What is the Medicare Levy Surcharge?
The Medicare Levy Surcharge (MLS) is an additional tax that is paid by Australian taxpayers who don’t have private hospital cover, and who earn above a certain income.
This is on top of the 2% Medicare Levy that most Australian taxpayers pay. The MLS 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 Medicare system.
Which MLS tier are you in?
The MLS tiers were updated on 1 July 2023, as seen in the table below.
| Threshold | Base Tier | Tier 1 | Tier 2 | Tier 3 |
|---|---|---|---|---|
| Single | $97,000 or less | $97,001-$113,000 | $113,001-$151,000 | $151,001 or more |
| Family | $194,000 or less | $194,001-$226,000 | $226,001-$302,000 | $302,001 or more |
| Medicare Levy Surcharge |
0% | 1% | 1.25% | 1.5% |
Example 1 - singles
Kate is a single person without dependents and with a taxable income of $108,000 for the 2024-25 financial year. She does not have private hospital cover.
Since Kate's income falls between $97,001 and $113,000, the threshold for singles, she would be required to pay the Medicare Levy Surcharge (MLS) at a rate of 1% of her income.
This translates to an MLS amount of:
$108,000 (income) x 1% (MLS rate) = $1,080
Example 2 – couples
Jack and Jill are a married couple living in Australia without dependents and with a combined taxable income of $200,000 for the 2023-24 financial year. They do not hold private hospital cover.
With their combined income exceeding $194,001, the threshold for couples without dependents, Jack and Jill would be required to pay the Medicare Levy Surcharge (MLS).
The rate for their income bracket is 1%.
This translates to an MLS amount of:
$200,000 (income) x 1% (MLS rate) = $2,000
How do you avoid paying the surcharge?
If you as an individual, couple or family want to avoid paying the MLS, you’ll need to purchase private hospital cover like our Gold Hospital cover.
For more information, visit privatehealth.gov.au’s Medicare Levy Surcharge page.