Medicare levy surcharge

The Medicare Levy Surcharge is a tax for Aussies earning over $90K – avoid it with a $17 a week hospital policy.

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If you earn over $90,000 a year or $180,000 as a couple, and you don't have private hospital insurance, you'll be hit with the Medicare Levy Surcharge (MLS). It's an additional tax of between 1% and 1.5% of your income. If you're earning just over $90,000, that's a monthly tax of at least $75. But why pay it when you can get hospital cover for less?

What is the Medicare levy surcharge?

The Medicare Levy Surcharge is a tax designed to encourage high earners to take out private hospital cover in order to ease the burden on the public system. You'll be automatically taxed an extra 1%, 1.25% or 1.5% of your income if you earn over $90,000 a year (or $180,000 as a couple or family) and don't have private hospital insurance.

Important: The surcharge is payable for every day you don't have private health insurance within a financial year. It means you'll still be taxed even if you buy a policy at some point during the year but not before 1 July.

How to avoid the Medicare Levy Surcharge

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.

Here's the best bit though. You can buy a qualifying hospital policy for less than the cost of the Medicare Levy Surcharge. That basically means you can get private hospital insurance without spending a cent. In fact, you can actually save hundreds.

Low cost cover to avoid the Medicare Levy Surcharge

If you're ready to save, check out some policies in this table. They'll all exempt you from the Medicare Levy Surcharge.

Name Product Tier Excess Price Per Month Hide CompareBox Apply
ahm starter basic
Basic
$750
$75.10
Frank Entry Hospital (Basic+)
Basic
$750
$73.85
HBF Basic Hospital Plus
Basic
$750
$74.15
HCF Hospital Bronze Plus
Bronze
$750
$86.85
Medibank Basic Accident and Ambulance
Basic
$750
$76.70
Peoplecare Bronze Hospital
Bronze
$750
$97.60
Qantas Basic Hospital
Basic
$750
$77.97
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Compare up to 4 providers

*Quotes are based on single individual with less than $90,000 income and living in Sydney.

How much is the Medicare Levy Surcharge?

The dollar cost of the Medicare Levy Surcharge is at least $75 a month for people who earn over $90,000 and don't have private hospital cover. However, it could be much more if you're earning well above $90,000.

The table below shows some examples of different income brackets and how they would be taxed by the Medicare Levy Surcharge.

IncomeMLSMonthly costAnnual cost
$80,0000%$0$0
$95,0001%$79$950
$110,0001.25%$114$1,375
$145,0001.5%$181$2,175

Medicare Levy Surcharge 2021 income thresholds

The table below shows how your annual earnings determine how much extra tax you pay under the Medicare Levy Surcharge:

Annual income
Singles$90K or less$90,001 - $105K$105,001 - $140K$140,001 or more
Couples$180K or less$180,001 - $210K$210,001 - $280K$280,001 or more
Medicare levy surcharge0%1%1.25%1.5%

Note: The family income threshold is increased by $1,500 for each MLS dependent child after the first child.

Find hospital insurance and avoid the MLS

We've added a search function designed to help Aussies who are looking to avoid the MLS. Just click "reducing tax and paying low premiums" when asked what's most important to you.

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