What hospital cover actually exempts you
Most policies do not. Extras cover exempts nobody, and an excess over the limit means your policy counts for nothing at all. Check yours against both rules before you pay.
What cover do you need?
To bring MLS down to $0 you need a hospital policy. Extras cover alone will not do it.
Hospital cover, not extras
Dental, optical, ambulance and physio cover do not clear MLS on their own.
Correct excess level
Singles need an excess of $750 or less. Couples and families need $1,500 or less.
Australian registered insurer
Your insurer must be registered in Australia. Overseas visitor policies often do not count.
Step-by-step: getting cover for MLS purposes
Check your MLS income tier
First check your income against the MLS thresholds. If you are above one, work out the cost below.
Compare eligible hospital policies
If you only want the tax saved, start with basic or bronze policies. Ask one question. Is the premium less than the surcharge?
Check the rebate position
The government rebate cuts your premium. Take it up front, or claim it back at tax time.
Keep your insurance statement
Your insurer sends a statement each year. It lists the days you held cover. You need it to lodge.
The common mistake
Extras cover does not avoid MLS. Check the policy includes hospital cover, and check the excess.
Hospital cover start dates matter
MLS is worked out on the days you had no hospital cover.
Start cover mid-year and you still owe MLS for the gap. That is why your start date matters.
Cover held all year
Hold eligible cover all year and your MLS is $0.
Cover started later
You may still pay MLS for the days before your eligible hospital cover started.
Lifetime Health Cover is separate
Lifetime Health Cover loading is different from the Medicare Levy Surcharge. MLS is a tax surcharge, while LHC is a loading that can increase your private hospital premiums if you delay getting cover after age 30.
If you are near or over 31, hospital cover may affect both your MLS position and your future premium loading.
Check if hospital cover could save you money
Use the calculator below to estimate your Medicare Levy Surcharge and compare whether eligible private hospital cover may cost less than paying extra tax.
If you already have cover, it can help estimate how much MLS you may avoid. If you do not have cover, test different policy start dates and premium amounts.
Income & Household
Health Insurance Details
1 July 2026 – 30 June 2027
The premium for eligible hospital cover. Not sure? The comparison below fills real prices in for you.
Advanced options
Must be $750 or less (singles) or $1,500 or less (families) to clear MLS.
Your result
-$929
Paying the surcharge looks cheaper
This compares your estimated Medicare Levy Surcharge against the cost of hospital cover for the selected period.
Income used
Taxable income + reportable benefits
MLS is a tax surcharge. Lifetime Health Cover loading is different. LHC increases hospital cover premiums if it applies.
FY 2026-27 coverage period
The later your cover starts in the financial year, the fewer days are covered and the more surcharge may remain payable.
The bottom line
On this income you sit under the 2026-27 surcharge threshold, so no Medicare Levy Surcharge applies. Hospital cover is then a health decision rather than a tax one, because there is no surcharge for it to offset.
Income Break-Even Point
$115,000
If your income stays above this line, private insurance is objectively cheaper than paying the surcharge.
ATO Policy Compliance
To clear MLS you need hospital cover with an excess of $750 or less (singles) or $1,500 or less (families). Extras-only cover does not count.
Compliant cover
Policies that clear your surcharge
To remove your $0 surcharge, you need hospital cover with an excess of $750 or less. These are the cheapest Bronze Plus policies from five major insurers.
Prices from privatehealth.gov.au, July 2026 release, for WA. The government rebate is applied for your income tier. Under-30 discounts are not included, so you may pay less. Links may earn us a commission at no cost to you.
MedibankBronze Plus Value
HBFLite Bronze Hospital Plus
BupaBronze Plus Simple Hospital
nibBronze Protect Hospital Plus
