Medicare Levy Surcharge – Check your private health insurance cover
The ATO is currently reviewing taxpayers’ private health insurance information to ensure all dependents — including partners and children — have been correctly reported.
They are checking each person listed has maintained an appropriate level of private health insurance with hospital cover for the entire year to avoid paying the Medicare Levy Surcharge.
We do not have full visibility of the information provided to the ATO, therefore we rely on your confirmation when completing your return. We ask you to please check your current cover to ensure you and all your dependents are covered with the appropriate level of private health insurance with hospital cover.
What Is the Medicare Levy Surcharge (MLS)?
The Medicare Levy Surcharge (MLS) is an extra tax applied to Australian taxpayers who:
Do not hold an appropriate level of private hospital insurance, and
Have income for MLS purposes above the relevant threshold.
Who Needs to Pay the MLS?
You may need to pay the surcharge if:
You are a single taxpayer with income above the base threshold, or
You are part of a family or couple whose combined income exceeds the family threshold, and
You and your dependents (spouse and children) did not hold private hospital cover for the full financial year.
If you had cover for only part of the year, the surcharge is calculated prorata based on the number of days you were uninsured.
The MLS is in addition to the standard 2% Medicare levy paid by most taxpayers.
Income Thresholds and MLS Rates 2025-26
Your MLS rate depends on your income tier. The surcharge increases as your income rises.
| Tier | Singles Threshold | Families Threshold | MLS Rate |
|---|---|---|---|
| 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% |
Important: The family income threshold is increased by $1,500 for each MLS dependent child after the first child.
The MLS is calculated as a percentage of your income for MLS purposes, not just your taxable income. The ATO applies the rate that corresponds to your income tier.
How to Avoid the Medicare Levy Surcharge
To avoid the surcharge, you and your dependents must hold a private hospital cover policy for the full financial year; "extras-only" policies do not exempt you.
Key Takeaway
To ensure your tax return is prepared correctly, you’ll need to confirm with us that you — and any dependents you claim — held an appropriate level of private health insurance for the entire financial year. We rely on your confirmation when completing your return.
Your insurer provides a private health insurance statement, which the ATO uses to verify your cover and calculate any surcharge owed.