If you’ve just finished your tax return and spotted a surprise charge called the Medicare Levy Surcharge (MLS) — yeah, we get it. That one hurts.
But the good news? There’s a way to stop it happening again, and it could be cheaper than you think.
What is the Medicare Levy Surcharge?
The MLS is an extra 1–1.5% levy for Aussies who earn over $101,000 (or $202,000 for couples/families) and don’t hold eligible hospital cover. It’s separate from the standard Medicare Levy, and it’s designed to encourage higher-income earners to take up private hospital insurance.
Why did I get charged?
It usually happens if:
- You earned over the income threshold, and
- You didn’t have hospital cover for the full financial year
Even if you had cover for part of the year, you’ll still pay a pro-rated surcharge for the months you weren’t covered.
What if I join after 1 July?
If you’ve already been hit with the Medicare Levy Surcharge this year — we get it, it stings. But the good news? You don’t have to go through it again next year.
✅ You’ve missed the 1 July cut-off for this financial year, but...
✅ You’ll only pay the surcharge for the months you weren’t covered
✅ The sooner you get cover, the less you’ll pay next tax time
✅ You’re setting yourself up to avoid the surcharge entirely in your next return — as long as you stay covered
So, while you can’t change what’s already happened, getting cover now means you’re one step ahead for the next year.
What kind of difference does it make?
Let’s say you earn $110,000:
- The full surcharge is 1% = $1,100 if you had no cover
- But if you join from 1 August? You’ll only be charged for one month = ~$91.67
- Join in September? That creeps up to ~$183.30 — and so on
Moral of the story? The earlier you join, the more you save. Your future self (and tax return) will thank you.
What kind of cover do I need?
The government only requires you to have basic hospital cover to avoid the surcharge.
No extras. No fancy add-ons. Just hospital.
At see-u, that's only around $18.12 per week* .
Want to sort it now?
We’ve made it easy. Get a quote in under a minute and lock in your hospital cover before the next tax year starts to creep up.
*Applies to Starter Hospital cover for a single in NSW, with age-based discount and income over $101,000. Includes a 16.192% Australian Government rebate on private health insurance.
FAQs
Q: What is the Medicare Levy Surcharge?
A: It’s an extra levy for higher-income earners in Australia who don’t hold eligible private hospital cover. It ranges from 1% to 1.5% of your income.
Q: Who has to pay the Medicare Levy Surcharge?
A: Individuals earning over $101,000, or couples/families earning over $202,000, who don’t have eligible hospital cover during the financial year.
Q: I joined after 1 July — do I still have to pay the surcharge?
A: Yes, but only for the months you weren’t covered. Joining later reduces how much you’ll owe on next year’s return.
Q: What kind of health insurance do I need to avoid the MLS?
A: Any complying hospital cover (like see-u’s Starter Hospital) is enough. Extras aren’t required and extras by themselves don’t help to avoid the surcharge.
Q: Can I get a refund if I take out cover now?
A: No - the surcharge for the past financial year still applies. But you can avoid it for future years if you stay covered.
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