Calculate your Australian Medicare Levy Surcharge (1%โ1.5%) vs cheapest private hospital cover cost. Includes family thresholds and ATO MLS income test. A$ formatting.
Medicare Levy Surcharge 2026-26
The MLS is calculated on your income for MLS purposes and applies at a flat rate once you cross a threshold. Unlike the standard Medicare Levy (2% for most taxpayers), the MLS applies only to those without qualifying private hospital insurance.
MLS Thresholds & Rates (Singles, 2026-26)
$0 โ $93,000: No MLS
$93,001 โ $108,000: 1.0% of total income
$108,001 โ $144,000: 1.25% of total income
$144,001+: 1.5% of total income
Example: Single, A$110,000, no private hospital cover
Income: A$110,000 โ falls in 1.25% band
MLS: A$110,000 ร 1.25% = A$1,375/year
Basic hospital cover: ~A$1,200/year
Savings with PHI: A$175/year (plus health cover benefit)
Frequently Asked Questions
What is the Medicare Levy Surcharge (MLS)?
The Medicare Levy Surcharge (MLS) is an additional tax of 1%โ1.5% of income paid by higher-income Australians who do NOT hold private hospital cover. It is designed to encourage higher earners to take out private health insurance and reduce pressure on the public hospital system. The MLS is separate from the standard 2% Medicare Levy, which applies to most taxpayers regardless of private cover.
What are the 2026-26 MLS income thresholds?
For 2026-26, the MLS applies as follows: Singles earning $93,000 or less pay 0% MLS. $93,001โ$108,000: 1% MLS. $108,001โ$144,000: 1.25% MLS. $144,001+: 1.5% MLS. Family thresholds are $186,001 (2 adults), rising by $1,500 for each dependent child after the first. The MLS is calculated on income for MLS purposes (total income + reportable fringe benefits + reportable super contributions).
How do I avoid the Medicare Levy Surcharge?
Hold private hospital cover from a registered Australian health insurer for the full income year. The cover must include hospital treatment โ extras-only policies (dental, optical) do not avoid the MLS. If you hold hospital cover for only part of the year, the MLS applies proportionally for the period you were uncovered.
Is private hospital insurance cheaper than paying the MLS?
For many higher earners, the MLS cost exceeds the cheapest private hospital insurance premium โ making insurance the rational choice financially. Basic hospital cover can start around A$1,000โ$1,500/year for singles. At $100,000 income, the MLS is $1,000/year. At $150,000, it's $2,250/year. At higher incomes, insurance is nearly always cheaper than paying the surcharge.
Does the MLS apply to Lifetime Health Cover (LHC) loading?
They are separate but related. Lifetime Health Cover loading (up to 70%) is an additional premium loading applied to people who didn't take out hospital cover before age 31. LHC loading increases your private health insurance premium but doesn't directly reduce or increase MLS. The MLS simply requires that you hold basic hospital cover โ regardless of whether you have LHC loading.