Government rebate and tax purposes

Not holding private hospital cover can (in specific circumstances) have an effect on your tax and the amount you pay to support our public healthcare system. Whilst we all pay 2% out of our incomes (except for low income earners and pensioners) as part of the Medicare Levy, if you’re earning above a certain amount and don’t currently hold hospital cover, you may be getting charged a higher percentage out of your annual income as part of the Medicare Levy Surcharge.

MLS Tiers and threshold:


If you’re a single earning above 90k per year, or a couple/family earning above 180k combined, you’ll be liable to pay an extra amount on top of the 2% Medicare Levy.  For example, if you’re a single person earning above 90 thousand dollars per year, you will need to pay the 2% Medicare Levy, plus an extra 1% of your annual income as part of the Medicare Levy Surcharge if you’re not holding private hospital cover. offers some very cost effective standalone hospital products that (depending on how much you earn and any potential Lifetime Health Cover Loading you may have to pay) can work out cheaper than the extra 1% you will need to pay if you’re earning over 90k. This is definitely applicable to singles earning over 140k for couples/families earning over 280k, as an extra 1.5% of their annual income will most likely work out to be more expensive than the annual cost of our Entry hospital cover.

If you’re concerned that you may need to pay the MLS or will potentially earn more than the threshold this year, give us a call to check out the covers we have available to help you avoid paying any extra once tax time rolls around!

The Rebate during tax time

The government rebate is designed to subsidise the cost of your health insurance based on your annual income.

Here are the current rebate tiers:

As you’ll see in the table above, earning below 90 thousand dollars as a single or 180 thousand as a family entitles you to have 25.059% of the cost of your health insurance subsidised per year. As a single/couple/family moves up the tiers, the rebate becomes smaller until tier 3 entitles customers to a 0% rebate. When signing up to a new health insurer, you must nominate which rebate you wish to claim, based on your projected annual salary for the next financial year.

During tax time, if an individual claims a rebate tier that is incorrect for the amount they’ve earned in the last financial year, they may be liable to pay extra tax once they’ve lodged their return.

For example, if a member claims the base tier rebate of 25.059%, but earns over 90k in that particular financial year, an extra amount will need to be paid by the member to the ATO to correct any overpaid rebate amounts.  

If you’re unsure you’re claiming the rebate, or not claiming the correct amount, drop us a line.