The Medicare Levy Surcharge (MLS) is a levy paid by Australian tax payers who do not have private hospital cover and who earn above a certain income. The current income threshold is $90,000 for singles and $180,000 for couples and families, including single parent families. For families with children, the thresholds are increased by $1,500 for each child after the first.
The surcharge aims to encourage individuals to take out private hospital cover, and where possible, to use the private system to reduce the demand on the public Medicare system. The surcharge is calculated at the rate of 1% to 1.5% of your income for Medicare Levy Surcharge purposes. It is in addition to the Medicare Levy of 2%, which is paid by most Australian taxpayers.more
The Medicare Levy Surcharge (MLS) is a levy paid by Australian tax payers who do not have private hospital cover and who earn above a certain income. The surcharge aims to encourage individuals to take out private hospital cover, and where possible, to use the private system to reduce the demand on the public Medicare system.
The surcharge covers you and your dependents. Your dependents include:
For more information about who is considered a dependant for MLS purposes, you can refer to the ATO's Medicare Levy Surcharge page.
The surcharge is calculated at the rate of 1% to 1.5% of your income for Medicare Levy Surcharge purposes. It is in addition to the Medicare Levy of 2%, which is paid by most Australian taxpayers. To work out your annual income for MLS and Rebate purposes, you can refer to the Australian Taxation Office's Private Health Insurance Rebate Calculator or contact the ATO directly.
The surcharge levels applicable to 30 June 2021* are:
*The income thresholds are indexed and will remain the same to 30 June 2023.
If you are a family with a combined income of more than $180,000 in the current financial year, you must hold hospital cover for you, your partner, and your dependents to avoid the surcharge. If your partner or one of your dependents is not covered, you will pay the surcharge.
A person over the age of 21 who is not a full-time student is not considered a dependent for MLS purposes. A person who is covered as a dependent aged over 21 on a family hospital policy, who also earns over the MLS income threshold, is liable to pay the MLS. To be exempt from the MLS, the person needs to take a hospital policy for themselves.
If you have held hospital cover for part of the year, then you will have a partial exemption from the MLS. You will have to pay the surcharge to account for the days that which you did not hold hospital cover.
If you hold hospital cover but temporarily suspended payments for that cover (for example, to travel overseas), then you are not exempt during the suspended period and you will have to pay the surcharge for the suspended days.
To be exempt from the surcharge, your hospital cover must be held with a registered health insurer and cover some or all of the fees and charges for a stay in hospital.
From 1 April 2019, the maximum permitted excesses for private hospital insurance is $750 for singles and $1,500 for couples/families (i.e. if multiple hospital claims are made in a single year, the excess paid by you cannot exceed $750/$1,500).
The following types of health insurance do not provide an exemption:
If you are from a country with a reciprocal healthcare agreement with Australia, and you earn over the surcharge threshold, then you can avoid the surcharge by purchasing an approved hospital insurance policy.
However, you should note that for people with reciprocal Medicare benefits, this type of insurance will provide limited benefits for hospital treatment and you will incur significant expenses if you are admitted as a private patient. If you require cover for hospital treatment, you should use your reciprocal Medicare benefits as a public patient or consider Overseas Visitors Health Cover for treatment as a private patient.