Medicare levy surcharge (MLS) calculator 2026-27
The Medicare levy surcharge is 1% to 1.5% of income for MLS purposes, charged in 2026-27 on singles above $105,000 without appropriate hospital cover. It's charged by the day: a single on $118,000 without cover for eight months pays $785.59 (ATO Medicare levy surcharge thresholds and rates (opens in a new tab)).
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Surcharge for those days
$785.59
Breakdown
| MLS tier and rate | Tier 1, 1% |
|---|---|
| Full-year surcharge | $1,180 |
| Days without cover | 243 of 365 |
| Surcharge for those days | $785.59 |
- MLS tier and rate
- Tier 1, 1%
- Full-year surcharge
- $1,180
- Also the break-even yearly cost of hospital cover: compare it against actual quotes
- Medicare levy
- $2,360
- Separate, still payable
Income for MLS purposes is broader than taxable income
The surcharge test uses income for MLS purposes, which starts with taxable income and adds back several amounts that don't appear in it. A car on a novated lease can add to it, and the novated lease calculator shows how.
The main additions are reportable fringe benefits, reportable super contributions (including salary sacrifice) and total net investment losses, such as negative gearing losses.
Say the same single with $118,000 of taxable income also salary sacrifices $6,000 into super. That moves them from tier 1 to tier 2 at 1.25%.
| Step | Amount | Running total |
|---|---|---|
| Taxable income | $118,000 | $118,000 |
| Salary sacrificed into super | +$6,000 | $124,000 |
| Income for MLS purposes | $124,000 | |
| Full-year surchargeUp from $1,180 | $1,550 | |
| Eight-month surchargeUp from $785.59 | $1,031.92 | |
2026-27 surcharge thresholds and tiers
For 2026-27, singles pay nothing up to $105,000 and families nothing up to $210,000. Above those amounts, the rate rises in three tiers.
| Tier | Singles | Families | MLS rate |
|---|---|---|---|
| Base tier | $105,000 or less | $210,000 or less | 0% |
| Tier 1 | $105,001 to $123,000 | $210,001 to $246,000 | 1% |
| Tier 2 | $123,001 to $164,000 | $246,001 to $328,000 | 1.25% |
| Tier 3 | $164,001 or more | $328,001 or more | 1.5% |
| Tier | Singles 2025-26 | Families 2025-26 |
|---|---|---|
| Base tier | $101,000 or less | $202,000 or less |
| Tier 1 | $101,001 to $118,000 | $202,001 to $236,000 |
| Tier 2 | $118,001 to $158,000 | $236,001 to $316,000 |
| Tier 3 | $158,001 or more | $316,001 or more |
The rate applies to your whole income for MLS purposes, not only the part above the threshold. At $105,000 a single pays no surcharge. At $105,001 the surcharge is $1,050.01 for a full year without cover.
The thresholds moved between years. In 2025-26, $118,000 was the top of tier 1. In 2026-27 it sits $5,000 below the top of tier 1 ($123,000).
Couples and families share one threshold
Couples and families are tested on combined income for MLS purposes against the family threshold. For 2026-27 it's $210,000, plus $1,500 for each dependent child after the first.
| MLS dependent children | Family base-tier threshold |
|---|---|
| 0 or 1 | $210,000 |
| 2 | $211,500 |
| 3 | $213,000 |
If combined income is above the threshold, each partner without appropriate cover pays the surcharge on their own income for MLS purposes, for the days they lacked cover. A combined $230,000 is tier 1 for families, so that's 1% each.
If only one partner holds hospital cover, the other can still be charged for their own days without it. A couple whose combined income is at or below the family threshold pays no surcharge, even if one partner earns more than $105,000.
| Step | Amount | Running total |
|---|---|---|
| First partner's income | $150,000 | $150,000 |
| Second partner's income | +$80,000 | $230,000 |
| Combined income | $230,000 | |
| First partner, full year without cover | $1,500 | |
| Second partner, full year without cover | $800 | |
Part-year cover: the surcharge is charged by the day
The surcharge applies only to days in the income year when you lacked appropriate hospital cover. Each day costs 1/365 of the full-year amount in a 365-day year such as 2026-27.
In the default example, the single has no cover from 1 July 2026 to 28 February 2027, which is 243 days. The surcharge is $118,000 × 1% × 243 ÷ 365 = $785.59, so each day without cover costs about $3.23 at this income.
| Period without hospital cover in 2026-27 | Days | Surcharge on $118,000 (1%) | Surcharge on $124,000 (1.25%) |
|---|---|---|---|
| 1 July to 30 September 2026 | 92 | $297.42 | $390.68 |
| 1 July to 31 December 2026 | 184 | $594.85 | $781.37 |
| 1 July 2026 to 28 February 2027 | 243 | $785.59 | $1,031.92 |
| Whole year | 365 | $1,180.00 | $1,550.00 |
Cover that starts part way through the year cuts the surcharge from that date. Your insurer reports the days you were covered to the ATO, and they normally pre-fill in your tax return. Cover held for all 365 days removes it, while the 2% Medicare levy of $2,360 still applies.
Surcharge or basic hospital cover: a worked comparison
For the $118,000 single, the full-year surcharge is $1,180. A hospital policy that costs less than that after the private health insurance rebate leaves them better off on tax alone. For the eight months without cover in the example, the break-even figure is $785.59.
We don't quote premiums because they vary by insurer, state, age and excess. Compare actual quotes for appropriate hospital cover against the surcharge figure from the calculator.
Tax is only part of the decision. Hospital cover pays for treatment the surcharge doesn't. Lifetime health cover loading can also make later cover dearer if you wait, as covered in the questions below.
Limits of the surcharge estimate
The calculator needs your income for MLS purposes. It doesn't build that figure from your payslip, so add back reportable fringe benefits, reportable super and net investment losses yourself.
It doesn't check whether a policy is appropriate cover, apply the private health insurance rebate, or test dependant status. For the 2% levy itself and the low-income reduction, use the Medicare levy calculator. Salary sacrifice also raises repayment income for study loans, shown in the HECS repayment calculator.
Surcharge questions: taxable income, private cover, single parents and lifetime health cover loading
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Last reviewed
What is the Medicare levy surcharge?
It's an extra charge of 1% to 1.5% of income for MLS purposes. It applies to people without appropriate private hospital cover whose income is above $105,000 for singles or $210,000 for families in 2026-27. It's charged on top of the 2% Medicare levy, by the day.
Do you still pay the Medicare levy if you have private health insurance?
Yes. Private hospital cover removes the surcharge, not the 2% Medicare levy. A single on $118,000 with cover all year pays a $2,360 Medicare levy and no surcharge. Without cover all year, they'd pay the same $2,360 plus a $1,180 surcharge.
Is the Medicare levy surcharge calculated on taxable income?
No. It's calculated on income for MLS purposes, which starts with taxable income and adds reportable fringe benefits, reportable super contributions and net investment losses. A single with $104,000 of taxable income and $2,000 of salary sacrifice has $106,000 for MLS purposes, which is above the $105,000 threshold.
Do single parents use the family threshold?
Yes. A single person with a dependent child is tested against the family threshold of $210,000 for 2026-27, not the singles threshold of $105,000. The threshold rises by $1,500 for each dependent child after the first. To avoid the surcharge as a family, the parent and dependants generally all need appropriate hospital cover.
How does lifetime health cover loading affect the decision?
Lifetime health cover (LHC) loading is a separate charge added to hospital premiums if you first take out cover after the 1 July following your 31st birthday. It isn't a tax. The Lifetime Health Cover loading (opens in a new tab) is 2% for each year you're over 30, up to 70%, and stops after 10 years of continuous cover. Weigh it with the surcharge when comparing quotes.
Should I get private health insurance to avoid the Medicare levy surcharge?
That depends on your income, the days you'd go without cover and the quotes you receive. On $118,000 the full-year surcharge is $1,180, so a policy costing less than that after the rebate costs less in tax terms. Cover also brings benefits and limits the surcharge doesn't. A licensed adviser can weigh both.
Estimates only, based on published rates for 2026-27. General information, not tax or financial advice.
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