Medicare levy surcharge on $150,000: what packaging changes, and what it does not
At $150,000 the tier is settled. The calculator shows the surcharge and the cheapest policy; open the options to remove super contributions or investment losses from the surcharge base.
The cheapest exempt cover costs less than the surcharge by
$743
Surcharge $1,875 against $1,132 of cover: ahm health insurance, ambulance hospital (basic) (Basic, $750 excess), $102.60 a month before rebate.
| Income tested: $150,000 | Tier 2, 1.25 % |
| Surcharge without cover, you | $1,875 |
| Cheapest exempt policy, full premium | $1,231 |
| Rebate (8.038 %) | -$99 |
| Net cost of the policy | $1,132 |
| Income from which cover is cheaper | $105,500 |
Premiums: PrivateHealth.gov.au file of 2026-10-01, 435 open policies that avoid the surcharge for this cover type in NSW and ACT. Premiums change on 1 April 2027.
Prepared by Radif Partners · How the figures are built · thresholds read on ato.gov.au, premiums from privatehealth.gov.au data · not tax advice
A single income for MLS purposes of $150,000 in 2026-27 sits in the middle of tier 2, which runs from $123,001 to $164,000. Without hospital cover for the full year, the surcharge is 1.25 % of taxable income and reportable fringe benefits, $1,875 when the whole income is of that kind. How the income is made up matters here more than anywhere. Fringe benefits from salary packaging count in full, both for the tier and for the base. Super contributions and net investment losses count for the tier only, so the surcharge on the same $150,000 can be several hundred dollars lower. With the tier 2 rebate of 8.038 %, any hospital policy whose full premium is under about $169.91 a month costs less than the full surcharge, and the cheapest exempt single policies in every state are well under that line.
Same $150,000, different surcharge
| How the $150,000 is made up | Tier | Base charged | Surcharge without cover |
|---|---|---|---|
| All salary, no packaging | Tier 2 | $150,000 | $1,875 |
| $130,000 salary and $20,000 of reportable fringe benefits | Tier 2 | $150,000 | $1,875 |
| $135,000 taxable and $15,000 salary sacrificed to super | Tier 2 | $135,000 | $1,688 |
| $140,000 taxable and a $10,000 net rental loss | Tier 2 | $140,000 | $1,750 |
| $125,000 taxable, $15,000 to super and a $10,000 rental loss | Tier 2 | $125,000 | $1,563 |
The ATO defines income for MLS purposes as taxable income plus reportable fringe benefits, reportable super contributions, net investment losses and any amount on which family trust distribution tax has been paid. That total picks the tier. The rate is then charged on taxable income, reportable fringe benefits and those trust amounts only. The rows above follow that rule: packaged benefits change nothing compared with salary, while super contributions and investment losses keep you in tier 2 but shrink the base. The salary packaging page goes through the income statement figures line by line.
Your own mix of income
Your income for MLS purposes
$150,000
| Taxable income | $125,000 |
| Fringe benefits | +$0 |
| Super contributions | +$15,000 |
| Investment losses added back | +$10,000 |
The premium ceiling at this income
Turn the question around: how expensive can a hospital policy be before the surcharge is the cheaper option? For a single person under 65 with no loading, the answer is a full premium of about $169.91 a month. In New South Wales the median exempt policy of the Basic, Basic Plus, Bronze, Bronze Plus tiers costs less than that, while the median Gold single policy, $375.20, is far above it. In other words, at $150,000 the tax side pays for a mid-range policy, not for a top one.
That ceiling falls when the surcharge base is smaller. With $25,000 of the income in super contributions and losses, as in the last row of the table, the surcharge is $1,563 and so is the most a policy can cost after the rebate and still win.
The ceiling moves with age and loading
| Situation | Rebate at tier 2 | Loading | Highest monthly premium that still beats the surcharge |
|---|---|---|---|
| Under 65, joined by 31 | 8.038 % | 0 % | $169.91 |
| Under 65, first joined at 40 | 8.038 % | 20 % | $139.56 |
| Under 65, first joined at 50 | 8.038 % | 40 % | $118.41 |
| Oldest on the policy 65 to 69 | 12.058 % | 0 % | $177.67 |
| Oldest on the policy 70 or over | 16.079 % | 0 % | $186.19 |
Two forces pull the ceiling in opposite directions. Age raises it, because the rebate at tier 2 is 12.058 % from 65 and 16.079 % from 70, against 8.038 % below 65. A Lifetime Health Cover loading lowers it, because the loading is added to the full premium and the rebate is never paid on it. Someone who first takes out hospital cover at 50, with a 40 % loading, can only pay about $118.41 a month before the policy costs more than the surcharge. The cheapest exempt policies of the October file are still below that line in every state, but the choice of policy narrows quickly. The loading stops after ten continuous years of cover; the surcharge does not stop as long as your income stays above the threshold and you stay uncovered.
Before you cross into tier 3
You are $14,001 from tier 3. There the surcharge rate rises to 1.5 % and the rebate disappears at every age, so the full premium becomes your price. The $170,000 page shows what that does to the comparison. Back at the start of tier 2, the $125,000 page explains the jump at $123,001. Thresholds are set for each income year: they rose on 1 July 2026, from $118,000 to $123,000 for the top of tier 1, and the 2026-27 figures are the ones that count for this return.