Changes to the Medicare Levy Surcharge Thresholds

Release date: 1 July 2009

If you don't have private hospital cover, the Australian Taxation Office will charge you an extra 1% of your taxable income under the Medicare levy surcharge (MLS). This is in addition to the 1.5% Medicare Levy - which everybody pays.

Importantly, people with a qualifying level of private hospital cover do not have to pay the MLS.

When the Federal Government amended the MLS thresholds in 2008, they also required that they be indexed annually to Average Weekly Earnings. That means that every year on 1 July, a revised threshold level will take effect in line with that index. 

The Australian Taxation Office has advised that the income thresholds for the MLS Surcharge for the 2009-10 income tax year will be as follows:

Additionally, the family threshold will increase by $1500 for each dependant after the first child.

The new income thresholds will be effective from 1 July 2009.

Lifetime Health Cover

It's also extremely important that people who earn under the MLS thresholds understand they may incur additional surcharges if they delay taking out private hospital cover.

This is due to the Federal Government's Lifetime Health Cover, which commences on 30 June each year.

Under this policy, you are charged an extra 2% on top of your regular premium for every year you delay taking out private health insurance after you turn 31 - for a maximum of ten years.