Important note: The information provided on this website does not constitute financial advice or tax advice. If you require financial or tax advice about your specific situation, you should contact your financial advisor or a tax expert.
The Medicare Levy Surcharge is an additional surcharge of taxable income of between 1% and 1.5% imposed on those on higher incomes, who are eligible for Medicare but who do not have an appropriate level of hospital insurance with a registered health fund. The Medicare Levy Surcharge is in addition to the normal 2% Medicare Levy.
On 1 July 2012, the Medicare levy surcharge became income tested against income tier thresholds. There is no change to how the Medicare levy surcharge applies and any exemptions that may apply to your circumstances. The only change has been the introduction of new income thresholds and Medicare levy surcharge rates. However, from 1 July 2012, the Medicare levy surcharge rate you are charged may increase depending on your income tier.
You may have to pay Medicare Levy Surcharge for any period during the income year that you, your spouse, or any of your dependants:
Your "income for surcharge purposes" is used to determine if you are liable to pay the Medicare levy surcharge. If you have a spouse, your combined income for surcharge purposes will be used.
The Australian Taxation Office (ATO) has advised that the income thresholds for surcharge purposes will be as follows from 1 July 2023:
Income for MLS purposes
Medicare Levy Surcharge
Thresholds from 1 July 2023 - 30 June 2024
Singles - $0 - $93,000
Families - $0 - $186,000
Singles - $93,001 - $108,000
Families - $186,001 - $216,000
Singles - $108,001 - $144,000
Families - $216,001 - $288,000
Singles - $144,001 +
Families - $288,001 +
|NOTE: The family income threshold increases by $1500 for each dependent child after the first|
Note: These thresholds are tiered and will be indexed in future to keep pace with changes to average wages. Please refer back to this site for current thresholds.
So singles with an MLS liability can expect to pay an extra tax of at least $930 pa and families will pay $1860 pa or more.
You need to know your income for Medicare levy surcharge purposes to work out whether you have to pay the Medicare levy surcharge.
The Australian Tax Office have an Online Calculator to help you work out your income for Medicare Levy surcharge purposes.
Broadly, income for MLS purposes is your taxable income plus the following if they apply to you:
If you were 55 to 59 years old this amount is then reduced by the taxed element amount of superannuation lump sums, other than a death benefit, received that do not exceed your low rate cap.
Income for surcharge purposes is only used to determine whether you are liable to pay. It is not used to calculate how much surcharge you pay.
The Medicare levy surcharge is only levied on the total of your taxable income for surcharge purposes.
Taxable income for Medicare levy surcharge (MLS) purposes – is the total of:
If you need more information, call the Australian Taxation Office (ATO) Helpline on 13 28 61.
Providing you contribute to their maintenance and they are Australian residents, your dependents (irrespective of their incomes) are your:
You do not have to pay the Surcharge if:
You have to pay the Surcharge if you are a high-income earner and you do not have a private hospital insurance policy with a low front-end deductible.
A Low(or ) is defined as equal to or less than:
Therefore, your front end deductible (also known as an excess) must be equal to or less than $500 per annum for single policies or $1,000 per annum for families/couples to be considered a.
You do not have to pay the surcharge for the full year if you had private patient health cover for part of the year and:
However, you must pay the surcharge for the number of days you or any of your dependants did not have private patient hospital cover.
To be exempt from the Surcharge, yourmust be held with a registered health benefits organisation (health fund) that covers some or all of the fees and charges for a stay in hospital and has a sufficiently low . Dental/Ancillary (Extras) Cover alone does not constitute hospital cover for the purposes of the Surcharge.
HICA can assist you to source and maintain appropriate health cover that qualifies for Medicare Levy Surcharge exemption. HICA provides ongoing service and will monitor your policy to ensure that it remains appropriate to your requirements.
Complete a free health insurance assessment or call HICA on 1300 44 2201 to discuss your options.
For more information about the Medicare Levy Surcharge, contact the Australian Taxation Office (ATO) by: