Medicare Levy Surcharge Explained
The Medicare Levy Surcharge (MLS) is an extra tax of 1% to 1.5% charged to singles earning over $101,000 and families earning over $202,000 who do not hold private hospital cover.
Earn above the threshold without private hospital cover and you pay the Medicare Levy Surcharge on top of your standard Medicare levy. Here's what it costs, who it applies to, and how to avoid it.
What Is the Medicare Levy Surcharge?
The Medicare Levy Surcharge (MLS) is an additional tax levied on higher-income Australians who do not have private hospital cover. It is separate from the standard 2% Medicare Levy that most Australians pay.
The surcharge exists to encourage higher earners to use private hospitals, reducing the load on the public system. If you have adequate private hospital cover, the surcharge does not apply — regardless of your income.
The MLS only applies to your hospital cover status — not extras. An extras-only policy does not exempt you from the surcharge. You need a qualifying hospital policy.
2025–26 MLS Income Thresholds and Rates
| Income | MLS rate |
|---|---|
| $101,000 or less | 0% |
| $101,001–$118,000 | 1.0% |
| $118,001–$158,000 | 1.25% |
| $158,001+ | 1.5% |
| Income | MLS rate |
|---|---|
| $202,000 or less | 0% |
| $202,001–$236,000 | 1.0% |
| $236,001–$316,000 | 1.25% |
| $316,001+ | 1.5% |
Source: privatehealth.gov.au — Medicare Levy Surcharge. Family thresholds increase by $1,500 per dependent child after the first.
Are you paying the surcharge right now?
Our agents show you whether a hospital policy costs less than your MLS — and find the right cover to eliminate the surcharge at the lowest possible premium.
Compare the maths →Does Private Cover Actually Cost Less Than the Surcharge?
For most people earning above the threshold, yes — private hospital cover costs less than the MLS. The numbers:
†Estimated premium after government rebate. Actual premiums vary by fund, age, state, and excess. Contact us for a precise comparison for your income and age.
What Cover Qualifies to Avoid the MLS?
To avoid the surcharge you must hold complying hospital cover for yourself and all dependants. Key requirements:
- Must be hospital cover (not extras-only)
- Annual excess must be $750 or less (singles) or $1,500 or less (couples/families)
- Must cover all listed dependants on your tax return
- Must be maintained for the full financial year — the MLS is calculated proportionally for part-year periods
Basic, Bronze, Silver, and Gold hospital policies all qualify — as long as the excess limit is met. Our agents make sure any policy we recommend satisfies the MLS exemption.