The surcharge is an extra tax for higher earners who have no private hospital cover. It buys no cover.
The Medicare levy surcharge (MLS) applies if you do not have appropriate private patient hospital cover and your income for MLS purposes is above the base threshold. It is separate from the 2% Medicare levy.
The 2026-27 thresholds and rates
Base tier (0%)
Tier 1 (1%)
Tier 2 (1.25%)
Tier 3 (1.5%)
Single
$105,000 or less
$105,001 to $123,000
$123,001 to $164,000
$164,001 or more
Family
$210,000 or less
$210,001 to $246,000
$246,001 to $328,000
$328,001 or more
💡 Pro Tip: The family threshold goes up by $1,500 for each dependent child after the first. For 2025-26 the single base tier was $101,000, with tiers at $118,000 and $158,000.
Worked examples
A single person with an income for MLS purposes of $130,000 and no hospital cover is in Tier 2: 1.25% × $130,000 = $1,625. A family with two children and $215,000 has a threshold of $211,500, so they are in Tier 1: 1% × $215,000 = $2,150.
Comparing with cover
The surcharge buys nothing, while hospital cover pays towards treatment. Compare the surcharge with the real cost of a policy, but also think about waiting periods, excess, exclusions and Lifetime Health Cover loading. A licensed adviser or the government's Private Health Insurance Ombudsman resources can help you compare policies.
✨ Key Takeaways
The surcharge is charged on your whole income for MLS purposes.
It only applies without appropriate hospital cover.
Family thresholds are higher and rise with children.
Thresholds change every year, so check the ATO.
Sources and checks
Our figures and rules follow these official sources:
