I have private hospital cover, do I have to pay the Medicare levy surcharge?

Are you confused about how the Medicare Levy Surcharge works? This article explains who the MLS applies to and the recent changes to the cost. 

The Medicare Levy Surcharge (MLS) Income Threshold has gone up for the first time since 2015. For the 2023/2024 year, the following Income Thresholds will apply.

For single individuals:

• You will not pay the MLS if your income is nil up to $93,000 (previously $90,000).
• A 1% surcharge applies if your income falls between $93,001 and $108,000.
• For incomes between $108,001 and $144,000, the surcharge is 1.25%.
• If your income exceeds $144,001, you will face a 1.5% surcharge.

For couples:

• Couples won’t be subject to the surcharge if their combined income is nil up to $186,000 (previously $180,000).
• A 1% surcharge applies to combined incomes between $186,001 and $216,000.
• For incomes between $216,001 and $288,000, the surcharge is 1.25%.
• If your combined income exceeds $288,001, you’ll face a 1.5% surcharge.

Keep in mind that the Threshold increases by $1,560 for each MLS dependent child after the first child.

Key Questions

Below are a few points to clarify questions that have come up during Tax season.

1. Extras are not Private Hospital Cover.
2. You must have private hospital cover for the full 365 days (or 366 in leap years) to avoid the surcharge.
3. If you are a couple, both need to be covered for Private Hospital for the full 365 days (or 366)
4. If you are single with a dependent child, you will need to have the child on the Policy for the full 365 days (or 366).
5. If you pay Child Support, you are classed as having a dependent and the child also needs to be either on your Policy or the parent they live with Policy.
6. Stepchildren and adopted children are counted as Dependents, but foster children are not.
7. A dependent child is any child under 21 or any child who is a full-time student under 25 (where they are living under your roof or you are paying child support)
8. The income used to calculate the Surcharge includes Salary Sacrifice Super, deductible Super Contributions, Reportable Fringe Benefits, and any Rental loss, with child support payments deducted.
9. If you claim the Government Rebate and your Taxable Income is above $93,000 for single or $186,000 for couples, you will receive an excess Tax Bill. The Government Rebate drops from 24.608% to $16.405% when you go over the Threshold so the excess rebate claimed will be added to your Tax Bill.

Medicare Thresholds

The Medicare Levy Thresholds for 2024 have stayed the same. If your Income is $24,276 to $30,345 for a single or $40,939 – $51,174 for family, the Taxpayer will get a Medicare Levy reduction. Additionally, if you have Dependent children, that Threshold goes up by $3,760 per dependent child so put your kids in your return. Note that Medicare Levy reductions are means-tested for dependent children, unlike the Medicare Levy Surcharge.

What now?

Do not let the Medicare Levy Surcharge catch you off guard. Our team of experienced Accountants specialises in navigating the intricacies of tax and healthcare regulations. We will review your specific situation, ensure you’re taking advantage of every possible exemption, and help you minimise your tax liability.  Contact our Accountants today to schedule a consultation.

Disclaimer:

The information contained in this article is for general informational purposes only and is not intended to provide legal advice or substitute for the advice of a professional. This information does not consider your personal circumstances and may not reflect the most current legal developments. Should you need advice, please contact our firm for targeted information relating to personal your situation. 

Greenhalgh Pickard’s Accountants