The Medicare Levy Surcharge (MLS) is a levy paid by Australian tax payers who do not have private hospital cover and who earn above a certain income. 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 Medicare system.

The surcharge covers you and your dependents.  Your dependents include:

• your spouse;
• any of your children who are under 21 years of age; or
• any of your student children who are under 25 years of age.

For more information about who is considered a dependant for MLS purposes, you can refer to the ATO's Medicare Levy Surcharge page.

The surcharge is calculated at the rate of 1% to 1.5% of your income for Medicare Levy Surcharge purposes. It is in addition to the Medicare Levy of 2%, which is paid by most Australian taxpayers. To work out your annual income for MLS and Rebate purposes, you can refer to the Australian Taxation Office's Private Health Insurance Rebate Calculator or contact the ATO directly.

The table below reflects the income thresholds in place from 2015–16 to 2022–23. These remained unchanged for eight years.

Note: Single parents and couples (including de facto couples) are subject to family tiers. The family income threshold is increased by $1,500 for each dependent child after the first child (dependent child is defined for MLS and also applicable for the Government Rebate).

The income thresholds change from 1 July 2023, outlined in the table below.

Note: Single parents and couples (including de facto couples) are subject to family tiers. The family income threshold is increased by $1,500 for each dependent child after the first child (dependent child is defined for MLS and also applicable for the Government Rebate).

From 1 July 2023, you have to pay the surcharge if you are:

• a single person with an annual taxable income for MLS purposes greater than $93,000; or
• a family or couple with a combined taxable income for MLS purposes greater than $186,000. 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 insurer.

For additional information about the Medicare Levy Surcharge, you can visit www.privatehealth.gov.au or the ATO website.

Most Australians with private health insurance currently receive a rebate from the Australian Government to help cover the cost of their premiums. The private health insurance rebate is income tested.

The rebate applies to hospital, general treatment and ambulance policies. It does not apply to overseas visitors health cover. 

To see a table of current rebate amounts click here.

Two very good online resources for additional information about the Australian Government Private Health Insurance Rebate include www.privatehealth.gov.au or the ATO website.