Health insurance explained

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

This means you could have to pay an additional tax of between 1% - 1.5% for every day you don't have an appropriate level of hospital cover and you are:

• a single with an income for MLS purposes that is greater than $101,000; or
• a couple or family whose combined income for MLS purposes is greater than $202,000.

To reduce or avoid the MLS, you (and everyone in your family) must hold an appropriate level of hospital cover. If you or your family is only covered for extras, you will have to pay MLS if your income is over the thresholds noted above.

When you do get hospital cover, keep in mind that 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 a full financial year. Learn more about MLS.

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.