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Medicare levy surcharge

The Medicare levy surcharge is an added tax for Australians who earn over $93K. You can avoid it with a $17-a-week hospital policy.

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.

Medicare Levy Surcharge Calculator

Medicare Levy Surcharge Calculator
Your results
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.

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 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 rateSingle incomeCouples income
0%$0 - $93k$0 - $186k
1%$93k - $108k$186k - $216k
1.25%$108k - $144k$216k - $288k
1.5%$144k+$288k+

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

IncomeAnnual MLS costSample hospital cover costPotential 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.

1 - 25 of 30
Name Product Treatments Price Apply
  • Rehabilitation
  • Joint reconstructions
  • Dental surgery
  • Hernia and appendix
  • Eye excluding cataracts
  • Pain management
  • Gynaecology
  • Lung and chest
$77.54
per month
  • Rehabilitation
  • Joint reconstructions
  • Dental surgery
  • Hernia and appendix
  • Eye excluding cataracts
  • Pain management
  • Gynaecology
  • Lung and chest
$77.92
per month
  • Rehabilitation
  • Joint reconstructions
  • Dental surgery
  • Hernia and appendix
  • Eye excluding cataracts
  • Pain management
  • Gynaecology
  • Lung and chest
$79.52
per month
Frank Entry Hospital (Basic+)
Basic Plus$750 excess
  • Rehabilitation
  • Joint reconstructions
  • Dental surgery
  • Hernia and appendix
  • Eye excluding cataracts
  • Pain management
  • Gynaecology
  • Lung and chest
  • +5 other treatments covered
$80.07
per month
starter basic
Basic$750 excess
  • Rehabilitation
  • Joint reconstructions
  • Dental surgery
  • Hernia and appendix
  • Eye excluding cataracts
  • Pain management
  • Gynaecology
  • Lung and chest
$80.33
per month
  • Rehabilitation
  • Joint reconstructions
  • Dental surgery
  • Hernia and appendix
  • Eye excluding cataracts
  • Pain management
  • Gynaecology
  • Lung and chest
$81.50
per month
Basic Plus Hospital $750
Basic Plus$750 excess
  • Rehabilitation
  • Joint reconstructions
  • Dental surgery
  • Hernia and appendix
  • Eye excluding cataracts
  • Pain management
  • Gynaecology
  • Lung and chest
  • +6 other treatments covered
$82.21
per month
Simple Hospital (Basic Plus)
Basic Plus$750 excess
  • Rehabilitation
  • Joint reconstructions
  • Dental surgery
  • Hernia and appendix
  • Eye excluding cataracts
  • Pain management
  • Gynaecology
  • Lung and chest
  • +4 other treatments covered
$82.48
per month
  • Rehabilitation
  • Joint reconstructions
  • Dental surgery
  • Hernia and appendix
  • Eye excluding cataracts
  • Pain management
  • Gynaecology
  • Lung and chest
  • +5 other treatments covered
$82.74
per month
  • Rehabilitation
  • Joint reconstructions
  • Dental surgery
  • Hernia and appendix
  • Eye excluding cataracts
  • Pain management
  • Gynaecology
  • Lung and chest
$82.78
per month
  • Rehabilitation
  • Joint reconstructions
  • Dental surgery
  • Hernia and appendix
  • Eye excluding cataracts
  • Pain management
  • Gynaecology
  • Lung and chest
$82.79
per month
  • Rehabilitation
  • Joint reconstructions
  • Dental surgery
  • Hernia and appendix
  • Eye excluding cataracts
  • Pain management
  • Gynaecology
  • Lung and chest
  • +8 other treatments covered
$82.86
per month
starter basic
Basic$500 excess
  • Rehabilitation
  • Joint reconstructions
  • Dental surgery
  • Hernia and appendix
  • Eye excluding cataracts
  • Pain management
  • Gynaecology
  • Lung and chest
$83.27
per month
  • Rehabilitation
  • Joint reconstructions
  • Dental surgery
  • Hernia and appendix
  • Eye excluding cataracts
  • Pain management
  • Gynaecology
  • Lung and chest
$83.31
per month
essentials basic plus
Basic Plus$750 excess
  • Rehabilitation
  • Joint reconstructions
  • Dental surgery
  • Hernia and appendix
  • Eye excluding cataracts
  • Pain management
  • Gynaecology
  • Lung and chest
  • +5 other treatments covered
$84.10
per month
Basic Plus Hospital 750
Basic Plus$750 excess
  • Rehabilitation
  • Joint reconstructions
  • Dental surgery
  • Hernia and appendix
  • Eye excluding cataracts
  • Pain management
  • Gynaecology
  • Lung and chest
  • +4 other treatments covered
$85.16
per month
Basic Plus Hospital $750/$1500
Basic Plus$750 excess
  • Rehabilitation
  • Joint reconstructions
  • Dental surgery
  • Hernia and appendix
  • Eye excluding cataracts
  • Pain management
  • Gynaecology
  • Lung and chest
  • +3 other treatments covered
$85.23
per month
  • Rehabilitation
  • Joint reconstructions
  • Dental surgery
  • Hernia and appendix
  • Eye excluding cataracts
  • Pain management
  • Gynaecology
  • Lung and chest
  • +7 other treatments covered
$85.58
per month
Basic Plus Hospital $500
Basic Plus$500 excess
  • Rehabilitation
  • Joint reconstructions
  • Dental surgery
  • Hernia and appendix
  • Eye excluding cataracts
  • Pain management
  • Gynaecology
  • Lung and chest
  • +6 other treatments covered
$85.92
per month
  • Rehabilitation
  • Joint reconstructions
  • Dental surgery
  • Hernia and appendix
  • Eye excluding cataracts
  • Pain management
  • Gynaecology
  • Lung and chest
  • +7 other treatments covered
$86.66
per month
Basic Plus Hospital $500/$1000
Basic Plus$500 excess
  • Rehabilitation
  • Joint reconstructions
  • Dental surgery
  • Hernia and appendix
  • Eye excluding cataracts
  • Pain management
  • Gynaecology
  • Lung and chest
  • +3 other treatments covered
$87.42
per month
  • Rehabilitation
  • Joint reconstructions
  • Dental surgery
  • Hernia and appendix
  • Eye excluding cataracts
  • Pain management
  • Gynaecology
  • Lung and chest
  • +8 other treatments covered
$87.76
per month
  • Rehabilitation
  • Joint reconstructions
  • Dental surgery
  • Hernia and appendix
  • Eye excluding cataracts
  • Pain management
  • Gynaecology
  • Lung and chest
$88.13
per month
  • Rehabilitation
  • Joint reconstructions
  • Dental surgery
  • Hernia and appendix
  • Eye excluding cataracts
  • Pain management
  • Gynaecology
  • Lung and chest
  • +3 other treatments covered
$88.36
per month
  • Rehabilitation
  • Joint reconstructions
  • Dental surgery
  • Hernia and appendix
  • Eye excluding cataracts
  • Pain management
  • Gynaecology
  • Lung and chest
  • +7 other treatments covered
$89.39
per month
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