The Medicare Levy Surcharge (MLS) is an additional tax introduced by the Federal Government to encourage individuals to take out private health insurance, and to reduce the load on the public hospital system.
The surcharge is applied to higher income earners that do not have a private health insurance policy that provides an appropriate level of private patient hospital cover. To calculate MLS, the Australian Taxation Office (ATO) bases their calculation on a special definition of income this being “income for MLS purposes”. This is different to your taxable income. For further information on income for MLS purposes please refer to the ATO website.
The Medicare Levy Surcharge (MLS) could be costing you extra at tax time
The MLS income threshold applies from $97,001 for singles and $194,001 for couples and families. For families with children, the threshold increases by $1,500 for each child after the first.
This surcharge is in addition to the standard 2.00% Medicare Levy^ paid by most Australian taxpayers.
However, if you hold a Queensland Country Health Fund hospital cover for a full tax year you may be exempt from the additional surcharge (if applicable), meaning you’ll pay less tax.
How much extra tax could you be paying?
The tables below outlines the income thresholds, applicable Medicare Levy Surcharges and the minimum MLS payments. The minimum MLS payment is a guide only. For MLS information particular to your income and personal circumstances you should speak to a financial advisor or tax agent.
2024-25
Singles
| Single Threshold | Medicare Levy Surcharge | Singles Minimum MLS Payment | |
| Base Tier | $97,000 or less | 0% | $0 |
| Tier 1 | $97,001 - $113,000 | 1% | $970 |
| Tier 2 | $113,001 - $151,000 | 1.25% | $1,412 |
| Tier 3 | $151,001 or more | 1.50% | $2,265 |
Couples/Families
| Family Threshold* | Medicare Levy Surcharge | Couples / Families Minimum MLS Payment | |
| Base Tier | $194,000 or less | 0% | $0 |
| Tier 1 | $194,001 - $226,000 | 1% | $1,940 |
| Tier 2 | $226,001 - $302,000 | 1.25% | $2,825 |
| Tier 3 | $302,001 or more | 1.50% | $4,530 |
* If you have two or more dependent children, the family income threshold is increased by $1,500 for each dependent child after the first child.
How to avoid paying the Medicare Levy surcharge
If your income is above the base tier threshold you can avoid paying the MLS by taking out a private patient hospital cover.
If you only hold hospital cover for part of the year, then you may only have a partial exemption from MLS. You would have to speak to your tax agent or financial adviser for further information.
To find out more contact the friendly staff at Queensland Country Health Fund 1800 813 415 or get a quote today.
More information about the Medicare Levy Surcharge can be found by visiting the Australian Taxation Office’s website, or by calling the ATO Helpline on 13 28 62.
^Medicare Levy
The Medicare levy helps fund some of the costs of Australia's public health system known as Medicare. The Medicare levy is 2% of your taxable income, in addition to the tax you pay on your taxable income. Depending on your and your spouse's circumstances you may get a reduction or exemption from paying the Medicare levy.The Medicare levy is collected from you in the same way as income tax. Generally, the pay as you go amount your employer withholds from your salary or wages includes an amount to cover the Medicare levy. Your actual Medicare levy is calculated by the Australian Taxation Office when you lodge your income tax return.