Medicare levy surcharge for families: children, thresholds and cover
Enter both parents’ incomes and the number of dependent children: the tool applies the raised family threshold and shows each parent’s share.
Medicare levy surcharge, 2026-27
$2,450
Tier 1 rate of 1.00 % on 365 days without cover.
| Income tested for the tier | $245,000 |
| Thresholds (base / tier 1 / tier 2) | $211,500 / $247,500 / $329,500 |
| You | $1,500 on $150,000 |
| Partner | $950 on $95,000 |
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 family with dependent children is tested like a couple, on the parents' combined income for MLS purposes, but the threshold grows with the family. For 2026-27 it is $210,000 with one child and rises by $1,500 for each MLS dependent child after the first, so $211,500 with two, $213,000 with three and $214,500 with four. Every boundary of the tiers moves by the same amount. A child counts while under 21, or from 21 to 24 while studying full time at school, college or university; a foster child does not count. To avoid the surcharge, both parents and every dependent child need an appropriate level of private patient hospital cover. A family with two children and incomes of $150,000 and $95,000 is in tier 1 and pays $2,450 for a year without cover, shared between the parents in proportion to their incomes.
The family threshold by number of children
The base figure is the same for a couple with no children and for a family with one child: $210,000 of combined income for MLS purposes in 2026-27. From the second child on, each MLS dependent child adds $1,500 to every boundary.
| Children | No surcharge up to | Tier 1 (1 %) up to | Tier 2 (1.25 %) up to | Tier 3 (1.5 %) from |
|---|---|---|---|---|
| 1 | $210,000 | $246,000 | $328,000 | $328,001 |
| 2 | $211,500 | $247,500 | $329,500 | $329,501 |
| 3 | $213,000 | $249,000 | $331,000 | $331,001 |
| 4 | $214,500 | $250,500 | $332,500 | $332,501 |
| 5 | $216,000 | $252,000 | $334,000 | $334,001 |
| 6 | $217,500 | $253,500 | $335,500 | $335,501 |
The increment is modest next to the threshold, so it decides the outcome only when the family is close to a line. The table below takes parents on $130,000 and $82,500, $212,500 in all, without cover, and changes only the number of children.
| Children | Threshold | Tier | Surcharge for the year |
|---|---|---|---|
| 1 | $210,000 | Tier 1 | $2,125 |
| 2 | $211,500 | Tier 1 | $2,125 |
| 3 | $213,000 | Base tier | $0 |
| 4 | $214,500 | Base tier | $0 |
Who is a dependent child
The ATO definition is narrower than the one insurers use for family policies. For the surcharge, a child is your dependant if they are an Australian resident, you contributed to their maintenance, and they are:
- under 21, or
- from 21 to 24 and studying full time at school, college or university.
Your child includes a child born in or outside marriage, an adopted child, a newborn or newly adopted child, your spouse's child and a child within the meaning of the Family Law Act 1975, such as a child under a surrogacy order. A foster child is not included. You maintained a child if you lived in the same house, gave them food, clothing and lodging, helped pay their living, medical or education costs, or pay child support for them. A child turning 21 without full-time study counts for the part of the year before the birthday; a full-time student turning 25 counts until then.
Your family, your incomes
Medicare levy surcharge, 2026-27
$2,150
| Income tested for the tier | $215,000 |
| Thresholds (base / tier 1 / tier 2) | $213,000 / $249,000 / $331,000 |
| You | $1,250 on $125,000 |
| Partner | $900 on $90,000 |
Every member must be covered
Above the family threshold, a single uncovered day for any member makes the parents liable for that day. The M2 instructions give a 2025-26 example. Jill and Kevin are married with three dependent children. Jill and the children are on a hospital policy all year; Kevin is added to it on 10 January 2026. Their combined income for MLS purposes is $220,000, above their 2025-26 family threshold of $205,000 ($202,000 plus two increments of $1,500). Because not everyone was covered from 1 July 2025 to 9 January 2026, both Jill and Kevin are liable for those 193 days, Jill included, although she held cover the whole time. Each writes 172, the days without liability, at label A of question M2.
Adult children and insurer rules
Insurers have their own, wider notion of a dependant. Since rules passed in June 2021, a policy may cover dependants up to age 31, though each insurer can set a lower limit. That is a policy rule, not a tax one. PrivateHealth.gov.au says that a person covered as a dependant on a family hospital policy is not liable to pay the surcharge, provided they have no spouse or dependants of their own. A 26-year-old on the family policy is thus protected from the surcharge, while no longer an MLS dependant who raises the parents' threshold.
What the cheapest family policy costs
A family policy in the October 2026 premium file costs, for the cheapest product of every state, exactly the same as the cheapest couple policy. In Victoria the cheapest open family policy that avoids the surcharge is $204.20 a month before the rebate, the median $451.90. For the family of the summary, the comparison with a surcharge of $2,450 is on the calculator of the home page; single parents have a page of their own.
Sources
Dependants and maintenance: ATO, Family and dependants for Medicare levy surcharge purposes (updated 21 August 2026) and ATO, M2 Medicare levy surcharge 2026 (tax return instructions). Thresholds: ATO, Medicare levy surcharge income, thresholds and rates (updated 22 June 2026). Adult dependants on family policies: PrivateHealth.gov.au, Medicare Levy Surcharge; insurer age limits: PrivateHealth.gov.au, private health insurance changes.