What is the Medicare levy surcharge?

It is an extra tax of 1, 1.25 or 1.5 per cent for people whose income for MLS purposes is above the threshold and who do not hold eligible private hospital cover. It is separate from the ordinary 2 per cent Medicare levy that most taxpayers pay, and it is charged through your tax return.

Is the surcharge charged only on income above the threshold?

No. Once your income is over the threshold the rate applies to your whole income for MLS purposes. A single earning $106,000 pays 1 per cent of $106,000, which is $1,060, not 1 per cent of the $1,000 above the line. That cliff is why people just over a threshold often buy basic cover.

Does extras cover stop the surcharge?

No. Only an eligible private hospital policy counts. The excess must be no more than $750 for a single policy or $1,500 for a family or couples policy. General treatment cover for dental, physio or optical, bought on its own, does nothing to reduce the surcharge.

How does Lifetime Health Cover loading work?

If you do not hold hospital cover by 1 July following your 31st birthday, a loading of 2 per cent is added for every year you are aged over 30 when you finally buy it, up to 70 per cent. The loading is removed once you have held hospital cover for ten continuous years.

Is it worth buying cover just to avoid the surcharge?

It is when the cheapest eligible policy costs less than the surcharge, which this calculator checks. Near the lower threshold the surcharge is often smaller than a policy, so paying it is cheaper. At higher incomes, or when a loading is looming, basic hospital cover usually wins even if you never claim.

What counts as income for MLS purposes?

Taxable income plus reportable fringe benefits, total net investment losses, reportable super contributions and any amount on which family trust distribution tax has been paid. For couples the income of both partners is combined and tested against the family threshold.

Private Health Insurance vs MLS Calculator

Australia· 2026-27

Works out the Medicare levy surcharge you would pay in 2026-27 without private hospital cover, then compares it with the yearly cost of the cheapest eligible policy including any Lifetime Health Cover loading. A single earning $115,000 faces a $1,150 surcharge, so cover under about $96 a month wins.

Enter your values

Single or family

Couples and single parents with dependent children use the family threshold, which is double the single one.

Income for MLS purposes

Taxable income plus reportable fringe benefits, reportable super contributions and net investment losses. Couples enter combined income.

Dependent children

Only counts for families. Each child after the first lifts the family threshold by $1,500.

Cheapest hospital cover per month

The monthly price after the private health insurance rebate, before any Lifetime Health Cover loading.

Your age now

years

Used to estimate Lifetime Health Cover loading if you have never held hospital cover since turning 31.

Have you held hospital cover since age 31?

Buyers taking out hospital cover for the first time after age 31 pay a loading on top of the premium.

Runs in your browser. Nothing you enter is stored or sent anywhere.

Results

Worked example. Edit the values and press Calculate

Medicare levy surcharge without cover

$1,150

Charged on your whole income, not just the part above the threshold.

Income above the surcharge threshold by
$10,000
Your income for surcharge purposes would need to be at or under $105,000 for no surcharge without cover.
Surcharge rate that applies
1.00%
Your surcharge threshold
$105,000
Single threshold.
Lifetime Health Cover loading
0%
No loading on the details entered.
Annual cost of hospital cover
$1,440
Twelve months of premium including any loading.
Cheaper option this year
Pay the surcharge
Difference per year
$290
The surcharge is cheaper than cover by this much.
Break-even monthly premium
$95.83
Any eligible policy priced below this per month costs less than the surcharge.

Why use this calculator

Every year thousands of Australians buy a hospital policy they never use purely to dodge the Medicare levy surcharge, and thousands more pay the surcharge at tax time without realising a cheap policy would have cost less. The answer depends on three things that are easy to get wrong: the surcharge tier your income falls into, whether you are assessed as a single or a family, and whether a Lifetime Health Cover loading will be added to any policy you take out now.

This calculator applies the 2026-27 thresholds straight from the shared tax tables, charges the surcharge on your whole income the way the Australian Taxation Office does, and adds the loading to the premium so the comparison is like for like. It also tells you the most you can pay per month before a policy stops being worth it on tax grounds alone, which is the number you actually need when you open a comparison site.

How to use it

Choose single, or family if you have a partner or dependent children, because the family threshold is double.
Enter your income for MLS purposes, which is the taxable income on your last notice of assessment plus reportable fringe benefits and reportable super contributions shown on your income statement in myGov.
Families enter the number of dependent children, which you can count yourself.
Enter the monthly price of the cheapest hospital policy you have found, taken from the quote on privatehealth.gov.au or an insurer site after the rebate. Enter your age today.
Finally say whether you have held hospital cover since age 31, which your insurer or your own records will confirm.

What each result means

Medicare levy surcharge without cover: The extra tax you would pay for the full year if neither you nor your dependants held an eligible hospital policy.
Income before the surcharge starts: How much more your income for surcharge purposes can rise before the Medicare levy surcharge applies if you have no hospital cover. Crossing the threshold charges the surcharge on your whole income, not just the excess.
Income above the surcharge threshold by: How far your income for surcharge purposes sits above the threshold where the surcharge starts. Below the threshold no surcharge applies, so a small fall in income can remove it entirely.
Surcharge rate that applies: The tier your income falls into: nil, 1, 1.25 or 1.5 per cent, applied to your entire income for MLS purposes.
Your surcharge threshold: The income above which the surcharge starts. Families get double the single figure plus an uplift for each extra child.
Lifetime Health Cover loading: The percentage added to hospital premiums for people who first take out cover after the year they turn 31.
Annual cost of hospital cover: Twelve months of the premium you entered, grossed up for any loading, which is the true yearly price of avoiding the surcharge.
Cheaper option this year: Whichever costs less in cash this financial year: holding the policy or paying the surcharge through your tax return.
Difference per year: How much you save each year by choosing the cheaper option, before any value you place on actually using the cover.
Break-even monthly premium: The highest monthly premium at which an eligible hospital policy still costs less than the surcharge it removes for you.

The formula

Surcharge equals income for MLS purposes multiplied by the MLS rate, where the rate is zero at or below the threshold, then 1, 1.25 or 1.5 per cent across the 2026-27 tiers in src/lib/tax-au.ts. The single base threshold is $105,000; the family threshold is double, plus $1,500 for each dependent child after the first. Lifetime Health Cover loading equals 2 per cent for each year of age over 30 when you first buy cover late, capped at 70 per cent. Annual cover cost equals the monthly premium times twelve times one plus the loading. The break-even premium is the surcharge divided by twelve, divided by one plus the loading.

How this number is used in practice

The surcharge is blunt. Cross the threshold by a single dollar and the rate applies to every dollar you earn, so a single on $106,000 pays $1,060 rather than ten dollars. That is why people just over a threshold should look hard at the cheapest basic hospital policy, which often costs around a hundred dollars a month after the rebate.

Salary sacrificed super and fringe benefits count towards the income test, so a pay rise that is mostly packaged can still push you over the line.

The Lifetime Health Cover loading changes the maths for anyone past 31 who has never held hospital cover. A 40 year old buying their first policy pays 20 per cent more, and the loading stays until they have held cover for ten continuous years. Delaying does not avoid it, because the loading grows by two percentage points each year you wait.

For some people the long run case for cover is the loading avoided in their fifties and sixties, when they are more likely to claim, rather than the surcharge avoided today.

Worked examples

Single on $115,000, $120 a month policy, already held cover since 31
The surcharge is $1,150 at 1 per cent, the policy costs $1,440 a year, so paying the surcharge is $290 cheaper. Any policy under $95.83 a month would win.
Single on $150,000, $110 a month policy, first cover at 40
The surcharge is $1,875 at 1.25 per cent. A 20 per cent loading lifts the policy to $1,584 a year, so cover still saves $291.
Family with three children on $240,000 combined, $250 a month policy
The family threshold rises to $213,000, the surcharge is $2,400 at 1 per cent, and the $3,000 a year policy costs $600 more than paying it.

When people use it

Deciding before 30 June whether a basic hospital policy is cheaper than the surcharge
Checking whether a pay rise or bonus pushes you over the surcharge threshold
Working out the loading you would pay if you buy your first hospital policy now
Comparing the family threshold with two single thresholds after moving in with a partner
Setting a maximum premium before you start using a comparison site

Tips

Only hospital cover removes the surcharge. Extras only policies do not count, however much they cost.
Single policies need an excess of $750 or less and family policies $1,500 or less to count for surcharge purposes, so check the excess before you buy.
The surcharge is worked out day by day, so cover held for half the year removes half the surcharge.
Salary packaging and reportable super contributions are added back for the income test, so a packaged salary can still attract the surcharge.
If you are over 31 and have never held cover, compare the loading you would pay now with the loading in five years, because it rises two points a year.
Everyone listed as a dependant must be covered for a family to avoid the surcharge, so a partner on a separate single policy still counts.

What it assumes, and where it stops being accurate

Thresholds and rates are the 2026-27 figures in the shared tax tables, verified against the Australian Taxation Office in September 2026.
The premium you enter is already net of the private health insurance rebate. The rebate does not apply to the loading portion, so the real loaded cost can be slightly higher.
Cover is assumed to be held for the full year. Part year cover reduces the surcharge day by day.
Lifetime Health Cover loading is estimated from your age today. Your exact loading depends on your base day, any permitted days without cover and past policies.
Couples are assessed on combined income, and each partner is assumed to pay the surcharge on their own share of that income.
The comparison is purely financial and places no value on shorter waits or choice of doctor in a private hospital.

Terms used on this page

Medicare levy surcharge (MLS): An extra tax on higher income earners who do not hold eligible private hospital cover, charged at 1 to 1.5 per cent of income.
Income for MLS purposes: Taxable income plus reportable fringe benefits, reportable super contributions and net investment losses.
Lifetime Health Cover loading: A 2 per cent per year premium loading for people who first take out hospital cover after the year they turn 31, capped at 70 per cent.
Private health insurance rebate: A government contribution towards premiums that reduces with income and is usually taken as a lower premium.

Questions people ask

What is the Medicare levy surcharge?: It is an extra tax of 1, 1.25 or 1.5 per cent for people whose income for MLS purposes is above the threshold and who do not hold eligible private hospital cover. It is separate from the ordinary 2 per cent Medicare levy that most taxpayers pay, and it is charged through your tax return.
Is the surcharge charged only on income above the threshold?: No. Once your income is over the threshold the rate applies to your whole income for MLS purposes. A single earning $106,000 pays 1 per cent of $106,000, which is $1,060, not 1 per cent of the $1,000 above the line. That cliff is why people just over a threshold often buy basic cover.
Does extras cover stop the surcharge?: No. Only an eligible private hospital policy counts. The excess must be no more than $750 for a single policy or $1,500 for a family or couples policy. General treatment cover for dental, physio or optical, bought on its own, does nothing to reduce the surcharge.
How does Lifetime Health Cover loading work?: If you do not hold hospital cover by 1 July following your 31st birthday, a loading of 2 per cent is added for every year you are aged over 30 when you finally buy it, up to 70 per cent. The loading is removed once you have held hospital cover for ten continuous years.
Is it worth buying cover just to avoid the surcharge?: It is when the cheapest eligible policy costs less than the surcharge, which this calculator checks. Near the lower threshold the surcharge is often smaller than a policy, so paying it is cheaper. At higher incomes, or when a loading is looming, basic hospital cover usually wins even if you never claim.
What counts as income for MLS purposes?: Taxable income plus reportable fringe benefits, total net investment losses, reportable super contributions and any amount on which family trust distribution tax has been paid. For couples the income of both partners is combined and tested against the family threshold.

Use this with

Private Health Insurance vs MLS Calculator answers one part of the question. These pick up where it stops: Lifetime Health Cover Loading Calculator, Salary After Tax Calculator, Australian Income Tax Calculator, Tax Refund Estimator and Salary Sacrifice Calculator.

Where these figures come from

Australia· 2026-27Last reviewed 2026-09·How we build and check calculators

Figures and rules on this page follow Australian law and ATO guidance.

ATO: Medicare levy surcharge income thresholds and rates. Surcharge tiers for singles and families
privatehealth.gov.au. Government comparison site, Lifetime Health Cover rules and policy search
Moneysmart (ASIC). Independent government guidance on borrowing, insurance, tax and investing

Private Health Insurance vs MLS Calculator produces an estimate for general information. It is not financial, tax, medical, legal or engineering advice. read the full disclaimer. Spotted a wrong number? Report it and it gets fixed. The form picks up this calculator and the inputs you used.