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Private health insurance in Australia
Three reasons to hold cover — Medicare Levy Surcharge, Lifetime Health Cover loading, and shorter waits for elective surgery. Hospital vs extras, MLS thresholds, and the comparison site that doesn't take referral fees.
Published 17 May 2026 · Last reviewed 17 May 2026
Three reasons you might want private health insurance in Australia:
- Avoid the Medicare Levy Surcharge (MLS). If your income is above $101,000 single / $202,000 family (2025–26 thresholds) and you don't hold hospital cover, you pay an extra 1–1.5% surcharge on top of the standard 2% Medicare Levy. For higher earners, hospital cover costs less than the surcharge.
- Avoid the Lifetime Health Cover (LHC) loading. If you take out hospital cover after age 31, you pay 2% extra per year of delay (up to a 70% maximum loading). Most newcomers have a 12-month grace period from when they first become eligible for Medicare to take out hospital cover without LHC loading.
- Choice and shorter waits for non-emergency procedures. Public hospital waitlists for non-emergency surgery (knee replacements, hernia repairs, cataracts) can be long. Private hospital cover gets you in faster, with choice of doctor.
The two types of cover
- Hospital cover — covers private hospital admission and helps avoid MLS.
- Extras cover — covers dental, optical, physio, chiro, psychology, etc. Doesn't affect MLS.
You can hold one without the other, or "combined" cover.
MLS income thresholds (2025–26)
| Income | Singles | Families | MLS rate |
|---|---|---|---|
| Tier 0 | < $101,000 | < $202,000 | 0% |
| Tier 1 | $101,001–$118,000 | $202,001–$236,000 | 1.0% |
| Tier 2 | $118,001–$158,000 | $236,001–$316,000 | 1.25% |
| Tier 3 | $158,001+ | $316,001+ | 1.5% |
Verify current thresholds at https://www.ato.gov.au/individuals-and-families/medicare-and-private-health-insurance/medicare-levy-surcharge/medicare-levy-surcharge-income-thresholds-and-rates
Common gotchas
- The MLS threshold is "income for MLS purposes" — broader than taxable income (includes fringe benefits, super salary sacrifice). Don't assume you're under just because taxable income is.
- Hospital cover only avoids the MLS — you need genuine hospital cover, not just extras.
- Extras cover often has annual caps that look generous but get hit fast (dental, especially).
- Waiting periods apply for almost everything — 2 months for general, 12 months for pre-existing conditions, 12 months for pregnancy, 6 months for major dental on extras.
Comparing funds
- Use the government comparison site: https://www.privatehealth.gov.au/
- The bigger funds (Bupa, Medibank, NIB, HCF) advertise the most, but smaller and not-for-profit funds (HBF, Teachers Health Fund, Police Health, Defence Health) often have better value.