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Find out how much health insurance you need to avoid paying the Medicare Levy Surcharge with Savvy.
Fact checked
The Medicare Levy Surcharge (MLS) is an additional tax imposed on higher-income earners in Australia who don’t have adequate private health insurance coverage. But what is ‘adequate’ health cover, and what is the minimum policy I need to avoid paying the Medicare Levy Surcharge?
Find out how much health cover you need to satisfy Australian Government requirements and avoid paying additional tax here with Savvy. Our informative guide can help you understand the minimum requirements necessary to avoid paying more tax.
The Medicare Levy Surcharge (MLS) is an additional tax on top of the standard Medicare Levy which applies to Australian taxpayers who don’t have an adequate level of private hospital cover and earn above the income threshold of $93,000 (as of the 2023-24 financial year).
To avoid paying the MLS, you need to have adequate hospital cover for 365 days of the financial year in which you are reporting to the tax office. An adequate hospital cover policy is defined as one with an excess of $750 or less for singles, or $1,500 or less for couples or families, per calendar year.
The cover must be from an approved Australian health insurance fund and must also provide benefits for all clinically necessary treatments in a private hospital, including:
Yes – there are some exemptions from the Medicare Levy Surcharge, including:
The MLS is calculated based on a percentage of your taxable income, with rates ranging from 1% to 1.5%.
Here's a table showing the Medicare Levy Surcharge income thresholds for the 2023-24 financial year, based on information provided by the Australian Taxation Office:
| Income Thresholds | Base Tier | Tier 1 | Tier 2 | Tier 3 |
|---|---|---|---|---|
|
Single |
$93,000 or less |
$93,001 – $108,000 |
$108,001 – $144,000 |
$144,001 or more |
|
Family |
$186,000 or less |
$186,001 – $216,000 |
$216,001 – $288,000 |
$288,001 or more |
|
Medicare Levy Surcharge Amount Payable |
0% |
1% |
1.25% |
1.5% |
These thresholds and rates determine whether an individual or family is liable to pay the Medicare Levy Surcharge if they don’t have adequate hospital cover. If an individual or family's income exceeds the base tier threshold, they’ll be subject to the surcharge at the applicable rate based on their income tier.
It's worth noting that the income thresholds for the Medicare Levy Surcharge are adjusted each year, so it's important to check the ATO website for the latest information.
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© Copyright 2024 Quantum Savvy Pty Ltd T/as Savvy. All Rights Reserved.
Quantum Savvy Pty Ltd (ABN 78 660 493 194) trades as Savvy and operates as an Authorised Credit Representative 541339 of Australian Credit Licence 414426 (AFAS Group Pty Ltd, ABN 12 134 138 686). We are one of Australia’s leading financial comparison sites and have been helping Australians make savvy decisions when it comes to their money for over a decade.
We’re partnered with lenders, insurers and other financial institutions who compensate us for business initiated through our website. We earn a commission each time a customer chooses or buys a product advertised on our site, which you can find out more about here, as well as in our credit guide for asset finance. It’s also crucial to read the terms and conditions, Product Disclosure Statement (PDS) or credit guide of our partners before signing up for your chosen product. However, the compensation we receive doesn’t impact the content written and published on our website, as our writing team exercises full editorial independence.
For more information about us and how we conduct our business, you can read our privacy policy and terms of use.