Levy Surcharge (MLS).
The MLS can be anywhere from 0 to 1.5% of a person’s income, depending on their income bracket.
The tables below outline the income thresholds and the MLS rates that are currently in effect.
| Singles income | Medicare Levy Surcharge |
| Up to $90,000 | 0.0% |
| $90,001 - $105,000 | 1.0% |
| $105,001 - $140,000 | 1.25% |
| $140,001 - and above | 1.5% |
| Family income | Medicare Levy Surcharge |
| Up to $180,000 | 0.0% |
| $180,001 - $210,000 | 1.0% |
| $210,001 - $280,000 | 1.25% |
| $280,001 - and above | 1.5% |
The MLS applies proportionately for the period during the tax year when you and any dependants did not hold an appropriate level of private hospital cover*.
For example:
Simon is 33 years old, single with no kids. He decided to take out private hospital cover half way through the 2018/2019 financial year.
His total income^ for the 2018/2019 financial year is $110,000, placing him in the income bracket for Tier 2. Seeing as he was only without the appropriate level of cover for 6 months of the year, only half of his income will attract the MLS.
$55,000 x 1.25% = $687.50 payable as the Medicare Levy Surcharge when he pays tax.
For more information about the MLS and how it could apply to you and any of your dependants, visit the Australian Taxation Office.
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Use the Medicare Levy Surcharge Calculator to find out if you're eligible, or discover how much extra tax you may be paying by not having Hospital cover for a full tax year.#
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Things you should know
*For families, the income thresholds increase by $1,500 for each MLS dependent child after the first. Please note the threshold information above is a general guide only and may vary according to your particular circumstances.
^Taxable income + fringe benefits. No net investment losses.
# Where annual income for Medicare Levy Surcharge purposes is over $90,000 as a single (or $180,000 as a couple/family).
Medibank Private Limited cannot advise on financial or tax matters. Any information provided to you is general in nature and does not take account of your individual circumstances. You should obtain your own independent financial advice.
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