For many Australians, tax time is simply about lodging a return and hoping for a refund. But if your income is above certain thresholds, you might be paying thousands of dollars in additional tax each year without realising it. The reason? The Medicare Levy Surcharge (MLS).
Understanding the Medicare Levy Surcharge
The MLS is designed to encourage higher-income earners to take out private hospital cover. If you earn above:
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$93,000 as a single, or
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$186,000 as a family,
and you don’t hold an eligible private health insurance policy, you’ll be charged between 1% and 1.5% of your taxable income.
This doesn’t replace the standard Medicare Levy of 2% (which most taxpayers already pay). It’s an extra tax on top.
The Real Cost of Doing Nothing
Let’s look at an example.
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Sarah earns $120,000 a year and does not have private hospital cover.
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Because her income is above the MLS threshold, she pays an additional 1.5% tax.
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That’s $1,800 per year going straight to the ATO.
Now, compare this to the cost of a basic private hospital insurance policy. In many cases, a compliant policy costs less than the surcharge. Which means Sarah could save money, while also gaining hospital cover that she can actually use.
Why This Matters Beyond Tax
Private health insurance is not just about reducing your tax bill. It also gives you:
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Greater choice of doctors and hospitals
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Shorter waiting times for elective procedures
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The ability to plan for unexpected medical needs
So instead of paying the government more in tax, you could be redirecting the same money into your own health and future wellbeing.
Steps You Can Take Today
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Check your income bracket — if you’re above the MLS threshold, calculate how much extra tax you’re paying.
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Compare policies vs. surcharge — see if the cost of an insurance policy is lower than your MLS.
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Review your cover regularly — the cheapest policy may not always give you the best value, so balance cost and benefits carefully.
The Bottom Line
The Medicare Levy Surcharge catches many Australians by surprise, but it doesn’t have to. With the right financial advice, you can legally reduce your tax bill and secure valuable private hospital cover at the same time.
At SW Global Finance, we help clients optimise their financial strategies — from tax planning to insurance, superannuation, and mortgage solutions. The goal is simple: to help you keep more of your income and put it to work for your future.
Call/WhatsApp: +84 96 275 92 07
Email: support@sw-globalfinance.com.au