Do you need private health insurance — or is it cheaper to just pay the surcharge? Enter your income and find out.
The Medicare Levy Surcharge is a separate tax on top of the standard 2% Medicare Levy. It only applies if you earn above the threshold and do not hold eligible private hospital insurance.
To avoid the MLS you need hospital cover with an excess of $750 or less (singles) or $1,500 or less (families). Extras-only cover does not count.
The cheapest option to avoid the MLS is Basic hospital cover — typically $900–$1,200 per year before the government rebate. The rebate reduces this by approximately 24.1% for incomes under $105,000 (less at higher incomes, nil at Tier 3).
| Singles income | Family income | MLS rate |
|---|---|---|
| ≤ $105,000 | ≤ $210,000 | 0% — no MLS |
| $105,001 – $123,000 | $210,001 – $246,000 | 1.0% |
| $123,001 – $164,000 | $246,001 – $328,000 | 1.25% |
| $164,001+ | $328,001+ | 1.5% |
| Singles income | Family income | MLS rate |
|---|---|---|
| ≤ $101,000 | ≤ $202,000 | 0% — no MLS |
| $101,001 – $118,000 | $202,001 – $236,000 | 1.0% |
| $118,001 – $158,000 | $236,001 – $316,000 | 1.25% |
| $158,001+ | $316,001+ | 1.5% |
Sources: ATO and privatehealth.gov.au (modified 21 April 2026). 2026–27 thresholds apply from 1 July 2026. Family threshold increases by $1,500 for each dependent child after the first. Rebate rates last adjusted 1 April 2026.