Medicare levy surcharge explained (2026–27)
Who pays it, how much, and when private hospital cover costs less.
Key points
- Singles pay the surcharge above $105,000 and families above $210,000.
- The rate is 1%, 1.25% or 1.5% depending on your income tier.
- Salary sacrifice, fringe benefits and investment losses count towards the threshold.
- Only hospital cover with an excess of $750 single or $1,500 family avoids it.
- Near the threshold, the surcharge and a basic policy cost about the same.
The Medicare levy surcharge (MLS) is an extra tax for higher earners who don't have an appropriate level of private hospital cover. It's on top of the standard 2% Medicare levy. For 2026–27 it starts above $105,000 for singles and $210,000 for families.
Check if you pay the surcharge
2026–27 thresholds and rates
| Tier | Singles | Families | Surcharge |
|---|---|---|---|
| Base | $105,000 or less | $210,000 or less | 0% |
| Tier 1 | $105,001 – $123,000 | $210,001 – $246,000 | 1% |
| Tier 2 | $123,001 – $164,000 | $246,001 – $328,000 | 1.25% |
| Tier 3 | Over $164,000 | Over $328,000 | 1.5% |
The family threshold rises by $1,500 for each dependent child after the first. Single parents use the family thresholds. The same tiers decide how much private health insurance rebate you get.
What a single person without hospital cover pays
| Income for MLS purposes | Surcharge rate | Surcharge for the year |
|---|---|---|
| $100,000 | Nil | $0 |
| $110,000 | 1% | $1,100 |
| $130,000 | 1.25% | $1,625 |
| $170,000 | 1.5% | $2,550 |
| $220,000 | 1.5% | $3,300 |
Assumes the whole year without cover and no fringe benefits. The surcharge is charged on taxable income plus reportable fringe benefits.
Income for MLS purposes is more than your salary
The ATO adds your reportable fringe benefits, total net investment losses (such as a negatively geared property) and reportable super contributions (salary sacrifice and personal deductible contributions) to your taxable income. Someone on a $100,000 salary who salary sacrifices $8,000 into super has $108,000 of income for MLS purposes, which is over the single threshold.
Which cover avoids the surcharge
- It must be hospital cover. Extras-only cover (dental, optical, physio) doesn't count.
- The excess can be no more than $750 for singles or $1,500 for couples and families.
- You're charged the surcharge only for the days you, and your spouse and dependants, weren't covered. Taking out cover part-way through the year reduces it.
Is hospital cover cheaper than the surcharge?
Compare the premium for the cheapest eligible hospital policy, after the rebate, with what you'd pay in surcharge. For a single person on $110,000, the surcharge is about $1,100 a year. A basic hospital policy can cost a similar amount, so for many people near the threshold it's close. Above about $130,000 the surcharge is usually higher than a basic policy.
Also think about Lifetime Health Cover loading: if you don't have hospital cover by 1 July after your 31st birthday, you'll pay 2% more on your premium for each year you're over 30 when you eventually take it out, for up to 10 years.
The private health insurance rebate
The government pays part of your premium through the rebate, unless you're in tier 3. From 1 April 2026, under-65s get 24.118% at the base tier, 16.079% at tier 1, 8.038% at tier 2 and nothing at tier 3. Rates are higher for people 65 and over.
Frequently asked questions
What is the Medicare levy surcharge threshold for 2026–27?
$105,000 for singles and $210,000 for families, plus $1,500 for each dependent child after the first.
How much is the Medicare levy surcharge?
1%, 1.25% or 1.5% of your taxable income plus reportable fringe benefits, depending on your income tier. A single person on $110,000 without hospital cover pays about $1,100.
Does extras cover avoid the surcharge?
No. You need hospital cover with an excess of no more than $750 for singles or $1,500 for families.
Does salary sacrifice count towards the MLS threshold?
Yes. Reportable super contributions, fringe benefits and net investment losses are added to your taxable income to test the threshold.
Sources
- ATO: MLS income thresholds and rates
- privatehealth.gov.au: Medicare levy surcharge
- ATO: private health insurance rebate rates
More guides
Last reviewed October 2026. This guide is general information only. It isn't financial, tax, credit or legal advice and doesn't consider your circumstances. Rules change, so check the official sources below or speak to a licensed professional before you make a decision.