Calculate Your Medicare Levy Surcharge
Medicare is a universal health system which is funded by taxpayers and provides a basic level of care to all Australians.
Taxpayers pay the Medicare levy which is 1.5% of their taxable income to fund the Medicare system.
What is the Medicare Levy Surcharge (MLS)?
The Medicare Levy Surcharge is an extra levy paid by Australian taxpayers who don’t have Private Hospital Cover and are considered by Government to be high income earners.
The Medicare Levy Surcharge is in addition to the 1.5% Medicare levy (which is paid by most Australian taxpayers) and aims to encourage individuals to take out Private Hospital Cover. The Medicare Levy Surcharge currently applies to those Australian taxpayers who do not have private hospital cover and who earn above $84,000 for individuals and $168,000 for couples or families, increasing by $1,500 for each additional child after the first.
The surcharge aims to encourage individuals to take out private hospital cover, and where possible, to use the private system to reduce the demand on the public system.
The Medicare Levy Surcharge is imposed on individuals and couples or families earning over the threshold who do not have an appropriate level of hospital insurance.
In 2012-13, the thresholds are:
- a single person with an annual taxable income for MLS purposes greater than $84,000 in the 2012-13 financial year; or
- a family or couple with a combined taxable income for MLS purposes greater than $168,000 in the 2012-13 financial year. The family income threshold increases by $1,500 for each dependent child after the first;
- and do not have an approved hospital cover with a registered health fund.
You must also pay the surcharge if you are a prescribed person with a taxable income over the threshold, and have any dependents who are not prescribed persons and who are not covered by an approved health cover policy as described above.
Changes to Rebate and Medicare Levy Surcharge thresholds from 1 July 2012
From 1 July 2012, the 30% rebate and Medicare Levy Surcharge are both income tested against the following income tier thresholds:
The thresholds increase annually, based on growth in Average Weekly Ordinary Time Earnings (AWOTE). Single parents and couples (including de facto couples) are subject to the family tiers. For families with children, the thresholds are increased by $1,500 for each child after the first. Singles earning $84,000 or less and families earning $168,000 or less will continue to receive the existing 30, 35 and 40 per cent rebate, depending on their age.
Note: These thresholds will be indexed in future to keep pace with changes to average wages. Please refer back to this site to see the current thresholds.
To avoid the surcharge, you must have an approved hospital cover policy with a registered health insurer with a low front-end deductible or excess equal to or less than $500 per annum for single policies, or $1,000 per annum for families/couples.
Further Medicare Levy Surcharge (MLS) information is available from the Australian Taxation Office (ATO) website