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An introduction to the Medicare Levy Surcharge

13 July 2011 - 5:56pm

There's been a lot of talk in the news lately about the Medicare Levy Surcharge (MLS) and quite frankly, it can be a little confusing at times, especially if you're not entirely sure what it means.

So what is it?

The MLS is an extra tax on Australian taxpayers who do not have private hospital cover and earn over $80,000 ($160,000 for couples).

It is designed to encourage people to take out private health cover in order to ease the strain on the public health system.

If you earn over $80,000 the government believes that you can afford private health cover.

Those who earn less, and are therefore more reliant on the public hospital system, are exempt.

To avoid paying the MLS, you need to have private health insurance and an approved hospital cover policy.

How much your surcharge amounts to is calculated on one per cent of your taxable income in addition to the Medicare Levy (which is already paid by most taxpayers).

For example, if you earn $80,000 and don't have private hospital cover, you will be paying an additional $800 come tax time.

You can avoid paying it simply by taking out private health cover that offers you more tailored health care than the public system would.