Medicare Levy Surcharge and hospital cover
Is your income above $105,001 as a single, or above $210,001 as a couple/family? You may be up to pay the Medicare Levy Surcharge (MLS) this financial year.
For many higher-income earners, Frank’s Basic Hospital covers may cost less than what you’ll be up to pay in MLS.
Last updated July 2026
How much tax could you save with private health insurance?
So you've done the math and it looks like you're going to have to pay up for MLS? (Enter Frank). Let's talk about how much you could save by joining one of Frank’s hospital covers.
Here’s how to go about it:
- Get a quote for hospital cover. The cheaper the policy, the more you could save (but take note that there's less services included). Keep in mind that extras or ambulance cover on its own doesn’t count as an appropriate level of private health insurance hospital cover
- Calculate your annual income for MLS purposes with the Medicare Levy Surcharge income calculator
- Subtract your hospital premium from your MLS amount
- That amount staring you in the face right now is your tax savings, if you were to take out a hospital policy
- Spend the rest of the day thinking about what you’ll do with your extra money. Whether you’ve saved quite a few pineapples or even just a fiver, it’s still a win!
How it works:
Mae
30 y/old single
Earned 124k in FY26-27
No hospital cover – paying MLS
Mae’s MLS estimate for FY26-27:
$1,550.00
Mae doesn’t have private health insurance hospital cover, so MLS applies.
Mae has to pay it in her tax return for the year. She mentally kisses that summer festival she’d been thinking about all winter goodbye.
With hospital cover for the full financial year – not paying MLS
Mae pays:
$1,136.65 per year for Frank Accident Only Hospital (Basic) and no longer needs to pay the MLS.
She instantly saves $413.35 in tax. Not too shabby!
The cherry on top? Mae also gets cover for Accidents and Emergency Ambulance with her Frank hospital cover.
Mae has done her homework and understands that Accident Only Hospital (Basic) has far more exclusions than inclusions, but it does what she needs it to do right now.
*Based on 1 person on a Single policy, aged 30, earning between $123,001 - $164,000 (MLS Tier 2), living in VIC. Premium shown is inclusive of 8.038% Australian Government Rebate on Private Health Insurance. Prices displayed are based on 1 July 2026 premiums and are subject to change.
See Basic Accident Boost Hospital for further information on the level of cover used in this example.
How it works:
Bluth family
2 adults (both 27) and 1 dependant under 18
Family
Earned 270k combined in FY26-27
No hospital cover – paying MLS
The Bluth's MLS estimate for FY26-27:
$3,375.00
Lucy and Georgos pay this when they do their tax return for the year as they don’t have a private health insurance hospital cover.
If they were to feel their feelings, they would say they are mildly annoyed at paying extra for not much in return.
With hospital cover for the full financial year - not paying MLS
Lucy and Georgos pay:
$2,967.80 per year for Frank Bronze Plus Hospital (Bronze+) and pay no MLS.
While the $407.20 they save in tax should just cover Mum’s coffee budget for the year, they get more inclusions with a higher hospital tier (Bronze+).
The Bluth's get private health benefits for 25 clinical categories to cover a few treatments that are pretty important to them, such as:
- Tonsils, adenoids and grommets
- Digestive system
- Joint reconstructions
- Chemotherapy, radiotherapy and immunotherapy for cancer
- Ear, nose and throat
- Gynaecology
- Gastrointestinal endoscopy
But wait – there's more! Lucy and Georgos are eligible for the age-based discount (available on all Frank hospital covers for members aged 18–29 years). As they are 27 years old, they receive a 6% discount on their policy until they turn 41. Learn about the age-based discount.
*Based on 2 adults, 1 dependant on a Family policy, adults aged 27, earning between $246,001 - $328,000 (MLS Tier 2), living in VIC. Premium shown is inclusive of 8.038% Australian Government Rebate on Private Health Insurance and 6% age-based discount. Prices displayed are based on 1 July 2026 premiums and are subject to change.
See Bronze Plus Hospital for further information on the level of cover used in this example.
What is the Medicare Levy Surcharge (MLS)?
The MLS is an additional tax between 1% to 1.5% of your annual income that aims to encourage higher-income earners to take out hospital cover.
You can avoid it by holding eligible private health insurance hospital cover for the full financial year.
Income thresholds | Single
Medicare Levy Surcharge rates and income thresholds | Effective from 1 July 2026
| Income threshold |
$105,000 or less | $105,001 - $123,000 | $123,001 - $164,000 | $164,001 or more |
|---|---|---|---|---|
| Tier | No charge | Tier 1 | Tier 2 | Tier 3 |
| % of income you may pay | 0.0% | 1.0% | 1.25% | 1.5% |
| MLS you may have to pay | $0 | $1050 - $1230 | $1537 - $2050 | $2460 or more |
How it works:
You’re single and earn $106,000 per year. Your income places you in Tier 1, meaning you would have to pay 1% of your income as MLS. That’s $1,060 per year. To avoid this, you could take out a hospital policy with a total premium that’s less than what you would have to pay in MLS.*
*Depending on your circumstances and where your income is placed in the relevant income tier, it’s possible that your health insurance premium could be higher than what you would be required to pay for the MLS and you might not see any tax savings if you have purchased a hospital policy for that purpose.
Income thresholds | Couples, Families & Single parents
Medicare Levy Surcharge rates and income thresholds | Effective from 1 July 2026
| Income threshold (increases by $1,500 per child after your first) |
$210,000 or less | $210,001 - $246,000 | $246,001 - $328,000 | $328,001 or more |
|---|---|---|---|---|
| Tier | No charge | Tier 1 | Tier 2 | Tier 3 |
| % of income you may pay | 0.0% | 1.0% | 1.25% | 1.5% |
| MLS you may have to pay | $0 | $2100 - $2460 | $3075 - $4100 | $4920 or more |
How it works:
You and your partner have a combined household income of $250,000 per year. Your income places you in Tier 2 family income threshold, meaning you would have to pay 1.25% of your combined income as MLS. That’s $3,125 per year. To avoid this, you could take out a couples hospital insurance policy with a total premium less than what you would have to pay in MLS*.
*Depending on your circumstances and where your income is placed in the relevant income tier, it’s possible that your health insurance premium could be higher than what you would be required to pay for the MLS and you might not see any tax savings if you have purchased a hospital policy for that purpose.
We all know that anything tax related can become complicated at the speed of light. If you’re still unsure, chat to a tax agent about your personal situation and any changes that have happened throughout the financial year.
What is the minimum health cover required to avoid the MLS?
If MLS applies to you, only hospital policies will exempt you from paying – extras policies on their own won’t help you avoid the additional tax. If you want the best of both worlds, you can combine hospital and extras to both avoid the surcharge and have the extras cover you want at the same time. A+ for multi-tasking.
Affordable hospital cover with Frank
-
Emergency ambulance
-
Dental surgery
-
Joint reconstructions
-
Emergency ambulance
-
Bone, joint & muscle
-
Digestive system
* The price shown is per week and applies to a Single, aged 30, living in VIC. It excludes LHC loading and includes a Base Tier Government Rebate
| Extras services (when included on cover) |
|---|
| All extras benefits except as specified below. Waiting Period: 2 Months |
| Optical, home and domestic aids and medical aids. Waiting Period: 6 months |
| Major dental services (including full & partial dentures, orthodontics, crown & bridgework, endodontic services such as root canal, gold fillings, indirect restorations, surgical extractions of a tooth/teeth including wisdom teeth). Waiting Period: 12 Months |
| Health appliances including nebuliser pump, blood glucose monitor, pressure garments, sleep apnoea monitor, extremity pump, hearing aids, orthopaedic appliances (GMHBA approved), prostheses (GMHBA approved non-surgical), tens monitor, podiatry surgical procedures and orthotic appliances (foot). Waiting Period: 12 Months |
| Hospital services (when included on cover) |
|---|
| Accidents - bodily injuries resulting from accidents which occur after the date of joining GMHBA or upgrading to a higher cover. Waiting Period: No |
| Obstetrics and maternity. Waiting Period: 12 months |
| Pre-existing ailment, illness or condition (other than psychiatric, rehabilitation and palliative care). Waiting Period: 12 months |
| Any other benefit for hospital (or hospital substitution) treatment. Waiting Period: 2 months |
A pre-existing condition is one where signs or symptoms of your ailment, illness or condition, in the opinion of a medical practitioner appointed by GMHBA (not your own doctor), existed at any time during the six months preceding the day on which you purchased your hospital insurance or upgraded to a higher level of hospital cover and/or benefit entitlement.
A special waiting period applies to obtain benefits for hospital treatment for new members who have pre-existing conditions. The waiting period also applies to existing members who have recently upgraded their level of hospital cover. If the ailment, illness or condition is considered pre-existing:
New members
New members must wait 12 months for any hospital benefits (other than psychiatric, rehabilitation and palliative care).
Existing members (transferring or upgrading)
Members transferring/upgrading to a higher hospital cover must wait 12 months to get the higher hospital benefits (other than psychiatric, rehabilitation and palliative care).
Existing members (with at least 12 months membership)
Existing members with at least 12 months membership in total across their old and new cover are entitled to the lower benefits on their old cover.
Silver Hospital cover provides the same single room coverage as Gold Hospital, but co-payments of $100 per day up to a maximum of $700 per admission apply. Co-payments are not the same as hospital excess. Please note: Some private hospitals only have single rooms and co-payments will apply.
Co-payments do not apply.
How to get started
Take a look through our covers and see what takes your fancy. All you have to do is decide what level of cover suits you best.
Why choose Frank health insurance?
Are you a higher income earner and need less tax in your life? Then you need more Frank.
Our range of health insurance policies mean that it’s your call – you could go basic with a policy that only gets you off the hook for additional tax and not much more, or you could look at a higher level of cover or even add extras cover on if you’re wanting a little, well, extra. We have cheap health insurance options for singles, couples, families, and single parent families - so there’s a cover to suit your needs. Peace of mind is pretty nice after all.
Frank is a not-for-profit health insurer with a focus on affordable cover and great member experience. With an Australian-based customer service team that really cares, we’re here for you when you need it.
Hear from real members on Product Review.
Frequently Asked Questions
Yes, you’re in this one together. For Medicare Levy Surcharge purposes, you're counted as a member of a family if you had a spouse or dependants for any part of the financial year.
If you have a spouse, you’ll both be assessed as a combined family income. If you earn over $210,000 together, you may have to pay MLS.
If you only had a spouse for part of the financial year, it can get a tad confusing working out how much MLS you’d need to pay. Check out the ATO info about income for MLS purposes to learn more.
Yes. The Medicare Levy is what most of us pay in our tax each year (2% of taxable income), regardless of health insurance coverage.
The Medicare Levy Surcharge is an additional levy on top of this, which may apply to higher income earners who don’t have an appropriate level of private health insurance hospital cover. While the Medicare Levy helps fund Australia’s public health system, the MLS is designed to encourage people to take out private hospital cover and reduce demand on the public health system.
An appropriate level of private patient hospital cover is provided by a registered health insurer and meets the following requirements:
- If you’re single, your policy must have an excess of $750 or less
- If you’re a couple, single parent or family, your policy must have an excess of $1,500 or less
- Every hospital product tier from Basic through to Silver Plus Max can meet these requirements
- Extras policies do not count as an appropriate level of private patient hospital cover.
All of Frank’s hospital policies meet the appropriate level of private patient hospital cover requirements to avoid MLS.
If you temporarily suspend your membership, you won’t have an appropriate level of hospital cover during that time. If your income is above the relevant thresholds, you may need to pay the Medicare Levy Surcharge (MLS) for the period your cover was suspended.
MLS is calculated based on the number of days you didn’t have hospital cover during the financial year. This means you’ll only pay the surcharge for those days, rather than the full year. This will show on your private health insurance tax statement as ‘days without cover’.
Short answer – no. However, you can claim the Australian Government Rebate on Private Health Insurance (rebate) to offset the cost of your health insurance policy. This subsidy, like the Medicare Levy Surcharge, is Tiered, and based on your annual taxable income, but also your age bracket. It can be claimed through your Private Health Insurance fund as a reduced policy premium, or as a lump sum refund from the ATO when you complete your tax return.
At the end of each financial year, your policy tax data is sent directly to the ATO to be pre-filled automatically into your tax return.
Learn more about the Australian Government Rebate on Private Health Insurance.
Lifetime Health Cover (LHC) loading is an aged-based loading on your hosptal premiums for every year you didn’t have cover after 30. It’s an Australian Government initiative designed to encourage people to take out hospital cover earlier in life and stay covered.
Learn more about Lifetime Health Cover loading.
If you're 18-29 years old, you may be eligible to receive an age-based discount on your Frank hospital cover. It’s a discount of between 2-10%, based on your age when you joined Frank on a hospital cover. Extras cover on its own is not eligible for the age-based discount.
If you held an age-based discount from another fund, Frank will honour that when you join if there is less than a 30 day gap in cover between leaving your previous insurer and joining Frank.
The age-based discount isn’t related to the Medicare Levy / Medicare Levy Surcharge, but it will affect the final premium that you pay if you're eligible.
To avoid paying the Medicare Levy Surcharge, you’ll need an appropriate level of hospital cover for the full financial year, which may help reduce the tax you pay. Basic hospital cover can be a lower-cost option for higher income earners, but if you’re only covered for part of the year, you may still need to pay the MLS.
The cost of private health insurance can vary! The amount you’ll pay for your premium (that’s the amount you pay to your health insurer) will depend on the type and level of cover you pick.
A few personal details like your age when you first take out and maintain private health insurance hospital cover, income, where you live and who needs to be covered on your policy (just you, you and your partner, or kids too) will also determine if any rebates, discounts or loadings will apply.
And there are a couple of things that may impact the amount you pay on your premiums, such as Lifetime Health Cover (LHC) loading, and the age-based discount.
6 weeks free* when joining on combined cover.
*For new members who have not been a member during the last 12 months, joining on combined hospital and extras cover, paying by direct debit. Must pay first month to receive offer. Offer only available via Frank website or phone joins. Not available with any other offer or Frank OVHC. Ends 31 July 2026.
