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.
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 |
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+ |
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.
| 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.
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.
Why compare health insurance with Finder?
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