Medicare Levy Surcharge Calculator
Whether hospital cover costs less than the Medicare levy surcharge on your income.
Your income for surcharge purposes is $120,000, which puts you in Tier 1. Without hospital cover you'd pay a 1% surcharge of $1,200 for 2026-27. Cover at $1,000 a year works out $200 cheaper than the surcharge. Any hospital policy under $1,200 a year saves you money.
| Single income for 2026-27 | Surcharge |
|---|---|
| $105,000 or less | Nil |
| $105,001 to $123,000 | 1% |
| $123,001 to $164,000 | 1.25% |
| $164,001 or more | 1.5% |
Income for surcharge purposes = taxable income + reportable fringe benefits + reportable super contributions + net investment losses. Singles are tested on their own income; families on the combined income of both partners, against thresholds that rise $1,500 for each dependent child after the first. The surcharge is 1%, 1.25% or 1.5% of your taxable income plus reportable fringe benefits, for a full year without an eligible hospital policy. If your own taxable income is under the Medicare levy low-income threshold, you don't pay it.
Rates checked September 2026 against the ATO.
What is the Medicare levy surcharge?
The Medicare levy surcharge (MLS) is an extra tax of 1%, 1.25% or 1.5% for people on higher incomes who don't have an eligible private hospital policy. It's on top of the 2% Medicare levy that most people pay, and it's worked out when you lodge your tax return.
It exists to push higher earners towards private hospital cover. So the question most people ask is simple: is a basic hospital policy cheaper than the surcharge? Above the first threshold, it often is.
Extras-only cover (dental, optical, physio) doesn't count. You need a hospital policy, and its excess has to be within the legal limit for avoiding the surcharge. Your insurer can confirm that a policy qualifies.
2026-27 Medicare levy surcharge thresholds
Singles are tested on their own income. Families (a couple, or a single parent with a dependent child) are tested on the combined income of both partners. The family thresholds go up by $1,500 for each dependent child after the first.
- Base tier: singles $105,000 or less, families $210,000 or less. No surcharge.
- Tier 1: singles $105,001 to $123,000, families $210,001 to $246,000. 1% surcharge.
- Tier 2: singles $123,001 to $164,000, families $246,001 to $328,000. 1.25% surcharge.
- Tier 3: singles $164,001 or more, families $328,001 or more. 1.5% surcharge.
What income counts for the surcharge
The ATO doesn't just use your taxable income. "Income for MLS purposes" adds back several items that lower taxable income, so salary sacrifice or a negatively geared property won't get you under a threshold:
- taxable income (including the net amount on which family trust distribution tax has been paid)
- reportable fringe benefits, for example from a novated lease
- total net investment losses: net rental property losses and net share or other financial investment losses
- reportable super contributions: salary sacrifice and personal super contributions you claim a deduction for
- exempt foreign employment income
Medicare levy surcharge examples for 2026-27
Single on $120,000. That's Tier 1, so the surcharge is 1% of $120,000: $1,200 for a year without cover. A basic hospital policy costing $1,000 a year after the rebate is $200 cheaper, and you'd also have the cover.
Single on $100,000 with $10,000 salary sacrifice and a $15,000 rental loss. Taxable income is $100,000, but income for MLS purposes is $125,000, which is Tier 2. The surcharge is 1.25% of the $100,000 taxable income: $1,250.
Couple on $130,000 and $100,000 with two children. The family threshold is $211,500 ($210,000 plus $1,500 for the second child). Combined income of $230,000 is in Tier 1, so without family hospital cover each partner pays 1% of their own income: $1,300 and $1,000.
Is private health insurance worth it to avoid the surcharge?
On price alone, compare the surcharge with the cheapest hospital policy that qualifies. If the policy costs less, cover wins, because you'd pay the surcharge for nothing otherwise. The calculator's break-even premium is the most a policy can cost before the surcharge becomes the cheaper option.
Two other things tip the balance. Lifetime Health Cover loading adds 2% to your hospital premium for every year you're over 30 when you first take out cover (from 1 July after your 31st birthday), up to 70%, and it stays for 10 years of continuous cover. Buying a basic policy early avoids that. The private health insurance rebate lowers your premium, but it's income-tested using the same tiers as the surcharge, and the rebate is nil in Tier 3.
The surcharge is charged for each day you don't have cover, so a policy taken out part-way through the year cuts it proportionally. This calculator assumes a full year with no cover.
What this calculator leaves out
It works out the surcharge for a whole year for Australian residents. It doesn't split the year for part-year cover, and it doesn't include the family trust distribution tax item or exempt foreign income, so add those to your taxable income if they apply. For the full picture of your tax, including the surcharge, use the income tax calculator or the take-home pay calculator.
Frequently asked questions
$105,000 for singles and $210,000 for families, plus $1,500 for each dependent child after the first. Above that, the surcharge is 1%, rising to 1.25% and 1.5% at higher incomes.
1%, 1.25% or 1.5% of your taxable income plus reportable fringe benefits, depending on your tier. On $120,000 as a single in 2026-27 it's 1%, or $1,200 a year.
No. Only an eligible private hospital policy avoids it. Extras-only cover doesn't count.
It doesn't help you get under a threshold, because reportable super contributions are added back to income for MLS purposes. The surcharge itself is charged on taxable income plus reportable fringe benefits, so a lower taxable income makes the amount slightly smaller.
Families are tested on combined income, and each partner without cover pays the surcharge on their own income. If your own taxable income is under the Medicare levy low-income threshold, you don't pay it.
No. The Medicare levy is 2% and most taxpayers pay it. The surcharge is an extra charge only for people above the thresholds without private hospital cover.