Medicare Levy Surcharge - Partner Has Insurance but I Don't


I got insurance.

Hi all,

I am usually pretty competent at sorting out my finances, however I'm struggling to find information on the Medicare Levy Surcharge for this situation.

My partner and I both started new jobs this year, so our FY19-20 combined income will be below the cutoff for the Medicare Levy Surcharge, however our FY20-21 will be slightly over the threshold.

My partner has always had (and will continue to have) private health insurance, however I do not.

I cannot find any clear information on ATO's site for the Medicare Levy Surcharge, or their income tax calculators. My understanding is that when submitting our tax as a family, if the income is over the threshold we will pay 1% unless we have private health insurance (i.e. if a couple's income is $180,000+ with no insurance they will pay $1,800+ in surcharge). If you have insurance less than the full year you will pay proportionate to the period without health insurance (i.e. insurance for 6 months = 50% of year so $900 surcharge).

However I cannot find any information on what the impact is if only one partner of a couple holds private health insurance and the other does not. Would the surchage be halved?

If anyone encountered this situation before, or can point out something I'm missing, I would love to hear your thoughts.

I don't particularly feel I need private health insurance, but if it is going to cost us $1800+ my best option is to find a cover.

Thanks for any help!


  • submitting our tax as a family,

    Why are you doing your tax returns as a family? Do you have children?

    • +2

      Is there a choice? I put myself down as married when I was filling in the forms and it asked me about my partners income already

    • Previously we have submitted our tax returns independently, however we recently got engaged this FY. I assumed this would mean we would need to report as a family (due to defacto or something), but I'll be honest I haven't properly researched if this is the case. It sounds like I should have a look at this properly, as we don't both earn over the surcharge threshold for individual tax returns.

  • Not an accountant. I think it's calculated separately eg wife paid the surcharge (until we got married) and if you earn below, then you don't pay. At least that's what happened with my wife and I until we found out that she wouldn't need private health insurance any more as our income was below $180,000.

  • Its based individually so you will be hit with the surcharge,as even though its family income, tax is individual.

    • Does this mean that if my partner didn't have private health insurance, we would both get charged the Surchage based on our combined income ($1800 each), even if we both earn $90,000 each and would have only pay $900 each if not reporting as a family?

      It definitely seems I should look further into if we will need to report as a family, and if we do I should get insurance.

      • Yes you would bothe be charged.

        • Thanks Timblakely, looks like my best option is to get insurance!

          • -1

            @mattthematt: if you want to put your dollars into pockets of investors rather than back into the system :D

  • What's your question OP?

    • The question is will my partner having health insurance reduce the amount we have to pay in surcharge, or do we both nead to have private insurance to avoid paying surchage? Is it an all or nothing situation?

      • +2

        Yes you will need to pay the MLS unless you earn less than $22,398.

        The base income threshold (under which you are not liable to pay the MLS) is $90,000 for singles and $180,000 for families. However, you do not have to pay
        the MLS if your family income exceeds the threshold but your own income for MLS purposes was $22,398 or less.

        • I think it finally just clicked.

          So if we as a family earn over $180,000, we are subject to Medicare Levy Surcharge.

          Then now that we know we are due for the surcharge it is calculated individually.


          If Person 1 earns $110,000, but has health insurance, they pay no surcharge.

          If Person 2 earns $70,000 with NO health insurance, they pay 1%, so $700.

          If this is correct, thank you for the help. I'm still not getting it, please say so.

          • +1

            @mattthematt: yes that's my understanding too..

            btw if your FY20-21 will be slightly over the threshold, wouldn't it be easy to reduce to below the threshold? *work-related deductions, donations, etc.

            • @PissLUR: Thank you!

              My partner earns inconsistent penalties rates on top of her salary so it can be difficult to predict how far over we would be. If we were too far over it might be difficult to reduce below the threshold and have just been better to get insurance. However that does sound like somethin I should look into! Maybe purchasing additional rec leave could help keep us under!

              • +1

                @mattthematt: A thing to be aware about is taxable income for MLS purposes is different from the normal taxable income. Personal contributions, salary sacrifice amounts, additional employer super contributions etc are not allowed as deductions - they have to be added back to taxable income. I.e you cannot simply make large personal contributions to reduce taxable income to avoid MLS.

                from the ATO site:
                "Your income for MLS purposes is your taxable income (excluding any assessable First home super saver released amount) plus the following if they apply to you:
                - reportable fringe benefits (shown on your payment summary or income statement)
                - reportable superannuation contributions (which is the sum of both your reportable employer superannuation contributions and your deductible personal superannuation contributions)
                - your net investment loss (which is the amount by which your financial investment deductions exceeded your financial investment income, plus the amount by which your rental property deductions exceeded your rental property income)
                - the amount on which family trust distribution tax has been paid."

  • +1

    Generally, if your partner has only taken out an individual policy for themselves then I would think that only they would be exempt from MLS and you’d need to pay. If it’s a joint cover then you’d both be exempt provided it’s an appropriate level of cover. However, if your family income is over $180k, but your own income for MLS purposes was under $22,398 then you wouldn’t need to pay MLS.

  • You will both pay MLS.

    As everyone in ya family must have appropriate level of cover if you are over the threshold.

    So get that PHI for 2021

    • Thanks, grabbed some cover last night :)

      • Don't you still have to pay MLS because it's calculated pro rata to the time you were not covered in that financial year?

        So reading though the comments, do you need to pay MLS for yourself and your partner? Or just yourself?

        • +1

          Hi @anzgamer,

          As we will only be earning enough to pay MLS this financial year just started, taking out cover last night means we will have insurance for the full financial year. So now neither of us will have to pay MLS.

          If I had not taken out cover (I.e. only my partner is covered for current FY) according to the parent comment of this chain, we both would have had to pay MLS as all of the family must be covered by insurance.

          Both our incomes are over the $22,398 threshold mentioned in Chookt's comment above.

  • Break up with them, problem solved. Sometimes I think people just make their lives difficult on purpose.

    • But if we broke up, I wouldn't have got fresh chocolate slice for a midday snack!!!
      (I'm far too lazy to bake snacks)

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