Medicare Levy Surcharge 2020

Medicare Levy Surcharge 2020 - Fair Health Care Alliance

Medicare Levy is the 1% tax that all the Australian citizens’ pay on their taxable income, in order to support Medicare and the public health care system of the country. The Medical Levy Surcharge (MLS) is the additional charge that an Australian is obligated to pay, if his income surpasses certain taxable income thresholds in the financial year 2019-20.

If you hold a private hospital cover, a part or the entire amount payable towards MLS can be exempted. In addition, if you have the optimum level of private hospital cover, you are also entitled to receive a private health insurance rebate from the government.

What is Medical Levy Surcharge?

While the government is offering rebates in favor of the private health insurance premiums paid by its citizens, it is also taxing the high income earning Australians an addition of 1-1.5% on their taxable income towards MLS. MLS is different from the general Medicare levy that every Australian is obliged to pay compulsorily.

MLS is an additional surcharge that the high income earners pay along with the general Medicare levy. This initiative was undertaken by the Australian government to encourage their citizens to switch to private hospital cover which is affordable by this income group, while the lower income group can be comfortably covered by the public health system. This relaxes the pressure on the public health system, while more citizens engage the services of private doctors and hospitals for their treatment.

Income Thresholds for MLS

MLS can be calculated on the basis of your single or combined gross annual income coming into the family. The basic threshold starts at $90,000 by a single earner or $180,000 earned by the couple annually. As per the tier of income that you earn, you are charged MLS of 1% on $90,000, 1.25% on $105,000 and 1.5% on $140,000 or above.

Despite these thresholds set by the government, some of the Australians falling in the low income bracket also purchase private hospital insurance on their own. There are a lot of factors also that come into play such as if the parent is single, the MLS differs. It is best to check with your financial advisor or accountant on how much MLS you are entitled to pay on your taxable income. However, MLS can be partially or totally avoided if you have invested in a private hospital cover policy.

Universal Health Care System

Medicare is the platform that is providing access to the Australians into a universal health care system. Its main funding rises from the Medicare Levy that all the earning citizens of Australia are entitled to pay. An additional MLS is also payable by the taxpayers if they do not have adequate private health insurance cover. MLS is calculated on the basis of a person’s taxable income, the fringe benefits that he is entitled to receive, total net investment losses, reportable super contributions and any amount on which family trust distribution tax is being paid. There has not been much change in Medicare Levy 2019 Vs 2020. You can know more about this by checking up with iSelect.