Medicare Levy & Medicare Levy Surcharge Explained
Most Australian residents pay the Medicare levy through their tax return. Higher-income earners without private hospital cover may also pay the Medicare levy surcharge. Here is the difference – in plain English.
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Medicare levy vs Medicare levy surcharge
Medicare levy
Generally 2% of your taxable income. Most Australian residents pay it. People on lower incomes may pay less or none.
Medicare levy surcharge (MLS)
An extra 1%, 1.25% or 1.5% for people above certain income thresholds who don’t have an appropriate level of private hospital cover.
Who pays the surcharge?
- Your income for MLS purposes is above the threshold for singles or families
- You (and your dependants) don’t have appropriate private patient hospital cover for the full year
- The surcharge applies for each day you didn’t have cover
Income thresholds are set each year and are higher for families, with extra allowance for each dependent child after the first.
Who may not pay the Medicare levy
- Some people on low incomes
- Foreign residents for tax purposes
- Some temporary visa holders from countries without a reciprocal health agreement (an exemption certificate may be needed)
- Certain other exempt groups
Common mistakes
- Not including your private health insurance statement details
- Having only “extras” cover – this doesn’t avoid the surcharge
- Forgetting a spouse’s income when working out family thresholds
- Not claiming a Medicare levy exemption you are entitled to
How UV TAX helps
- Check whether the surcharge applies to you
- Make sure your private health details are correct
- Claim reductions or exemptions you are entitled to
- Explain whether hospital cover could save you money overall
⚠️ General information only – not tax or legal advice. Thresholds, rates and exemption rules change and depend on your family situation. UV TAX does not provide advice on choosing a health insurance product. This page is a simple overview as at November 2026 and does not consider your personal circumstances. Tax laws, rates and thresholds change regularly. Please get advice for your situation before acting.
Not sure about the Medicare levy surcharge?
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0466 268 405Frequently asked questions
What is the Medicare levy rate?
Generally 2% of taxable income for Australian residents.
What is the Medicare levy surcharge?
An extra 1% to 1.5% for higher-income earners without appropriate private hospital cover.
Does extras cover avoid the surcharge?
No. You need an appropriate level of private patient hospital cover.
Do foreign residents pay the Medicare levy?
Foreign residents for tax purposes generally don’t pay the Medicare levy.
Related
General information current as at November 2026.