What is Medicare Levy Surcharge?
To encourage Australians to take out private Hospital cover and relieve stress on the public system, the government applies an additional levy for those without private Hospital cover, depending on your annual income.# This is known as the Medicare Levy Surcharge (MLS).
How much is the Medicare Levy Surcharge?
You could be paying an additional tax surcharge of 1% (up to 1.5%) of your income, if you or any of your dependants# don’t hold an appropriate level of private Hospital cover.
The table below outlines the Medicare Levy Surcharge income thresholds and rates that could apply to you.
| Single income |
Family income |
Medicare Levy Surcharge |
|
| Base tier | $101,000 or less |
$202,000 or less |
0% |
| Tier 1 | $101,001 - $118,000 |
$202,001 - $236,000 |
1% |
| Tier 2 | $118,001 - $158,000 |
$236,001 - $316,000 |
1.25% |
| Tier 3 | $158,001 or more |
$316,001 or more |
1.5% |
The family income threshold for single parents, couples and families (including de facto couples) is increased by $1,500 for each MLS dependant child after the first.
How can I avoid the Medicare Levy Surcharge?
To avoid the MLS, you and any of your dependants would need to take out eligible private Hospital cover for the full financial year. Any level of private Hospital cover will do, so long as the excess is not greater than $750 for singles or $1,500 for couples or families.1
For example:
Emily is 29, lives in VIC, single without children, and has an annual income of $102,000.
Without Hospital cover for a full tax year: Emily could be paying an extra $1,020 in tax.
With Hospital cover: Medibank Basic Plus Healthy Start could cost Emily only $1,165.56*, giving her cover towards things she might need as well as other Medibank perks.
* Based on 29yo on Singles cover with Single income $101,001 - $118,000 per year, in VIC. 16.192% Australian Government Rebate. $750 excess. Excludes Lifetime Health Cover loading. A youth discount of 2% has been assumed for eligible hospital products.
Calculate how much extra tax you could be paying without Hospital cover
Private Hospital cover isn’t just about saving money on tax, though. Learn about the additional perks you can enjoy as a Medibank member.
Frequently Asked Questions
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Things you should know
1 Australian Taxation Office - Australian Government; Appropriate level of patient hospital cover; retrieved June 2025.
2 Australian Taxation Office – Australian Government; What is the Medicare Levy?; retrieved April 2025.
3 Australian Taxation Office – Australian Government; Paying the Medicare Levy Surcharge; retrieved June 2025
# The single parent/couple/family income threshold is increased by $1,500 for each MLS dependant child after the first child. 'Income’ and 'dependants' have a specific meaning for Medicare Levy Surcharge purpose. Learn more.
Medibank Private Limited cannot advise on financial or tax matters. Any information provided to you is general in nature and does not take account of your individual circumstances. You should obtain your own independent financial advice.