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The levy and surcharge are different
The usual Medicare levy helps fund the public health system. Private hospital insurance does not remove that ordinary levy. The surcharge is an extra charge for some higher-income people without appropriate hospital cover.
The calculator assumes a full year of either qualifying cover or no cover. Partial-year insurance, dependant cover and exemption days need a separate check.
| Tier | Single income | Family income | Rate |
|---|---|---|---|
| Base | Up to $105,000 | Up to $210,000 | 0% |
| Tier 1 | $105,001 to $123,000 | $210,001 to $246,000 | 1% |
| Tier 2 | $123,001 to $164,000 | $246,001 to $328,000 | 1.25% |
| Tier 3 | Above $164,000 | Above $328,000 | 1.5% |
What one dollar over a surcharge threshold changes
For a single person without qualifying hospital cover, $105,000 of surcharge income stays in the base tier. At $105,001, the 1% charge applies to the relevant income base for the uncovered year. It is not a 1% charge on the extra dollar alone.
These examples use taxable income equal to surcharge income, with no reported benefits or super add-backs. A salary input can be different after a deduction. The table excludes the separate ordinary Medicare levy.
| Taxable and surcharge income | Surcharge rate | Annual surcharge |
|---|---|---|
| $105,000 | 0.00% | $0.00 |
| $105,001 | 1.00% | $1,050.01 |
| $123,000 | 1.00% | $1,230.00 |
| $123,001 | 1.25% | $1,537.51 |
Family income needs both people
For a family assessment, enter the partner annual income used for the surcharge test, including relevant add-backs. The family threshold increases by $1,500 for each dependent child after the first. Your personal surcharge is not simply the percentage of the whole family’s income.
The separate partner taxable income field is for the ordinary Medicare levy family reduction. It can differ from surcharge income, for example when your partner sacrifices salary into super. Use the expected taxable amount after eligible deductions rather than automatically copying gross salary.
Salary sacrifice to super and reportable fringe benefits can be added back to test which tier applies. The actual surcharge base is different from the tier test. This distinction is why a simple “salary times 1%” rule can mislead.
Compare cover on more than the tax saving
Hospital cover has a cost and policy conditions. Compare the premium you would actually pay, any rebate eligibility, exclusions, waiting periods and the care you want. The surcharge alone does not decide whether a policy suits you.
Cover needs to meet the ATO conditions, including applicable excess limits. Ask the insurer about your household circumstances rather than assuming any private health policy qualifies.
Common questions
Does private health cover remove the 2% Medicare levy?
No. Appropriate hospital cover can affect the surcharge, but generally does not remove the ordinary Medicare levy.
Does extras-only insurance avoid the surcharge?
No. The surcharge rules require appropriate private patient hospital cover. Extras cover alone does not qualify.
Sources you can check
Sources checked for this page on 3 October 2026. Statistics keep their own measurement dates.