The Medicare levy surcharge (MLS) is imposed on Australian taxpayers who do not have an appropriate level of private hospital insurance and who earn above a certain income. MLS can be 1% – 1.5% of your income for MLS purposes, depending on which tier you fall into, and is in addition to the regular Medicare Levy of 2%.
The purpose of the MLS is to reduce demand on the public Medicare system by encouraging people to get private hospital cover and use the private hospital system.
How is the Medicare Levy Surcharge calculated?
Income for MLS purposes includes taxable income, reportable fringe benefits, total net investment losses, reportable super contributions and exempt foreign employment income.
Singles whose income exceeds $90,000 and families whose income exceeds $180,000 will have to pay MLS if they do not have an appropriate level of private hospital cover for the full year. For further information on MLS income thresholds, refer to the ATO website here.
Is Private Hospital Insurance worth it?
There can certainly be tax savings achieved from taking out private hospital insurance, however cost savings may not be achieved overall. Many factors should be considered when determining if private hospital insurance is right for you.
If you would like assistance with determining if you will have to pay the MLS, contact us today.
Stay tuned for tips on when it’s best to take out private health insurance.