Compare health insurance to lower your tax

Find out how to avoid the Medicare Levy Surcharge, and compare health insurance policies to reduce your tax.

calculate new policy compare existing policy

What is the Medicare Levy Surcharge? 

The Medicare Levy Surcharge is a government penalty on people who earn over a certain amount and do not have appropriate Hospital Cover. The Levy is 1% to 1.5% of your income, added to your tax.

To avoid the Medicare Levy Surcharge, you need to have Hospital Cover that:

covers every member of your household (unless they have their own Hospital Cover)

has an excess of $750 or less for a single adult policy, or $1,500 or less for couple, single parent or family policies.

Extras Cover does not make you exempt from the Medicare Levy Surcharge.

Compare now

Do I have to pay the Medicare Levy Surcharge?

The Medicare Levy Surcharge income thresholds increase every year; check whether you have to pay here.

In 2026/27 financial year, the income threshold is:

$105,001 for singles
$210,001 for couple, single parent or family policies.

The threshold increases $1,500 for additional children after the first.

The income threshold counts your salary, bonuses, investment returns, salary-sacrificed super, and fringe benefits.

Compare now

How much is a policy to avoid the MLS?

On the healthslips.com.au calculator, you will find plenty of policies cheaper than the cost of your Medicare Levy Surcharge. For example:

a single person’s income of $130,000 in the 2026/27 year is a Levy of 1.25% – $1,625.
a couple’s combined income of $240,000 in the 2026/27 year is a Levy of 1% – $2,400.

Make sure you avoid the ‘junk policy’ trap. Buying a Basic Hospital Cover policy might save you money but will only cover 3 out of 38 hospital services – and only at a restricted level. It may be worth buying a Basic Plus or Bronze policy that offers more value and still helps you avoid the Medicare Levy Surcharge.

Compare now

It all starts by comparing every policy from every insurer to calculate your cheapest policy

calculate now

Frequently Asked Questions

Why do I have to pay the Medicare Levy Surcharge?

The Medicare Levy Surcharge was created to encourage Australians to take out Hospital Cover so they can use the private health system and reduce pressure on the public system. If you earn above the Medicare Levy Surcharge thresholds (which change every year) and do not have appropriate Hospital Cover, you will have to pay the Levy.

Compare now

What’s the difference between the Medicare Levy and the Medicare Levy Surcharge?

The Medicare Levy is 2% of your taxable income. Most people will have to pay this unless they qualify for a medical exemption. However the Medicare Levy Surcharge, which is 1-1.5% of your taxable income, only applies if you earn above the income thresholds and don’t have Hospital Cover.

Having Hospital Cover will not make you ineligible for the Medicare Levy.

Compare now

Do I have to pay the Medicare Levy Surcharge if I only have Extras Cover?

Yes. You must have Hospital Cover to avoid the Medicare Levy Surcharge. Extras Cover does not impact your requirement to pay the Medicare Levy Surcharge.

Compare now

What happens if my income goes over the Medicare Levy Surcharge threshold?

If your income increases during the financial year and you think you might go above the Medicare Levy Surcharge threshold, it’s a good idea to buy a Hospital Cover policy. The Surcharge will apply for the number of days you did not have Hospital Cover during that financial year, so the sooner you get the policy, the lower your Surcharge. Talk to your accountant for advice tailored to your circumstances.

Compare now

How often do the Medicare Levy Surcharge income thresholds change?

Generally the Medicare Levy Surcharge thresholds are adjusted every year, taking effect on 1 July. Check the latest thresholds here.

What counts as ‘income’ for the Medicare Levy Surcharge?

Your income for the Medicare Levy Surcharge is not the same as your taxable income. To work out whether you have to pay the Medicare Levy Surcharge, you must calculate your income including:

Bonuses
Investment income
Net investment losses
Rental profits
Reportable fringe benefits (e.g. a company car)
Reportable super contributions (including personal and salary-sacrificed contributions)
Foreign employment income
Amounts for which family trust distribution tax has been paid.

Can I avoid the Medicare Levy Surcharge if I buy Hospital Cover mid-year?

You can reduce your Surcharge by buying Hospital Cover during the year, but not avoid it entirely. The Medicare Levy Surcharge will still apply for the number of days you did not have appropriate Hospital Cover.

Compare now

Do couples need to be on the same health insurance policy to avoid MLS?

No. As long as you and your partner both have appropriate Hospital Cover policies, and any children are covered, you will not have to pay the Medicare Levy Surcharge.

Compare now

Do my kids need to be on my health insurance policy to avoid the MLS?

Children that are your dependants need to be covered by Hospital Cover in order for you to avoid the Medicare Levy Surcharge, even if they don’t live with you. As a general rule, if you are paying child support or financial support for your children, they will need to be covered by Hospital Cover – either on your policy, or your co-parent’s policy – for you to avoid the Medicare Levy Surcharge. However requirements can differ depending on your circumstances, so it’s important to talk to your accountant or the ATO for tailored advice.

Compare now

What is the minimum level of Hospital Cover needed to avoid the MLS?

You need to have Hospital Cover with an excess of $750 or less for single adult policies, or $1,500 or less for couples, single parents or family policies. The tier or level of Hospital Cover does not matter. Many Australians choose to buy the cheapest Basic tier Hospital Cover policy available to avoid the Medicare Levy Surcharge, but often that policy provides little cover. It may be worth getting a Basic Plus or Bronze tier policy to get cover that you can use while still avoiding the Medicare Levy Surcharge.

Compare now

Will a Basic policy with a high excess still make me exempt from the MLS?

No. To avoid paying the Medicare Levy Surcharge, your policy must have an excess of $750 or less for single adult policies, or $1,500 or less for couples, single parents or family policies.

Compare now