A million Australians without private health cover face surprise tax bills

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Almost one million higher-income Australians could be hit with an extra tax bill for not holding private hospital insurance.

New analysis shows the number of people paying the Medicare Levy Surcharge (MLS) is rising as more Australians move above the income threshold.

For the 2025–26 financial year, the surcharge applies to singles earning more than $101,000 and families earning above $202,000. It adds an extra 1 to 1.5 per cent tax on a person’s full taxable income, on top of the standard 2 per cent Medicare levy.

For example, someone earning $200,000 could face an additional $3,000 tax bill if they do not have eligible private hospital cover.

ATO figures show 885,087 Australians paid the surcharge in 2023–24, with the number expected to approach one million this financial year.

Financial experts say some taxpayers may find basic private hospital cover cheaper than paying the surcharge. The average cost of a basic policy across Australia is around $993 a year, according to Canstar analysis.

Basic policies generally provide limited hospital cover, while higher levels such as bronze cover offer access to more health services.

Experts also warn that MLS income calculations can include factors such as voluntary super contributions and fringe benefits, meaning some people may exceed the threshold even if their salary appears lower.

Australians approaching the income limit are being encouraged to review their health cover options before tax time to avoid unexpected costs.

Source : 9 News

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