Medicare is a universal health system which is funded by taxpayers and provides a basic level of care to all Australians. Taxpayers pay the Medicare levy which is 2% of their taxable income to fund the Medicare system.

What is the Medicare Levy Surcharge (MLS)?

The Medicare Levy Surcharge is an extra 1% to 1.5% levy paid by Australian taxpayers who don’t have Private Hospital Cover and are considered by the Government to be high income earners.

The Medicare Levy Surcharge is in addition to the 2% Medicare levy (which is paid by most Australian taxpayers) and aims to encourage individuals to take out Private Hospital Cover. The Medicare Levy Surcharge currently applies to those Australian taxpayers who do not have private hospital cover and who earn above $93,000 for individuals and $186,000 for couples or families, increasing by $1,500 for each additional child after the first.

The surcharge aims to encourage individuals to take out private hospital cover, and where possible, to use the private system to reduce the demand on the public system.

Currently, you have to pay the surcharge if you are:

    • a single person with an annual taxable income for MLS purposes greater than $88,000 in the 2013-14 financial year or greater than $90,000 in the 2014–15 to 2022-23 financial years or greater than $93,000 in the 2023-24 financial year; or
    • a family or couple with a combined taxable income for MLS purposes greater than $176,000 in the 2013-14 financial year or greater than $180,000 in the 2014–15 to 2022-23 financial years or greater than $186,000 in the 2023-24 financial year. The family income threshold increases by $1,500 for each dependent child after the first;
    • and do not have an approved hospital cover with a registered health fund.

You must also pay the surcharge if you are a prescribed person with a taxable income over the threshold, and have any dependents who are not prescribed persons and who are not covered by an approved health cover policy as described above.

Medicare Levy Surcharge Income Thresholds and Rates applicable from 1 July 2023 onwards

The table below shows the income thresholds and MLS rates set by the Australian Government for the 2023-24 financial year.

Singles $93,000 or less $93,001 – $108,000 $108,001 – $144,000 $144,001 or more
Families $186,000 or less $186,001 – $216,000 $216,001 – $288,000 $288,001 or more
Base Tier Tier 1 Tier 2 Tier 3

MEDICARE LEVY SURCHARGE

All ages 0.0% 1.0% 1.25% 1.5%

Notes:

  • The thresholds increase annually, based on growth in Average Weekly Ordinary Time Earnings (AWOTE). Single parents and couples (including de facto couples) are subject to the family tiers. For families with children, the thresholds are increased by $1,500 for each child after the first.
  • Note: These thresholds will be indexed in future to keep pace with changes to average wages. Please refer back to this site to see the current thresholds.
  • For the period of 1 July 2015 to 30 June 2023, the income tiers were paused at the 2014-15 threshold levels. For the thresholds applicable from 2010-11 to 2022-23, go to the ATO website.

To avoid the Medicare Levy Surcharge, you must have an approved hospital cover policy with a registered health insurer with a low front-end deductible or excess of $750 or less for singles, and $1,500 or less for couples, families and single-parent families.

Further Medicare Levy Surcharge (MLS) information is available from the Australian Taxation Office (ATO) website