Medicare Levy Surcharge – Post July 1 2013

The Medicare Levy Surcharge (MLS) applies to income earners who earn over the MLS threshold and do not have hospital cover.

Prior to 1 July 2012, the MLS was applied at a rate of 1% of annual taxable income. The Australian Government passed legislation to make changes to the MLS in 2012. The changes included increasing the MLS surcharge rates and income testing the MLS against new income thresholds.

What are the MLS income thresholds?

This table shows the 2017-2018 income thresholds set by the Government.

Medicare Levy Surcharge
NO CHANGETIER 1TIER 2TIER 3
SinglesLess than $90,000$90,001–$105,000$105,001–$140,000$140,001+
Couples/Families/Single Parent FamiliesLess than $180,000$180,001–$210,000$210,001–$280,000$280,001+

What will I be charged in the 2017 – 2018 financial year?

This table shows the MLS you’ll be charged by the Government if you, your spouse or your dependent children don’t have hospital cover.

Medicare Levy Surcharge
NO CHANGETIER 1TIER 2TIER 3
All ages0%1%1.25%1.5%
Singles0%$900–$1,050$1,312–$1,750$2,100+
Couples/Families/Single Parent Families0%$1,800–$2,100$2,625–$3,500$4,200+

The threshold increases by $1,500 for each dependent child after the first. Single parents and couples with dependent children are also subject to the family thresholds.

Calculating the surcharge

For example, if you’re single and your taxable income is $91,000 in the 2016–2017 financial year, you will incur an $910 Medicare Levy Surcharge (MLS) bill at tax time (1% of your annual income).

For singles, the MLS increases to 1.25% if you earn over $105,000 and 1.5% if you earn over $140,000.

So for many higher income earners, it’s worth taking out hospital cover rather than paying the MLS.

Which hospital cover will exempt me?

By taking out hospital cover you will be exempt from paying the surcharge for every day of the financial year that you have eligible cover.

Your hospital cover needs to have an excess of:

  • $500 or less for singles, per calendar year
  • $1,000 or less for couples/families, per calendar year

Take a look at the range of hospital covers that will exempt you from paying the surcharge.

Which portion of my income will determine my surcharge?

It’ll be determined by your income for MLS purposes. This includes your taxable income, fringe benefits, super contributions minus any net investment losses. If you have a spouse, your combined income will be used. Visit the Australian Taxation Office for a full overview.

What’s the definition of a dependent child?

For calculating your Medicare Levy Surcharge (MLS) a dependent child is:

  • Your child under 21; or
  • Your child who is a full-time student between 21 and 25

Means testing FAQs