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Introduction

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General Information

Surcharges and Incentives

About Private Health Insurance

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Questions You Should Ask

Common Terms

Insurer Contact Details

Medicare levy surcharge (MLS)

The Medicare Levy Surcharge has been in place since 1 July 1997 with the aim of encouraging people to take out private hospital cover, and where possible, use the private system to reduce the demand on the public system.

The Medicare Levy Surcharge is an additional 1% surcharge of taxable income imposed on those earning above a certain income, who are eligible for Medicare but who do not have an appropriate level of hospital insurance with a registered health insurer. The Medicare Levy Surcharge is in addition to the normal 1.5% Medicare Levy.

Who must pay the Medicare levy surcharge

You have to pay the surcharge if you earn above the income threshold and you do not have a private hospital insurance policy with a low front-end deductible or excess.

The thresholds are:

• a single person with an annual taxable income greater than $50,000; or

• a family or couple with a combined taxable income greater than $100,000. The family income threshold increases by $1,500 for each dependent child after the first.

A low front end deductible or excess is defined as:

• equal to or less than $500 per annum for single policies or

• $1,000 per annum for families/couples.

You must also pay the Medicare Levy 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 a low front-end deductible hospital insurance policy with a registered health insurer.

* Generally, you will know if you are a prescribed person. If you need more information on prescribed persons, call the Australian Taxation Office (ATO) Helpline on 13 28 61.

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Your dependents in relation to the Medicare Levy Surcharge

Providing you contribute to their maintenance (including child support payments), your dependents are:

• your spouse

• any of yor children who are under 16 years of age, or

• any of your student children who are under 25 years of age.

You do not have to pay the surcharge if:

• your taxable income is below the income threshold

• your taxable income is over the income threshold and you have hospital insurance for you and all of your dependents with a low front-end deductible with a registered health insurer

• you are normally exempt from the Medicare Levy because you are a prescribed person and you do not have any dependents. Your taxable income is not considered in this case

• you are a high income earner who had already purchased a hospital insurance product with a front-end deductible or excess greater than $500 for singles or $1,000 for families/couples, on or before 24 May 2000. In this case you will continue to be exempt from the surcharge while you maintain continuous membership to the same hospital table.

Notes about the surcharge

To be exempt from the surcharge, your hospital cover must be held with a private health insurer that covers some or all of the fees and charges for a stay in hospital. Information about whether your health insurer is registered can be obtained from the Private Health Insurance Administration Council (PHIAC) by phoning their office on 02 6215 7900.

General treatment (previously known as ancillary or extras) cover does not constitute private patient hospital cover for the purposes of the surcharge.

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Low Front-End Deductible or excess

Your front end deductible or excess must be equal to or less than $500 per annum for single policies or $1,000 per annum for families/couples to be considered a low front end deductible or excess.

For more information

For more information about the Medicare Levy Surcharge, contact the Australian Taxation Office (ATO) by:

• calling the ATO Helpline
  13 28 61

• visiting the ATO Internet Home Page
  www.ato.gov.au

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Private Health Insurance Administration Council

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Last modified: 20 May, 2008