How to Avoid the Expensive Medicare Levy Surcharge for 2024
The Medicare Levy Surcharge (MLS) is a charge for medium to high-income earners to pay in addition to the Medicare Levy.
Similar to the Medicare Levy, the surcharge helps pay for the public health system encourages those who can afford it to take out a private health cover with insurance providers. This means they can avoid paying the surcharge and can go to a private hospital when required to reduce the pressure on public medical services. This article details what it is and how to avoid it.
Medicare Levy Surcharge – Who pays for it?
Since private health insurance can be expensive, the government only applies the surcharge if you meet the following criteria:
- You are single and earn over $90,000 a year or a family who earn a combined income above $180,000, and;
- You do not have private hospital cover.
How is the Medicare Levy Surcharge Calculated?
The surcharge is calculated as a simple percentage of your annual income. In general, the more you earn the higher the Medicare Levy Surcharge.
| Threshold | Base Tier | Tier 1 | Tier 2 | Tier 3 |
|---|---|---|---|---|
| Single Threshold | $93,000 or less | $93,001 - $108,000 | $108,001 - $144,000 | $144,001 or more |
| Family Threshold | $186,000 or less | $186,001 - $216,000 | $216,001 - $288,000 | $288,001 or more |
| Medicare Levy Surcharge | 0% | 1% | 1.25% | 1.5% |
The family income threshold is increased by $1,500 for each MLS dependant child after the first child.
Avoiding The Medicare Levy Surcharge
If you earn above $93,000 as an individual or above $186,000 as a couple or family, you can avoid the surcharge by simply taking out a private hospital cover.
At the time of doing your tax return, your hospital cover details get added which indicates to the ATO you’re not liable for the surcharge. It’s important to remember that only having private hospital cover will exempt you from the surcharge, having extras only will still expose you to the surcharge if your or your family income surpasses the thresholds.
Is Taking Out Private Health Insurance the Right Option for You?
Deciding if private health cover is the best decision for you can be complicated. If your income is high, more often the private health insurance will cost less than the surcharge.
For instance, if you are single with an income of $100,000, you will end up with $1,000 surcharge. Whereas private health insurance covers can start as little as $800 per year. An added benefit is often these hospital covers with a few extras which results in more money in your pocket.
If you’re unsure about whether you will have to pay the Medicare Levy Surcharge or not, contact Link Advisors and we can guide you on the best way ahead.
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