Medicare Levy Surcharge: how it works
Rates checked 15 Oct 2026 against the ATO's surcharge thresholds.
The Medicare levy surcharge (MLS) is an extra 1% to 1.5% of income. You pay it on top of the 2% Medicare levy if you, your spouse and your dependent children don't have appropriate private hospital cover and your income is over the threshold.
| 2026-27 | Singles | Families | Rate |
|---|---|---|---|
| Base tier | $105,000 or less | $210,000 or less | 0% |
| Tier 1 | $105,001 to $123,000 | $210,001 to $246,000 | 1% |
| Tier 2 | $123,001 to $164,000 | $246,001 to $328,000 | 1.25% |
| Tier 3 | $164,001 or more | $328,001 or more | 1.5% |
Family thresholds go up by $1,500 for each dependent child after the first. Couples and single parents use the family thresholds.
Your tier depends on your income for MLS purposes, combined with your spouse's if you have one: taxable income plus reportable fringe benefits, net investment losses and reportable super contributions. The surcharge itself is charged only on your taxable income and reportable fringe benefits.
To avoid it you need hospital cover from an Australian insurer with an excess of $750 or less for singles, or $1,500 or less for couples and families. Extras-only cover and travel insurance don't count.
General information only, not financial, tax or credit advice. Check your situation with the ATO, your state revenue office or a licensed adviser.
Medicare Levy Surcharge FAQs
Is it cheaper to pay the Medicare levy surcharge or get private health insurance?
Hospital cover is cheaper whenever its yearly premium after the rebate is less than the surcharge. On $130,000 as a single, the surcharge is $1,625 a year, so a basic hospital policy costing less than that, with an excess of $750 or less, saves money. Enter a quote in the calculator to compare.
Do I pay the surcharge if my partner earns most of the income?
Couples are tested on combined income, but each person pays on their own taxable income and fringe benefits. If you had a spouse all year and your own income for MLS purposes is $28,011 or less (the 2025-26 figure; the 2026-27 one isn't published yet), you don't pay it.
Does salary sacrifice or negative gearing affect the surcharge?
Yes. Salary sacrificed super, deductible personal contributions and net investment losses are added back when working out your tier, even though they reduce your taxable income.
What if I only had cover for part of the year?
The surcharge is charged only for the days you didn't have appropriate hospital cover, so enter the number of days without it.
What is Lifetime Health Cover loading?
It's separate from the surcharge. If you don't hold hospital cover by 1 July after your 31st birthday, your premium goes up 2% for every year you're over 30 when you join, up to 70%. The loading is removed after 10 years of continuous cover.