MLS 2026–27 · $105k / $210k thresholds

Paying the Medicare Levy Surcharge? Hospital cover could cost less than the tax.

Earn over $105,000 (single) or $210,000 (family) and you'll pay 1–1.5% of your income to the ATO unless you hold an appropriate level of private hospital cover. For many earners, a basic policy is the cheaper option.

Levy vs surcharge: the Medicare levy is the flat 2% almost every taxpayer pays and cover won't change it. The Medicare Levy Surcharge is the extra 1–1.5% only higher earners without private hospital cover pay — and that one you can avoid.

Quick example · single earning $120,000

  • MLS at 1.25% of income~$1,500 / yr
  • Typical basic hospital cover~$1,100 / yr
  • You'd be ahead by~$400 / yr

Illustrative only. Actual premium depends on age, location and fund. General information — not tax advice.

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MLS income thresholds — 2025–26 and 2026–27

The ATO indexes the thresholds each 1 July. Family thresholds are $1,500 higher for each dependent child after the first.

2025–26 income year

Base (no MLS)
0%
Singles $101,000 · Families $202,000
Tier 1
1.0%
Singles $101,001 – $118,000 · Families $202,001 – $236,000
Tier 2
1.25%
Singles $118,001 – $158,000 · Families $236,001 – $316,000
Tier 3
1.5%
Singles $158,001+ · Families $316,001+

2026–27 income year

Base (no MLS)
0%
Singles $105,000 · Families $210,000
Tier 1
1.0%
Singles $105,001 – $123,000 · Families $210,001 – $246,000
Tier 2
1.25%
Singles $123,001 – $164,000 · Families $246,001 – $328,000
Tier 3
1.5%
Singles $164,001+ · Families $328,001+

Source: Australian Taxation Office. General information only — not tax advice.

Worked example

Sam, 34, single, earning $120,000

  • At $120k income, Sam falls in Tier 1 (2026–27). MLS = 1.0% of income = $1,200.
  • A basic hospital policy (with an excess at or below $750) typically runs $1,000 – $1,200/yr for a single in their 30s.
  • Sam either pays the surcharge for nothing, or pays a similar amount for cover. The cover usually wins — and locks in Lifetime Health Cover before age 31 to avoid LHC loading.

Premiums vary by age, fund and state. An advisor can run the exact numbers for your situation.

Two things people get wrong

Only hospital cover counts — not extras

A standalone extras policy (dental, optical, physio) does not exempt you from the MLS. You need an appropriate level of private hospital cover with an excess of $750 or less (singles) / $1,500 or less (couples/families).

The 1 July LHC deadline

If you take out hospital cover after 1 July following your 31st birthday, you'll pay a 2% Lifetime Health Cover loading for every year you were uninsured. Joining before that date locks in the base rate for life.

Australians who stopped paying the surcharge

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Common questions

What is the Medicare Levy Surcharge?
The Medicare Levy Surcharge (MLS) is an extra tax — between 1% and 1.5% of your taxable income — paid by higher-income Australians who don't hold an appropriate level of private hospital cover for the full income year.
What income counts towards the MLS thresholds?
The ATO uses 'income for MLS purposes', which is broader than taxable income: it includes your taxable income, reportable fringe benefits, reportable super contributions, net investment losses and exempt foreign employment income.
Does extras cover help me avoid the MLS?
No. Only an appropriate level of private hospital cover with an excess of $750 or less (singles) or $1,500 or less (couples/families) exempts you from the MLS. Extras-only policies do not count.
I'm covered for part of the year — do I still pay?
You only avoid the MLS for the days you held appropriate hospital cover. If you were uninsured for part of the income year, the surcharge applies to your income for those days.
What is Lifetime Health Cover (LHC) loading?
If you take out private hospital cover after 1 July following your 31st birthday, you pay a 2% LHC loading on top of your premium for every year you were uninsured (capped at 70%). Joining before that 1 July deadline avoids the loading.
Is this tax advice?
No — this page is general information only and doesn't take your personal circumstances into account. For tax advice, talk to a registered tax agent or visit ato.gov.au.

General information only — not tax advice. Sources: ATO, Department of Health.

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