Private Health Insurance and the Medicare Levy Surcharge
What is the Medicare Levy Surcharge?
The Medicare Levy Surcharge (MLS) is an additional 1% on top of the Medicare Levy.
Why was it introduced?
Its introduction in 1997 was intended to encourage more Australians to take out private hospital insurance. This strategy has assisted with increasing the number of persons with private health insurance from 30.5% in 1998, to 44.7% of the population.
What are the Thresholds?
You will have to pay the Medicare Levy Surcharge if you and all of your dependants do not have appropriate private hospital insurance and:
- You are a single person without a dependant child or children and you have a taxable income greater than $73,000.
- You are a member of a family and the combined taxable income of you and your spouse is greater than $146,000, (with an extra $1,500 allowance for each additional child after the first).
How can I avoid the surcharge?
If you are a single with a taxable income greater than $73,000 or a couple/family with a combined taxable income greater than $143,000 you can avoid paying the MLS simply by purchasing private hospital insurance.
What's in it for me?
Persons without private health insurance pay an average surcharge of around $600. But despite paying more, you are not entitled to any extra benefits - you're still only covered for the basics offered by Medicare. In fact, in some circumstances the surcharge could amount to more than the cost of basic health cover. You will pay the surcharge for every day you delay taking out CUA Health hospital cover.
More information about the MLS is available on the Australian Taxation Office website or their special help line on 132861.
