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.
Basic hospital cover is generally the lowest-cost way to meet the requirement; premiums vary by insurer, state, age and policy (compare at privatehealth.gov.au). The Government rebate on premiums is 24.118% for people under 65 at the base income tier (1 April 2026 to 31 March 2027); it reduces at higher incomes and is 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.