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Medicare Levy Surcharge calculator
Medicare Levy Surcharge calculator
Written by
Madeline Pettet
Edited by
Ellie Garran
Reviewed by
Andres Gutierrez
What is the Medicare Levy Surcharge (MLS)?
What is the Medicare Levy Surcharge (MLS)?
The MLS is an extra tax paid by higher-income earners who don’t hold eligible private hospital cover that financial year. The MLS rate ranges from 1% to 1.5% depending on your income. It’s designed to ease the stress on our public health system by encouraging high-income earners to hold private hospital insurance.
For the 2026–27 financial year, the MLS annual taxable income base tier threshold for singles is $105,000, while it’s $210,000 for couples and families. If you earn over this threshold and don’t have hospital cover, you’ll have an MLS rate of 1% or more. This is on top of the 2% Medicare Levy, which is paid by all Australian taxpayers.
Calculate your Medicare Levy Surcharge
Use our handy Medicare Levy Surcharge (MLS) calculator to estimate your potential surcharge and learn how eligible private hospital cover could help you avoid paying it.
Could taking out eligible private hospital cover help you avoid paying more at tax time?
Use our handy Medicare Levy Surcharge (MLS) calculator to estimate your potential surcharge and learn how eligible private hospital cover could help you avoid paying it.
This calculator provides an estimate based on the information entered and current tax regulations. For personalised advice, please consult a registered tax advisor or the Australian Taxation Office.
How can I avoid paying the Medicare Levy Surcharge (MLS)?
You can avoid the MLS by taking out appropriate private hospital cover or having an annual income below the MLS threshold.
For the 2026–27 financial year, the MLS income threshold for singles is $105,000 and the family threshold is $210,000.
For MLS purposes, an appropriate level of private hospital insurance is one with an excess of $750 or less ($1,500 for couples and families). Your chosen tier of hospital cover does not matter. Keep in mind, though, ambulance cover or an extras-only policy won’t help you avoid the MLS.
iSelect can make it easy to compare a range of appropriate hospital cover options from different health funds.
What are the Medicare Levy Surcharge (MLS) thresholds?
The MLS thresholds determine your MLS rate for a given financial year. There are 4 MLS threshold tiers with rates ranging from 0% to 1.5%. If your annual income falls within a higher tier, you’ll pay a higher MLS rate.
For 2026–27, the base threshold is $105,000 for singles and $210,000 for families and couples. If you earn more than this threshold, you’ll need to pay the MLS (if you don’t have hospital cover).
If you have dependents, such as children, your family threshold increases by $1,500 for each dependent child after the first. For example, if you had 3 children, your base family income threshold would increase from $210,000 to $213,000.
MLS thresholds and rates for 2026–27
| Base tier | Tier 1 | Tier 2 | Tier 3 | |
| Single threshold | $105,000 or less | $105,001–$123,000 | $123,001–$164,000 | $164,001 or more |
| Couple or family threshold | $210,000 or less | $210,001–$246,000 | $246,001–$328,000 | $328,001 or more |
| MLS rate | 0% | 1% | 1.25% | 1.5% |
Note: These figures reflect income thresholds based on Australian Government data. Data retrieved June 2026.
Other than the Medicare Levy Surcharge (MLS), what are the incentives to get private health insurance?
The Australian Government has other incentives to encourage people to take out private health insurance, including the private health insurance rebate, Lifetime Health Cover (LHC) loading and age-based discounts for those under 30 years old.
Along with the MLS, you might want to take out private health insurance because of the following incentives.
- The private health insurance rebate: depending on your age and income, the Australian Government could subsidise your health insurance premiums either when you pay them or as a tax offset when you complete your tax return.
- LHC loading: if you don’t have hospital cover by 1 July after your 31st birthday, a loading will be added to your premiums (when you do take out cover), calculated at 2% every year up to a maximum of 70%.
- Age-based discounts: if you take out hospital cover before you turn 30, you can get a discount of up to 10% on your premiums and keep it until you turn 41.
Frequently asked questions
Does having health insurance mean I’ll pay less tax?
If you earn over the Medicare Levy Surcharge (MLS) income threshold, having appropriate private hospital cover means you don’t have to pay the MLS at tax time. However, if you earn under the threshold – that is, $105,000 or less as a single person in the 2026–27 financial year – having health insurance won’t make any difference to how much tax you pay.
Do I need to take out health insurance before 30 June to avoid the Medicare Levy Surcharge (MLS)?
If you want to avoid the MLS for the coming financial year, you need to take out hospital cover by 30 June. If you take out hospital cover partway through the year, you will pay the MLS for the portion of the year that you did not have appropriate hospital cover.
What type of health insurance do I need to avoid the Medicare Levy Surcharge (MLS)?
To avoid the MLS you need to take out hospital cover with an excess of $750 or less for singles and $1,500 or less for couples and families. It doesn’t matter which hospital insurance tier you choose.
Importantly, it needs to be hospital cover, not any other kind of private health cover. For instance, extras cover and ambulance cover do not count towards whether or not you’ll pay the MLS.
What’s the difference between the Medicare Levy and the Medicare Levy Surcharge (MLS)?
The Medicare Levy is a 2% tax paid by all Australian taxpayers to fund Medicare, while the MLS is an additional tax (1%–1.5%) paid by high-earning Australians who don’t have appropriate private hospital cover.
Both the levy and the MLS help fund Medicare, but the MLS aims to encourage higher-income earners to take out private cover and reduce the burden on Australia’s public health system.
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Health Insurance & Tax
Tax Implications on Health Insurance
The Medicare Levy Surcharge
About the Life Time Health Cover Loading
The Private Health Insurance Benefit Codes
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