To break it down, you already pay 2% of your income via the Medicare Levy to fund the public health system. But if you don’t have private hospital health cover and your income is a little too healthy, the ATO charges you up to an extra 1.5% just for not holding a private policy.

Yep – you’re taxed for not buying insurance, even though you’re already taxed for the healthcare system. Make’s sense right.. ?
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Who gets hit with the Medicare Levy Surcharge?

In 2025 you’re in the firing line if:

• You’re single and your income is over $97,000
• You’re in a couple or family and your combined income is over $194,000
• And you don’t have an eligible private hospital policy

But beware: this isn’t based on your taxable income.

The Medicare Levy Surcharge is calculated on your “income for surcharge purposes”, which includes:

• Taxable income
• Reportable fringe benefits
• Total net investment losses (including net rental losses and financial investment losses)
• Reportable super contributions

So, if you’re a property investor claiming net rental losses or making deductible super contributions, you might think you’re under the threshold – but the ATO’s surcharge formula adds all that back in to reassess your “real” income.

What does that mean? It means you could be hit with the surcharge even if your tax return says otherwise.And if you’re carrying investment losses across multiple properties, it could bite you hard.

What counts as ‘eligible’ cover?

Only hospital cover that complies with government rules.
Extras-only policies (like dental, optical or physio) won’t protect you from the surcharge.

How Bupa + TaxTank Can Save You

We’ve partnered with Bupa, one of Australia’s most trusted names in health insurance, to help you:

Avoid the Medicare Levy Surcharge
Protect your health with real value
Save long-term with a TaxTank exclusive bonus

Why Bupa?

• Wide range of compliant hospital policies to suit your needs
• Flexible options for different life stages and budgets
• Great member benefits and wellness perks
• Award-winning service and an extensive hospital network
• Competitive pricing – plus an additional 6% off for TaxTank members, on top of any other eligible Bupa promotions

At TaxTank, we’re on a mission to help Aussies make smarter money moves – not just during tax time, but all year round. Avoiding a sneaky, unnecessary tax and scoring better value on health cover? Now that’s a win-win

Join TaxTank today to take advantage of our great partnership offer.