{"menuItems":[{"label":"What is the Medicare levy surcharge?","anchorName":"#what-is"},{"label":"Medicare Levy Surcharge Calculator ","anchorName":"#medicare-levy-surcharge-calculator"},{"label":"How much is the Medicare levy surcharge?","anchorName":"#how-much"},{"label":"Does everyone pay the medicare levy surcharge?","anchorName":"#avoid-it"},{"label":"Cheap health insurance to avoid the Medicare levy surcharge","anchorName":"#compare-all"},{"label":"Frequently asked questions","anchorName":"#frequently-asked-questions"}]}
What you need to know
The Medicare levy surcharge is a tax designed to encourage high earners to take out private hospital cover to help ease the burden on the public system.
You will be automatically taxed an extra 1%, 1.25% or 1.5% of your income if you earn over $93,000 a year, or $186,000 as a couple or family, and do not have private hospital insurance.
There are a range of cheap hospital policies that exempt you from the Medicare levy surcharge.
What is the Medicare levy surcharge?
The Medicare levy surcharge (MLS) is a tax for high income earners that don't hold private hospital insurance with a registered health fund. It's designed to encourage high earners to take out private health insurance, theoretically easing the burden on the public system.
That means you could save around $ a year if you signed up to the cheapest hospital policy available on Finder.
How? When you earn over $93,000 as a single or $186,000 as a couple (plus $1,500 per dependent), you have to pay the Medicare Levy Surcharge – unless you take out private hospital insurance.
Based on what you've told us, your Medicare Levy Surcharge will be around $ per year. That means even a cheap private health insurance policy would cost you more than paying the MLS.
If you already have hospital insurance, you might save $ a week by cancelling and paying the MLS instead. However, you'd no longer be covered for private treatment. This could include emergency ambulance transportation, which isn't covered by Medicare in most states.
Because the difference between the MLS you'll pay and the price of a basic or bronze hospital policy is small, it could still be worth taking out cover.
Based on what you've told us, you won't need to pay the Medicare Levy Surcharge because you earn below the minimum threshold ($93,000 for singles and $186,000 for couples, plus $1,500 per dependent).
If you already have hospital insurance you could save the cost of your policy - as much as $ a week - by cancelling and relying on Medicare instead. However, you'd no longer be covered for treatment in a private hospital. You also won't be covered for emergency ambulance transportation, which isn't covered by Medicare in most states.
The MLS calculator is not a complete assessment of your financial position. It is a general guide only. Hospital policies are based on the cheapest hospital policies available on the Finder database. Price estimates are based on the state you told us you live in and your age. If you're a couple, you both need to hold private health insurance to avoid paying the MLS.
How much is the Medicare levy surcharge?
The MLS is between 1% and 1.5% of your income. If you're earning just over $93,000, that's a monthly tax of at least $75. Note this is on top of the 2% Medicare Levy and is payable for every day you don't have insurance within a financial year.
The table below shows some examples of different income brackets and how they would be taxed by the Medicare levy surcharge.
Income
MLS
Monthly cost
Annual cost
$80,000
0%
$0
$0
$95,000
1%
$79
$950
$110,000
1.25%
$114
$1,375
$145,000
1.5%
$181
$2,175
Medicare Levy Surcharge income thresholds – from 1 July 2023
For the first time in 8 years, the government is bringing in new income thresholds – this starts on 1 July 2023. Here are the new bands:
MLS rate
Single income
Couples income
0%
$0 - $93k
$0 - $186k
1%
$93k - $108k
$186k - $216k
1.25%
$108k - $144k
$216k - $288k
1.5%
$144k+
$288k+
The MLS doesn't just take your wage into account. The ATO uses a special definition of income to calculate the MLS. The calculation takes a range of factors into account, including:
Taxable income. Including the net amount paid towards family trust distribution tax.
Reportable fringe benefits. Including all those listed on your PAYG payment summary.
Total net investment losses. Including net financial investment losses and net rental property losses.
Super contributions. Including deductible personal super contributions and reportable employer super contributions.
Spousal trust income. If you have a spouse, their share of the net income of a taxable trust will be taken into account.
Does everyone pay the medicare levy surcharge?
No. You can avoid the MLS by having an "appropriate level" of private hospital insurance. That means any hospital policy which has an excess of $750 or less for singles, or $1,500 or less for couples and families. Travel insurance with medical cover isn't considered appropriate.
Fortunately, you can buy a qualifying hospital policy for less than the cost of the Medicare levy surcharge. That means you may actually save money by getting private hospital insurance. Another option you have to to look for a hospital and extras plan, to get more from your insurance.
Potential savings of getting private health insurance
Income
Annual MLS cost
Sample hospital cover cost
Potential saving
$95,000
$950
$813
$137
$110,000
$1,375
$813
$562
$145,000
$2,175
$813
$1,362
**For the sample cost of hospital cover, we averaged the price of three different basic policies offered by three different Australian insurers. All are considered appropriate by the ATO. *Quotes are based on a single individual with less than $90,000 income, $750 excess and living in Sydney.
Cheap health insurance to avoid the Medicare levy surcharge
If you're ready to save, here are some cheap hospital policies from Finder partners. They'll all exempt you from the Medicare levy surcharge. All prices are based on a single individual with less than $90,000 income and living in Sydney.
We update our data regularly, but information can change between updates. Confirm details with the provider you're interested in before making a decision.
Compare prices from 30+ Aussie funds in under 30 seconds.
Why you can trust Finder's health insurance experts
We're free
Our health insurance engine is completely free to use. You pay the same as buying directly from the health insurer. Better still, we regularly run exclusive deals that you won't find on any other site.
Unlike other comparison sites, we're not owned by an insurer. That means our opinions are our own and you can compare nearly every health fund in Australia on the site (and find a better deal).
We're here to help
Since 2014, we've helped 350,000+ people find health insurance by explaining your options simply. We'll never ask for your number or email to see prices. We're here to help you make a decision.
Frequently asked questions
The Medicare levy surcharge is an additional tax of between 1% and 1.5%, depending on how much you earn. The full 1.5% is only applied to singles who earn more than $144k a year, or couples earning more than $288k a year. This is in addition to the 2% Medicare Levy that most tax payers pay.
You can avoid the Medicare levy surcharge by taking out an eligible hospital cover policy. You cover will need to have an excess of no more than $750 for singles, or $1500 for couples.
It's hard to be exact. Finder looked at earnings figures from the 2021 Census. Two years ago, there were:
3.51 million Australians earning $91,000 per year or more.
1.53 million households with a combined income of more than $182,000.
Even with lower-than-average wage rises, you'd expect most would fall above the minimum thresholds today.
APRA stats show around 55% of the population isn't covered by hospital cover, meaning we're likely talking millions not hundreds of thousands.
Yes, if you both earn a combined income of more than $186,000 in the current financial year, you must hold hospital cover for you and your partner to avoid the MLS. If your partner or any dependent isn't covered, you will pay the surcharge.
Essentially, yes. If you have a spouse, the ATO uses your combined income to calculate your surcharge.
No. The industry follows portability rules to make sure there's competition among health funds. You won't need to re-serve any waiting periods you've already served.
Gary Ross Hunter is an editor at Finder, specialising in insurance. He’s been writing about life, travel, home, car, pet and health insurance for over 6 years and regularly appears as an insurance expert in publications including The Sydney Morning Herald, news.com.au, The Telegraph, Explore Travel and Escape. Gary holds a Kaplan Tier 1 General Insurance (General Advice) certification and a Kaplan Tier 1 Generic Knowledge certification which meets the requirements of ASIC Regulatory Guide 146 (RG146).
How likely would you be to recommend finder to a friend or colleague?
0
1
2
3
4
5
6
7
8
9
10
Very UnlikelyExtremely Likely
Required
Thank you for your feedback.
Our goal is to create the best possible product, and your thoughts, ideas and suggestions play a major role in helping us identify opportunities to improve.
Important information about this website
finder.com.au is one of Australia's leading comparison websites. We are committed to our readers and stands by our editorial principles
We try to take an open and transparent approach and provide a broad-based comparison service. However, you should be aware that while we are an independently owned service, our comparison service does not include all providers or all products available in the market.
Some product issuers may provide products or offer services through multiple brands, associated companies or different labeling arrangements. This can make it difficult for consumers to compare alternatives or identify the companies behind the products. However, we aim to provide information to enable consumers to understand these issues.
We make money by featuring products on our site. Compensation received from the providers featured on our site can influence which products we write about as well as where and how products appear on our page, but the order or placement of these products does not influence our assessment or opinions of them, nor is it an endorsement or recommendation for them.
Products marked as 'Top Pick', 'Promoted' or 'Advertisement' are prominently displayed either as a result of a commercial advertising arrangement or to highlight a particular product, provider or feature. Finder may receive remuneration from the Provider if you click on the related link, purchase or enquire about the product. Finder's decision to show a 'promoted' product is neither a recommendation that the product is appropriate for you nor an indication that the product is the best in its category. We encourage you to use the tools and information we provide to compare your options.
Where our site links to particular products or displays 'Go to site' buttons, we may receive a commission, referral fee or payment when you click on those buttons or apply for a product. You can learn more about how we make money.
When products are grouped in a table or list, the order in which they are initially sorted may be influenced by a range of factors including price, fees and discounts; commercial partnerships; product features; and brand popularity. We provide tools so you can sort and filter these lists to highlight features that matter to you.
Please note that the information published on our site should not be construed as personal advice and does not consider your personal needs and circumstances. While our site will provide you with factual information and general advice to help you make better decisions, it isn't a substitute for professional advice. You should consider whether the products or services featured on our site are appropriate for your needs. If you're unsure about anything, seek professional advice before you apply for any product or commit to any plan and read any disclosure documents (such as any Target Market Determination (TMD) and/or Product Disclosure Statement (PDS)) issued by the provider before making a decision.
Providing or obtaining an estimated insurance quote through us does not guarantee you can get the insurance. Acceptance by insurance companies is based on things like occupation, health and lifestyle. By providing you with the ability to apply for a credit card or loan, we are not guaranteeing that your application will be approved. Your application for credit products is subject to the Provider's terms and conditions as well as their application and lending criteria.
Please read our website terms of use and privacy policy for more information about our services and our approach to privacy.