What is the Medicare Levy Surcharge?

Find out how the Medicare Levy Surcharge works and whether it will affect your tax return.

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What is the Medicare Levy Surcharge?

The Medicare Levy Surcharge (MLS) is a tax applied to people who don’t have an appropriate level of hospital cover and:

  • earn over $90,000 as a single
  • earn over $180,000 as a couple/family*

The tax is designed to encourage Australians to get hospital cover and use private hospitals. This reduces demand on the public health system.

You can avoid this tax by getting hospital cover. It's good to note that the cost of the Medicare Levy Surcharge often exceeds the cost of getting hospital cover.

How much is the Medicare levy surcharge?

It can start at about $900 per year for singles earning just over $90,000.

It can increase to over $2,000 per year for singles earning over $140,000.

Use the calculator below to estimate how much you might pay.

To calculate your MLS, the Australian Tax Office (ATO) uses a special definition of income (called ‘income for MLS purposes’). Your ‘income for MLS purposes’ is different from your regular taxable income.

Medicare Levy Surcharge Calculator

Change the details below to reflect your situation and estimate how much you'll pay for the MLS:

I'm with and we lodge our tax I have We have child kids and my taxable income is and my taxable income is and our combined income is $Go
$56,000 $108,000 $160,000 $212,000 $264,000
Estimated Surcharge
$ 1,000
Your estimated surcharge is
$1,000

Calculate your rebate
30%

Age of the oldest adult on the policy

“It's nice to know I can get hospital cover for less than it costs to pay the surcharge.”

You could save

$
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by taking out
Young Singles Saver Hospital

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Change the details below to reflect your situation I'm with and we lodge our tax I have We have child kids and my taxable income is and my taxable income is and our combined income is $
$56,000 $108,000 $160,000 $212,000 $264,000
Estimated Surcharge
$ 1,000

What type of HBF cover do you currently have?

Great news!

You already have hospital cover, so you don’t have to pay the surcharge.


Estimated tax you’re saving
$1,000
Is your current cover right for you?

“ Last year I got a pay rise and it was a bit of a shock to find out I'd have to pay nearly $1,000 extra tax. It's nice to know I can get hospital cover for less than it costs to pay the surcharge. ”

Your estimated surcharge is
$1,000

Calculate your rebate
30%

Age of the oldest adult on the policy

“It's nice to know I can get hospital cover for less than it costs to pay the surcharge.”

You could save

$
Loading...

by taking out
Young Singles Saver Hospital

More information Let us call you

You could avoid this tax by getting hospital cover.

This is a guide only. You should speak to a financial advisor or registered tax agent who will be able to take into account your income and personal situation, including any changes that occur during a tax year.

How to avoid the Medicare Levy Surcharge

You can avoid the MLS by getting an appropriate level of hospital cover.

All of HBF's hospital cover options qualify as an appropriate level of hospital cover.

If you only buy extras cover, you’ll still have to pay the MLS.

When you do get hospital cover, you’ll still pay the MLS for the part of the year you weren’t covered. You’ll only avoid the MLS completely if you’ve held hospital cover for the full financial year.

There are also special cases where you’d be exempt from paying the MLS, which you can read about on the ATO’s website.

Medicare Levy Surcharge thresholds*

Income thresholds
 
Base tier
Tier 1
Tier 2
Tier 3
Single
$90,000 or less
$90,001 – $105,000
$105,001 –$140,000
$140,001 or more
Family
$180,000 or less
$180,001 – $210,000
$210,001 – $280,000
$280,001 or more
Medicare levy surcharge
Medicare levy surcharge
0%
1%
1.25%
1.5%

Learn more about how the MLS is calculated on the ATO website.

* Single parents and couples (including de facto couples) are subject to family tiers. For families with children, the thresholds are increased by $1,500 for each child after the first.

The income thresholds are indexed and will remain the same to 30 June 2023.

What's the difference between the Medicare Levy and the MLS?

There’s often confusion between the Medicare Levy and the MLS – they are two different taxes. The Medicare Levy is a tax that helps fund the public health care system. Most Australian taxpayers pay this tax. The MLS is an extra tax on top of the Medicare Levy, which only applies to high income earners who don’t have hospital insurance.

For more information on how the MLS works, head to the Private Health Insurance Ombudsman.

 

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