Medicare Levy Surcharge in Australia.
The Medicare levy surcharge (MLS) was introduced to encourage individuals to take out private hospital cover and reduce demand on the public Medicare system. This should free up Public Medical facilities and reduce waiting times.
The Medicare levy surcharge is in addition to the Medicare levy, and is levied on Australian taxpayers who earn above a certain income, and who do not have an appropriate level of private hospital insurance.
Your income for MLS purposes is the sum of the following items for you (and your spouse, if you have one):
Taxable income + Reportable fringe benefits + Total net investment losses + Reportable super contributions + Exempt foreign employment income + Net income of a trust. (See: Income for medicare levy surcharge purposes)
The Medicare Levy Surcharge can be avoided by having appropriate Private Hospital Insurance.
2024/25 Medicare Levy Surcharge:
Singles
Annual Income:
Up to $ 97,000 – No Surcharge.
$ 97,001 – $113,000 1.0%
$113,001 – $151,000 1.25%
$151,001 or more 1.5%
Couples
Annual Income:
Up to $194,000 – No Surcharge.
$194,001 – $226,000 1.0%
$210,001 – $302,000 1.25%
$302,001 or more 1.5%
The family income threshold is increased by $1,500 for each MLS dependent child after the first child.
A Private Hospital Insurance cover might cost less than the Medicare Levy Surcharge, and could therefore be a better option.
The Medicare Levy Surcharge is calculated for every day for which you do not have private hospital cover within the financial year, so to get the full benefit, you need cover for all 365 days of the year. Getting cover in the last month of the year will not help much. Also, everyone in the immediate family, including all dependent children, must have private hospital cover to avoid having to pay the MLS.
The MLS is in addition to the normal 2% Medicare Levy.
www.ato.gov.au/…/medicare-levy-surcharge-income-thresholds-and-rates
2023/24 Medicare Levy Surcharge:
Singles:
Annual Income:
$0 – $93,000 – No Surcharge.
$ 93,001 – $108,000 1.0%
$108,001 – $144,000 1.25%
$144,001 or more 1.5%
Couples:
Annual Income:
$0 – $186,000 – No Surcharge.
$186,001 – $216,000 1.0%
$216,001 – $288,000 1.25%
$288,001 or more 1.5%
2022/23 Medicare Levy Surcharge:
These income thresholds and MLS rates apply for income years from 2014–15 to 2022–23.
Singles:
Annual Income:
Up to $ 90,000 – No Surcharge.
$ 90,001 – $105,000 1.0%
$105,001 – $140,000 1.25%
$140,001 or more 1.5%
Couples:
Annual Income:
Up to $180,000 – No Surcharge.
$180,001 – $210,000 1.0%
$210,001 – $280,000 1.25%
$280,001 or more 1.5%
2017/2018 Medicare Levy Surcharge Rates.
A single person is not charged the MLS if their MLS calculated income is under $90,000 per year.
If the Family income exceeds $180,000 per year, then anyone in that family earning over $21,655 will pay the MLS.
Medicare Levy Surcharge for Singles
1.00% on incomes between $90,001 – $105,000
1.25% on incomes between $105,001 –$140,000
1.50% on incomes of $140,001 or more
An example of how the MLS works, as shown on the ATO website:
Single Person Taxable Income $90,000 but with $20,000 of reportable fringe benefits and a net investment loss of $7,000.
This gives a total income for Medicare levy surcharge purposes of $117,000, (including the Net Investment Loss) putting the taxpayer in the 1.25% MLS bracket.
The MLS income is calculated at: ($90,000 taxable income + $20,000 reportable fringe benefits, but not the Net Investment Loss) × 1.25% = $1,375.
A Private Hospital Insurance cover may have cost less than the $1,375 Medicare Levy Surcharge, and saved the MLS from being paid.
The Medicare Levy Surcharge is calculated for every day for which you do not have private hospital cover within the financial year, so to get the full benefit, you need cover for all 365 days of the year. Getting cover in the last month of the year will not help much. Also, everyone in the immediate family, including all dependent children, must have private hospital cover to avoid having to pay the MLS.
The MLS is in addition to the normal 2% Medicare Levy.
2012/2013 Medicare Levy Surcharge Rates.
The Medicare Levy Surcharge (MLS) is a charge levied on Australian taxpayers who earn over a certain income threshold, and who do NOT have suitable private hospital cover.
The surcharge, from July 2012 was changed to a variable rate between 1% and 1.5% of taxable income.
The thresholds were:
2012/13 Medicare Levy Surcharge:
Singles
$0 – $84,000 No Surcharge.
$ 84,001 – $97,000 1.0%
$ 97,001 – $130,000 1.25%
$130,001 or more 1.5%
Couples
$0 – $168,000 No Surcharge
$168,001 – $194,000 1.0%
$194,001 – $260,000 1.25%
$260,001 or more 1.5%
2011/12 Medicare Levy Surcharge:
$ 80,000 for Singles
$160,000 for Couples
2010/11 Medicare Levy Surcharge:
$ 77,000 for singles.
$154,000 for couples and families.
2009/10 Medicare Levy Surcharge:
$ 73,000 for singles.
$146,000 for couples and families.
This surcharge is designed to try to reduce the demand on the public system, by persuading people to take out private hospital cover.
Those people holding a suitable Health Insurance, do NOT pay the extra Medicare Levy. For many people it is cheaper to have the Insurance than to pay the levy. It is worth getting a quote.
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