Is private health insurance worth it? The tax answer at your income
Pick your state, your household and the age of the oldest person covered: the calculator finds the income from which hospital cover costs less than the surcharge.
Income from which cover is cheaper
$105,100
At that income the surcharge is $1,051 and the cheapest exempt policy costs $1,033 after the rebate.
| Surcharge threshold | $105,000 |
| Cheapest policy, per month | $102.60 |
| Median exempt policy, per month | $186.10 |
Prepared by Radif Partners · How the figures are built · thresholds read on ato.gov.au, premiums from privatehealth.gov.au data · not tax advice
On the tax side alone, private hospital cover is worth it once the Medicare levy surcharge you would pay without it is larger than what the policy costs after the rebate. Below the 2026-27 threshold of $105,000 for a single person or $210,000 for a family there is no surcharge, so cover never pays for itself through tax. Above it, the answer turns on the policy you buy. With the cheapest exempt single policy in New South Wales, $102.60 a month before the rebate in the PrivateHealth.gov.au file of 1 October 2026, cover is cheaper from $105,100. With a policy at the median price, $186.10 a month, the line moves to $164,500. A Lifetime Health Cover loading pushes it further out, since the rebate is never paid on the loading. Whether the cover is worth it for your health is a separate question that this page does not try to answer.
Two questions hidden in one
People who type "is private health insurance worth it" usually mean two things at once. The first is a money question: will a hospital policy cost me more than the tax I pay without one? The second is a health question: will the policy pay out when I need it, for the treatment I care about? Only the first has an answer that holds for everybody with the same income, state and family, because it rests on published rules and published prices. This page answers that one, and it answers it in dollars.
The money question has three moving parts. The Medicare levy surcharge you pay without cover rises with your income, from 1 % to 1.5 %. The rebate lowers the premium but falls as your income rises, and disappears at tier 3. The Lifetime Health Cover loading raises the premium if you join after your base day. All three are set from the same income tiers, so they have to be computed together, not one after the other.
The break-even income for a single person in NSW
| Income for MLS purposes | Surcharge without cover | Cheapest exempt policy, net | Median exempt policy, net | Cheaper option |
|---|---|---|---|---|
| $100,000 | $0 | $934 | $1,695 | no surcharge |
| $110,000 | $1,100 | $1,033 | $1,874 | cheapest policy only |
| $120,000 | $1,200 | $1,033 | $1,874 | cheapest policy only |
| $130,000 | $1,625 | $1,132 | $2,054 | cheapest policy only |
| $150,000 | $1,875 | $1,132 | $2,054 | cheapest policy only |
| $170,000 | $2,550 | $1,231 | $2,233 | any of the two |
| $200,000 | $3,000 | $1,231 | $2,233 | any of the two |
Read the table from the top. Under $105,000 there is nothing to compare: no surcharge, and the policy is a pure cost on the tax side. Just above the threshold, the surcharge is 1 % of your income and the cheapest policy, after the tier 1 rebate of 16.079 %, is already a little cheaper. The median policy only wins at incomes where the surcharge has grown to 1.5 %, and a Silver policy at the median Silver price wins from $164,500.
Your income and your own premium
Paying the surcharge costs less than the cheapest cover by
$16
| Income tested: $140,000 | Tier 2, 1.25 % |
| Surcharge without cover, you | $1,750 |
| Your policy, full premium | $1,920 |
| Rebate (8.038 %) | -$154 |
Why the rebate works against you as income rises
The rebate is not a fixed discount. For a person under 65 it is 24.118 % at the base tier, 16.079 % at tier 1, 8.038 % at tier 2 and nothing at tier 3. So the net price of the same policy goes up exactly when the surcharge goes up. That is why the gap between the two does not simply widen with income: at the step into tier 3 the surcharge rate rises to 1.5 % and the rebate falls to zero at the same moment. The thresholds page shows the exact boundaries.
Older households get more rebate. When the oldest person on the policy is 70 or over, the base tier rebate is 32.158 %, which lowers the break-even income. A bill before Parliament would bring the over 65 rates down to the under 65 ones from 1 April 2027; it is not law, and the over 65 page prices the change.
The loading changes the sum for late joiners
A person who first takes out hospital cover at 50 pays 40 % more on the hospital premium for ten years, and the rebate does not reduce that extra. On $140,000 in NSW the cheapest policy then costs $1,625 a year against a surcharge of $1,750. Cover still wins, but by less. The loading ends after ten continuous years, while the surcharge is due every year you stay uncovered above the threshold, so a single year's comparison understates the case for joining. The base day page shows what each year of delay adds.
Couples and families
For a couple the tier comes from combined income, tested against $210,000, and both partners and every dependant must be covered to avoid the surcharge: PrivateHealth.gov.au says plainly that if your partner or one of your dependants is not covered, you will pay it. A couple policy costs about twice a single one, and the surcharge is charged on both incomes, so the break-even depends on how the income is split. Set the household in the calculator and enter your partner's income; the result is your own income from which the cheapest family policy costs less. The couples page and the families page go through the cases.
What the numbers cannot tell you
A cheap Basic policy that removes the surcharge can leave you without cover for treatments you might want as a private patient. Every policy has a Private Health Information Statement that lists what it covers and excludes, and PrivateHealth.gov.au publishes the statement of every policy on sale. Our comparison stops at the tax line on purpose. If the cheapest exempt policy is all you want, the sum above is the whole story; if you want cover you would actually use, put its premium in the calculator and see what it really costs you after the surcharge it saves.