Medicare Levy Surcharge Calculator
Not sure if you’ll need to pay the MLS come tax time? Give us a call and one of our health insurance experts can explain all you need to know about the MLS.
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What is the Medicare Levy Surcharge?
The MLS is an extra tax charged by the Australian Government via your annual income tax return. The purpose of the surcharge is to take pressure off the public healthcare system by encouraging high-income earners to take out hospital cover.
The Medicare Levy Surcharge (MLS) is owed on top of the regular Medicare levy, but only applies to high-income earners who don’t have a private hospital cover policy. If you meet the following Medicare Levy Surcharge thresholds, without sufficient private health cover, you will likely need to pay the MLS:
- Singles who earn more than $97,000
- Couples with a combined income of more than $194,000 (including families and single parents).
If the above applies to you, you’ll owe the MLS for every day you didn’t hold appropriate private patient hospital cover in the full financial year. So, if you get insured from the full month of December, you may still owe MLS from July to November.
Private hospital cover with an excess of no more than $750 for singles or $1,500 for couples and families can help you avoid the MLS.
Taking out an extras cover policy as a standalone product will not help you avoid paying the MLS.
Frequently asked questions about the MLS
What is the Medicare levy and how is it different from the Medicare Levy Surcharge?
The MLS differs from the Medicare levy in that the latter is a 2% tax paid by most taxpayers to fund the public healthcare system. For those on higher incomes, the MLS is payable in addition to the Medicare levy.
The MLS can be easily avoided by taking out hospital cover, but if you haven’t held it for the entire tax year, you’ll probably have to pay the MLS for each day you didn’t have cover.
Do I have to pay the Medicare Levy Surcharge?
If you earn less than a specified amount, you won’t have to pay the MLS. If you earn above the income threshold and don’t hold an appropriate private hospital policy or qualify for an exemption, you will pay the MLS for every day of the tax year you aren’t insured.
The Australian Taxation Office (ATO) uses a different definition of income for MLS purposes than you might be used to.1 Unlike your regular taxable income, ‘income for MLS purposes’ is your taxable income (not including any assessable First Home Super Saver released amount) plus any reportable fringe benefits and super contributions, minus your net property and investment losses.
This can make it difficult to know exactly how much MLS you’ll have to pay. If you’re unsure what your income for MLS purposes could be and whether you would meet the MLS income threshold or not or if you’re right on the line, it might be worth considering private hospital insurance just to be safe.
Do I qualify for Medicare Levy Surcharge exemptions?
If you’re exempt from the Medicare levy, you could also be exempt from the MLS. Some exemptions to the Medicare levy and MLS include:
- Blind pensioners
- Those receiving sickness allowances from Centrelink
- Australian Defence Force or Veterans’ Affairs Repatriation Health Card (Gold Card) holders
- Those ineligible for Medicare benefits altogether
- Non-Australian residents.
If any of the above conditions apply, you may be exempt from the Medicare levy and MLS, but we recommend you visit the ATO’s website to make sure.
Is it worth taking out private health insurance to avoid the MLS?
Taking out hospital cover will not only help you avoid the MLS, but it also helps pay for your treatment as a private inpatient, allows you to choose your available doctor, have a private room (if available), and avoid public waiting lists.
Australia’s public hospital waiting lists have continued to increase over recent years, with the percentage of patients waiting more than a year for elective surgeries growing from 2.1% to 9.6% between 2019 and 2023.2 This is partially due to the COVID-19 pandemic, although there was also steady growth over the years prior.
Meet our health insurance expert, Steven Spicer
As the Executive General Manager of Health, Life and Energy, Steven Spicer is a strong believer in the benefits of private cover and knows just how valuable the peace of mind that comes with cover can be. He is passionate about demystifying the health insurance industry and advocates for the benefits of comparison when it comes to saving money on your premiums.
Want to know more about health insurance?
1 Australian Taxation Office: Medicare Levy Surcharge, Last updated February 2024.
2 Australian Institute of Health and Welfare. Elective surgery waiting times 2022-23. Accessed February 2024.
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