Do I need private health insurance to avoid the Medicare Levy Surcharge?
You only need private hospital cover to avoid the Medicare Levy Surcharge if your income is over the threshold. For 2026-27 that is $105,000 for a single and $210,000 for a family. Below that line the surcharge is zero, so cover saves you nothing at tax time. The cover must be a complying hospital policy. Extras-only cover does not exempt you.
What counts as exempt cover?
A complying private hospital policy exempts you from the surcharge. It can carry an excess up to the allowed limit. Extras-only cover, sometimes called ancillary or general treatment, does not exempt you. You need hospital cover, held for the full period you want to be exempt.
When is cover not worth it for tax reasons?
If your income is under the threshold, the surcharge is zero, so there is no tax reason to hold cover. There may be other reasons to hold it, but dodging the surcharge is not one of them below the line.
A worked example
A single earning $95,000 is under the $105,000 threshold. Their surcharge is zero. Holding hospital cover saves them nothing at tax time. A single earning $130,000 is over the threshold and faces a surcharge, so cover starts to make tax sense.
The numbers, with sources
- Single threshold for 2026-27 is $105,000.privatehealth.gov.au
- Family threshold for 2026-27 is $210,000.ato.gov.au
- The surcharge runs 1% to 1.5% of income.ato.gov.au
General information only, not personal or financial advice. Full method on the methodology page.