Image source: Pixabay
Medicare Levy Surcharge (MLS) is a levy paid by Australian taxpayers without a private hospital cover and who earn above a certain income level. The MLS was put in place to encourage individuals with relatively higher income levels to carry private hospital cover to reduce the burden on the public Medicare system.
Now that you know what MLS is, let us look at its purpose, who has to pay it, thresholds, and everything else there is to know about the Medicare Levy Surcharge.
Do I have to pay MLS?
If you make more than $90k as a single person or more than $180k as a couple, Australian law requires you to pay the MLS. However, if you have a private hospital cover, you are exempt from paying the MLS. The good news is that the money paid as MLS annually can be sufficient or even exceed the amount you need to buy a basic private hospital cover.
If you intend to take a private health insurance cover and are unsure where to start, a local health insurance comparison site like iSelect can help. iSelect is free to use and enables you to compare the best plans from the leading insurance providers so you can make an informed decision when choosing your health policy.
Medical levy surcharge thresholds
The threshold for MLS is $90k for singles, and $180k, meaning anything above that will attract a surcharge. According to the Australian Tax Offices, an income of $90k to 105k for singles and $180k to 210k for couples attracts an MLS rate of 1.0%.
For singles earning between $105,001-140k and a couple earning between $210,001-280k, the MLS rate is 1.25%. Finally, for singles earning more than $140,001 and couples making more than $280,001, the MLS charge is at a rate of 1.5% of their taxable income. Regardless of which surcharge tier you fall in, you may have to pay an extra 2% Medicare Levy.
Some private health insurance covers aren’t exempt from MLS.
If you intend to take a private hospital insurance cover to avoid paying the MLS, you must be sure that you take the right policy. This is because only insurance policies from registered Australian insurance providers are accepted.
Some health insurance policies that won’t qualify you from MLS exemption include:
- Extra covers that are not part of a hospital cover
- Cover from foreign insurers
- Policies offered to foreigners
Who is exempt from MLS?
You may be exempt from paying a part of or all the Medicare Levy Surcharge under certain circumstances that include:
- Your income is below the required threshold
- You carry a private hospital insurance
- You serve in the Australian defense forces (this qualifies you for half or total exemption depending on your circumstances).
- You are a blind pensioner.
Why take a private hospital cover?
Besides helping you avoid paying the MLS, taking a private hospital cover comes with its benefits. First, after your waiting period is over, your insurer covers part of the treatment costs listed in your contract with the option of being treated in a private hospital.
Additionally, private health insurance allows you to choose where to be treated, when to undergo a procedure, and who to treat you subject to availability.
Medicare Levy Surcharge is an important cover for any Australian taxpayer. Besides providing health insurance, it helps reduce the amount of tax you pay, especially if your income level is above the threshold.
But if MLS does not sound like a thing for you, you can still choose to get a private hospital insurance cover from the many different health insurers in Australia.
Senior Outlook Today is your go-to source for information, inspiration, and connection as you navigate the later years of life. Our team of experts and writers is dedicated to providing relevant and engaging content for seniors, covering topics such as health and wellness, finances, technology and travel.