What is the Medicare Levy Surcharge

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

Medicare levy surcharge

The Medicare Levy Surcharge (MLS) is a tax applied to high income earners who don’t have an appropriate level of hospital insurance and earn above a certain threshold. The tax is designed to reduce the strain on the public system by encouraging people to go to private hospitals instead.

How does the Medicare levy surcharge work?

To calculate your MLS, the Australian Tax Office (ATO) uses your income for MLS purposes. Your income for MLS purposes is different from your regular taxable income.

If you have a partner, the ATO will combine both of your incomes for MLS purposes.

Depending on your income for MLS purposes, if you don’t have hospital insurance, you could pay between 1% - 1.5% tax.

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

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%

Does the Medicare Levy Surcharge apply to me?

Below is an overview of common circumstances where the MLS would and wouldn’t apply*:

The MLS applies to you if you don’t have an appropriate level of hospital cover and you are:

  • a single person with an income for MLS purposes that is greater than the income threshold; or
  • a couple or family whose combined income for MLS purposes is greater than the income threshold.

The MLS doesn’t apply to you if:

  • your income for MLS purposes is below the threshold; or
  • as a couple or family, your income for MLS purposes is below the threshold; or
  • your income for MLS purposes is greater than the threshold but you have an appropriate level of hospital insurance.

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

How to avoid Medicare Levy Surcharge?

If the MLS applies to you, or will apply to you, you need to get an appropriate level of hospital cover to avoid the MLS. You will only be exempt from the MLS if you buy hospital insurance. If you only buy extras insurance, you’ll still have to pay the MLS.

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

couple-checking-phone

Looking for hospital cover? Get a quote in minutes.

Compare our hospital and extras insurance products. We have affordable health cover options that may suit your needs and budget.

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.

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

$
Loading...

by taking out
Young Singles Saver Hospital

More information Get a quote
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

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.

At HBF, we’re here for our members when they need us most

Experience you can trust

We've got over 80 years experience helping our members navigate health insurance and the healthcare system.

We’re not-for-profit

We’re one of the largest not-for-profit health funds in Australia and with no shareholders to pay, we focus on giving more back to our members.

We’re flexible

Mix and match our hospital and extras products to create cover that’s right for you.