Question 1

Do I need private health insurance in Australia?

Accepted Answer

You are not legally required to have private health insurance in Australia. However, if your taxable income exceeds $93,000 (single) or $186,000 (family) for 2025-26, you will pay the Medicare Levy Surcharge (MLS) of 1% to 1.5% unless you hold an eligible private hospital insurance policy. For many people above these thresholds, a basic hospital policy is cheaper than the surcharge.

Question 2

What is the Medicare Levy Surcharge?

Accepted Answer

The Medicare Levy Surcharge (MLS) is an additional tax of 1% to 1.5% of your taxable income, on top of the standard 2% Medicare levy. It applies to Australian taxpayers who earn above the MLS threshold and do not have an eligible private hospital insurance policy. The surcharge is designed to encourage higher-income earners to take out private health insurance and reduce demand on the public health system.

Question 3

At what salary does private health become cheaper than MLS?

Accepted Answer

For singles, the MLS kicks in at $93,001. At that income level, the 1% surcharge is about $930 per year. Basic hospital cover policies that satisfy the MLS exemption start from around $900-$1,200 per year, depending on your state, age, and insurer. So for most people earning between $93,000 and $120,000, basic hospital cover costs roughly the same as the surcharge. Above $120,000, insurance is almost always cheaper than the MLS.

Question 4

What's the cheapest way to avoid the MLS?

Accepted Answer

The cheapest way to avoid the Medicare Levy Surcharge is to take out a basic hospital-only policy with a $750 excess (the maximum allowed). Look for policies with restricted or basic tier hospital cover. You do not need extras cover (dental, optical, etc.) to be exempt from the MLS — only hospital cover counts. Compare policies on privatehealth.gov.au, the government's official comparison website.

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