The one thing worth doing the moment your salary crosses $101k
Key takeaways
- If your salary has recently ticked over $101k, it might be time to make the call between paying the MLS or taking out private health cover.
- We ran the numbers to determine which option put you financially ahead.
- What’s next: Decide where you stand with the MLS and browse basic hospital policies today.
The EOFY season is officially upon us, with limited time offers and deals available across everything from gym memberships to appliances.
But for Aussies who’ve recently received a payrise and had their salary tip over $101k, the EOFY involves more than just scoring more than just snagging a discount.
It also means you officially fall within the threshold of the Medicare Levy Surcharge (MLS).
Wait, what’s that?
The MLS is an extra 1% tax on top of your regular Medicare levy, applied to anyone earning over $101,000 who doesn't hold eligible private hospital cover.
And on a $101,000 income, that's $1,010 a year.
The good news is that there is an easy way to avoid paying the MLS: purchasing a basic hospital-only health insurance policy.
Basic hospital cover is the most stripped-back tier of private health insurance and exists largely for exactly this reason. It's not meant to get you a private room or elective surgery, but to help to tick the government's box and exempt you from the surcharge.
How much you could save with private health insurance
The cheapest basic hospital policies start from around $80 a month or $960 a year.
When you compare that to a $1,010 MLS bill, taking out cover is actually cheaper by around $50 a year.
While $50 a year isn’t exactly a massive financial drain, it’s important to think about what you're getting for your money.
On the one hand, you can pay the surcharge and walk away with nothing, or you take out basic cover and lock in cover for some treatments.
Not to mention if your income grows, the gap between your MLS bill and the cost of cover widens every year.
So if you’re keen to start browsing policies, why not start with some of the offers below?
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