This appeared earlier today!
Medicare levy surcharge payers almost quadruple in six years
17 August, 2025
More Australians are paying extra tax through the Medicare levy surcharge, potentially wasting their money.
The latest Australian Taxation Office figures show a sharp rise in taxpayers hit by the surcharge, which is between 1 and 1.5 per cent extra tax on their income above a certain threshold if they do not have private hospital insurance.
It can be cheaper for singles and families to buy private hospital cover, although experts say the lowest-cost policies offer very little value.
Rising wages have meant the Medicare levy surcharge now kicks in at a level below the nation’s average full-time wage of $102,632, and the new ATO data shows 768,537 individuals paid a surcharge averaging $1318 in the 2022-23 financial year.
That was an annual increase of 25 per cent, while the number of payers has almost quadrupled in six years, from 196,807 in 2017.
For 2025-26, a Medicare levy of 1 per cent is payable by singles earning above $101,000 a year and couples earning above $202,000, and rises to 1.5 per cent for individuals and couples on more than $158,000 and $316,000, respectively. Families with children have slightly higher thresholds.
Hospital cover is needed to avoid the Medicare levy surcharge. Picture: iStock
Tribeca Financial chief executive Ryan Watson said Australians’ average incomes had increased dramatically over the past six years.
“This puts a lot of people above the surcharge threshold, thus a lot more people are duty-bound to pay it,” he said.
Mr Watson said people should do some research to understand if they were paying the surcharge.
“We suggest all of our clients have private health insurance for a number of reasons, not least to avoid paying another government levy or surcharge.”
H&R Block director of tax communications Mark Chapman said he suspected more people were choosing to pay the surcharge because “the cost of health insurance is so expensive”.
“The issue with hospital cover is although it might be sufficient to avoid the Medicare levy surcharge, it might not be sufficient to provide a level of cover that you actually expect,” he said.
Research shows basic hospital cover – the minimum to avoid the tax – starts at about $100 a month, but for higher-level “silver” hospital cover, average monthly costs are about $300-$400 for families and $160 for singles.
Mr Chapman said health fund members might be horrified to discover the long list of exclusions on basic hospital policies, and some “are not worth the paper it’s written on”.
Government figures show about 12.3 million Australians have private hospital cover.
Compare the Market economic director David Koch said people could be stung by the Medicare levy surcharge without knowing.
“Even when your salary does go up and you’re bumped over the threshold, your employer probably isn’t going to let you know … for a lot of people, the first time they’ll hear about the Medicare levy surcharge is when they start their tax return.”
Compare the Market makes money by referring to customers to partnered health funds.
“You pay the MLS every day during a financial year that you don’t hold private hospital cover,” Mr Koch said.
“That means you can’t just wait until tax time or the very last minute to take out cover to avoid the tax – if you want to avoid MLS entirely, you must cover for each day of the financial year.”
To avoid the surcharge, for singles, appropriate hospital cover must have an excess of $750 or less, while for couples the excess must be $1500 or less, comparison website iSelect’s spokeswoman Sophie Ryan said. Like Compare the Market, iSelect is paid by the private health insurance providers it refers customers to.
“In some cases, Aussies mistakenly believe extras-only policies exempt them from the MLS,” she said. “Many may be caught out because they assume extras-only cover is enough to avoid the surcharge, which it’s not.”
Analysis by iSelect found the average monthly premium for a basic hospital-only policy was $98.36. “There may be a small cost difference between paying the additional tax or taking out a level of hospital cover which may provide significant benefit should you experience a health issue in the future,” Ms Ryan said.
Here is the link:
To me this is a decision we all have to make (how much etc.) and then keep and eye on to make sure it is not going up unnoticed, and we are getting value for money! What you need to pay varies throughout life and your coverage needs to be adjusted to suit. Well worth seeking advice if unsure...
David.
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