EOFY Medicare Levy Surcharge Check (2025-26): Do You Need Private Health Before 30 June?
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Primary tax-year context: 2025-26
This article is general information only. We maintain pages using primary-source checks and date-based reviews. See editorial policy.
General information only. This is not tax or financial advice. Consult a registered tax agent for advice specific to your situation.
If your income is above the Medicare Levy Surcharge (MLS) threshold and you do not hold appropriate private hospital cover, you will pay the surcharge for every day you are without cover. Getting covered before 30 June reduces the number of days MLS applies for the 2025-26 year.
MLS income thresholds for 2025-26
The MLS uses its own income test, which includes taxable income, reportable fringe benefits, total net investment losses, and certain other amounts. The thresholds for 2025-26 are:
| Tier | Single | Family | MLS rate |
|---|---|---|---|
| No MLS | $101,000 or less | $202,000 or less | 0% |
| Tier 1 | $101,001 – $118,000 | $202,001 – $236,000 | 1.0% |
| Tier 2 | $118,001 – $158,000 | $236,001 – $316,000 | 1.25% |
| Tier 3 | $158,001+ | $316,001+ | 1.5% |
The family threshold increases by $1,500 for each dependent child after the first.
How MLS is calculated
The surcharge is applied as a percentage of your taxable income (not your MLS income) for each day you do not hold appropriate cover. If you are without cover for the entire year, the full surcharge applies. If you get cover part-way through the year, the surcharge is prorated for the days without cover.
For example, if your taxable income is $130,000 and you are in Tier 2, the MLS would be 1.25% of $130,000 = $1,625 per year. If you get cover on 1 March 2026, you would pay MLS for the 243 days from 1 July 2025 to 28 February 2026 (approximately $1,082), with no surcharge for the remaining days.
What counts as appropriate cover
Not all private health insurance avoids MLS. The policy must be:
- Private patient hospital cover — extras-only cover does not count
- From a registered health insurer
- With an excess (front-end deductible) of no more than $750 for singles or $1,500 for couples/families
Basic hospital cover with a $750 excess is typically the cheapest policy that satisfies the MLS requirements. Policies marketed as “MLS exempt” or “surcharge exempt” are designed for this purpose.
Lifetime Health Cover loading
Lifetime Health Cover (LHC) loading is a separate penalty that increases your hospital insurance premium by 2% for every year you are aged over 30 without hospital cover, up to a maximum loading of 70%.
- LHC loading is separate from MLS — it affects your premium cost, not your tax
- The base day for LHC is 1 July following your 31st birthday
- If you have been without cover for several years past age 30, the LHC loading can make the premium significantly more expensive
- The loading is removed after you hold hospital cover continuously for 10 years
When comparing the cost of MLS versus private health, include any LHC loading in the premium cost.
Cost comparison: MLS versus cheapest policy
The key question is whether the MLS costs more than the cheapest qualifying policy. Here is a rough comparison framework:
Step 1: Estimate your MLS cost. Multiply your taxable income by the applicable MLS rate.
Step 2: Get a quote for the cheapest qualifying hospital cover (basic hospital, $750 excess for singles or $1,500 for families). Include any LHC loading.
Step 3: Compare the two amounts.
In many cases, particularly at Tier 2 and Tier 3 income levels, the MLS costs more than basic hospital cover. At Tier 1, it is closer, and the comparison depends on your exact income and the premium available.
Getting cover also means you have hospital insurance — which has value beyond just avoiding the surcharge.
Family considerations
If you have a spouse or dependants, the test applies to the family as a unit.
- Both you and your spouse need cover (plus dependent children) to fully avoid MLS
- If one person in the family does not have cover, MLS can still apply
- A family policy or combination of single policies can satisfy the requirement
- De facto partners are included in the family test
Action items before 30 June
- Estimate your MLS income for 2025-26 (include reportable fringe benefits and net investment losses)
- Determine which MLS tier applies to you
- If above the threshold, get a quote for the cheapest qualifying hospital cover
- Compare the annual premium (including any LHC loading) against the MLS cost
- If taking out cover, arrange it as soon as possible — MLS applies for each day without cover
- If you already have cover, confirm the excess is within the allowed limits
Key dates
- 30 June 2026 — MLS is calculated daily. Every additional day of cover before 30 June reduces the surcharge for 2025-26.
- Getting cover even a few weeks before 30 June saves a proportionate amount of MLS for the current year.
Next step
- Calculate your MLS exposure with the Medicare Levy & MLS Calculator
This is general information only. Rules and thresholds can change. Check with the ATO or a registered tax agent for your specific situation.