Do I need private health insurance to avoid the Medicare Levy Surcharge?

Only if your income is over the surcharge threshold. For 2026-27 that is $105,000 for a single and $210,000 for a family. Below that, the surcharge is zero and hospital cover saves you nothing at tax time.

What income triggers the Medicare Levy Surcharge in 2026-27?

For 2026-27, a single pays the surcharge above $105,000 and a family above $210,000. The family threshold rises by $1,500 for each dependent child after the first.

Is it cheaper to pay the Medicare Levy Surcharge than to hold cover?

Sometimes. If your income is just over the threshold, the surcharge can be smaller than the cheapest compliant policy. The higher your income, the more the surcharge grows and the more likely cover is the cheaper path.

The tax call

Should you hold hospital cover, or pay the surcharge?

If your income is over the Medicare Levy Surcharge threshold, going without private hospital cover adds 1% to 1.5% of your income to your tax bill. Below the threshold, the surcharge is zero. This tool runs the numbers for your situation and shows the full working. No signup, no gate.

Already have cover? Review your renewal to see cheaper equivalent policies and this tax call together.

A worked example

Take a single person in NSW earning $120,000 in 2026-27. That income sits in the first surcharge tier, so the surcharge is 1% of income, or $1,200 a year. A basic hospital policy at roughly $1,100 a year, less the 16.079% rebate for that income tier, costs about $923 a year. Holding cover leaves this person around $277 ahead, and they get hospital cover on top. The gap widens as income rises.

The numbers that drive this

The single surcharge threshold rose to $105,000 from 1 July 2026.privatehealth.gov.au
The surcharge runs 1% to 1.5% of income by tier.ato.gov.au
The base rebate fell to 24.118% on 1 April 2026.health.gov.au
Lifetime Health Cover adds 2% per year after age 30, up to 70%.privatehealth.gov.au
The family threshold rises $1,500 per child after the first.ato.gov.au

Do I need private health insurance to avoid the surcharge?

Only if your income is over the threshold. For 2026-27 that is $105,000 for a single and $210,000 for a family. Under that line the surcharge is zero, so hospital cover is a lifestyle choice, not a tax play. To count for the surcharge, the cover must be a complying hospital policy. Extras-only cover does not exempt you.

What income triggers the surcharge in 2026-27?

A single pays above $105,000. A couple or family pays on combined income above $210,000, plus $1,500 for each dependent child after the first. The rate steps up through three tiers, from 1% to 1.5%.

Is it ever cheaper to just pay the surcharge?

Yes. If your income is only just over the threshold, the surcharge can be smaller than the cheapest complying policy after the rebate. The calculator above says so plainly when that is the case for your numbers.

Common questions

Read the full method and every source on the methodology page.