Guide to Medicare levy

Medicare levy surcharge

Individuals and families on incomes above the Medicare levy surcharge (MLS) thresholds, who do not have an appropriate level of private patient hospital cover, pay MLS for any period during the year that they did not have this cover.

The MLS is in addition to the 1.5% Medicare levy. In 2011-12, we calculate MLS at the rate of 1% of:

your taxable income
your total reportable fringe benefits, and
any amount on which family trust distribution tax has been paid.

From 1 July 2012, in conjunction with income testing of the private health insurance rebate, the rate of Medicare levy surcharge for individuals and families without private patient hospital cover may be increased depending on your level of income.

For more information, see Changes to private health insurance rebate and Medicare levy surcharge.

If you have to pay the surcharge it will be included with the Medicare levy and shown as one amount on your notice of assessment called Medicare levy and surcharges.

If you want to work out the Medicare levy surcharge refer to our Comprehensive tax calculator.

For assistance completing the Medicare levy surcharge question on your tax return, see M2 - Medicare levy surcharge

When don't you have to pay the surcharge?

You do not have to pay MLS if you and all your dependants (including your spouse):

were in a Medicare levy exemption category for the whole of the income year, or
had an appropriate level of private patient hospital cover.

When do you have to pay the surcharge?

You may have to pay MLS for any period during the year that you or any of your dependants did not have an appropriate level of private patient hospital cover for the whole income year and your income for MLS purposes was above a certain amount.

Appropriate level of private patient hospital cover

An appropriate level of private patient hospital cover is cover provided by an insurance policy issued by a registered health insurer for some or all hospital treatment provided in an Australian hospital or day hospital facility which has an excess of:

$500 or less (for a policy covering only one person), or
$1,000 or less (for a policy covering more than one person).

Family situation

Whether you have to pay MLS depends on your family circumstances - for example, the income for MLS purposes thresholds are higher if you have dependent children.

Income for MLS purposes

Whether you have to pay MLS depends on your income for surcharge purposes. This is referred to as your income for MLS purposes and is the sum of your:

taxable income
reportable fringe benefits
total net investment losses
reportable super contributions
any amount on which family trust distribution tax has been paid
exempt foreign employment income

If you are aged 55-59 years old, this is reduced by any taxed element of a super lump sum (other than a death benefit) which you received that does not exceed your low rate cap.

Each of these terms has a specific meaning.

To work out your income for Medicare levy surcharge purposes, refer to our Income for (Medicare levy) surcharge purposes calculator.

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Sections within Medicare levy surcharge

Last Modified: Monday, 25 March 2013