The Medicare Levy Surcharge (MLS) is a surcharge (additional tax) on individuals or families who don’t have eligible private hospital cover AND earn above $77,000 for individuals or $154,000 for families.
The surcharge is calculated at 1% of your taxable income. It is in addition to the Medicare Levy of 1.5%, which is paid by most Australian taxpayers. The MLS is imposed on individuals earning over the threshold who don’t have an appropriate level of private hospital insurance.
Who pays it?
The people that may have to pay the Medicare Levy Surcharge are those individuals, families or dependants of those people that don’t have eligible cover and are:
- a single person without dependent children with an annual taxable income greater than $77,000 (including any reportable fringe benefits of $1,000 or more); or
- a family, couple or single parent with a combined taxable income greater than $154,000 (including any reportable fringe benefits of $1,000 or more). The family income threshold increases by $1,500 for each dependent child, after the first child.
How do I avoid paying it?
If you're earning under the thresholds you don't have to pay the surcharge.
If you're earning over the thresholds, you can avoid it by taking out GMHBA's private hospital cover. If you have eligible hospital cover not only will you avoid paying the MLS, you and your family will also be covered in a private hospital in the event that you are admitted.
Don't wait until tax time
For further information about the Surcharge and whether it applies to you, contact the Australian Taxation Office, or consult a tax professional.