Medicare Levy Surcharge

The Medicare Levy Surcharge (MLS) is a Federal Government initiative. If your income exceeds certain MLS thresholds and you don't have an appropriate private hospital cover, you may have to pay the MLS.

The MLS is an extra 1% to 1.5% in tax on top of the normal 2% Medicare Levy we all have to pay.

Avoid the MLS with a hospital cover that suits you.

How do I avoid the Medicare Levy Surcharge?

Join any nib hospital cover
before July 1 and maintain it
for the full financial year.

If your income exceeds the thresholds (refer to the table below), you could be up for $900 or more in extra tax if you don't have an appropriate hospital cover.

Any nib hospital cover with an excess of $500 or less for singles, and $1000 or less for couples, families and single-parent families, will help you avoid the surcharge.

If you take out hospital cover part-way through a financial year, you will only avoid the surcharge for the period you held suitable hospital cover.

*QLD & TAS residents are covered by State Ambulance Schemes

How does it affect me and my tax?

If you're earning over $90,000 as a single or over $180,000 as a couple, family or single-parent family, you could be affected by the Medicare Levy Surcharge if you don't hold private hospital cover for the full financial year.

Annual Taxable Income

Medicare Levy Surcharge

$90,000 or less

0.0% (no extra tax)

$90,001-$105,000

1.0%

$105,001-$140,000

1.25%

$140,001 or more

1.5%

Above table: Thresholds for individuals for the 2016/2017 financial year.

Combined Annual Taxable Income

Medicare Levy Surcharge

$180,000 or less

0.0% (no extra tax)

$180,001-$210,000

1.0%

$210,001-$280,000

1.25%

$280,001 or more

1.5%

Above table: Thresholds for couples, families and single parent families (based on your combined incomes)

Why do I need to do something by July 1?

If you take out hospital cover part-way through the financial year you'll only avoid the surcharge for the period you held suitable hospital cover. Hop to it so you're covered from July 1 for the whole financial year - you'll be taxed for any days that you're without cover.

What if I am switching between health funds?

If you're changing to a new health fund and earning above the threshold, you'll need to make sure you don't have any days where you're without cover. When you switch to nib, we'll make the break-up call to your previous insurer for you so we can make sure everything lines up smoothly.

What if I suspend my cover?

If you suspend your cover and are still earning above the Government's Medicare Levy Surcharge threshold, you may be hit with the surcharge for that period of time.

What if I'm in Australia on a working visa?

The Medicare Levy Surcharge also applies to some overseas visitors living and working in Australia. Call nib on 13 16 42 for more information or visit the IMAN Australian Health Plans Website.

More information

The Australian Tax Office has specific rules regarding who is covered under the Medicare Levy Surcharge and how to define your income for Medicare Levy Surcharge purposes. For information get in touch with your accountant, financial planner or visit The Australian Tax Office.

Avoid the MLS with a hospital cover that suits you.