1. Get hospital cover that counts
- It must be hospital cover. Extras-only cover (dental, optical, physio) doesn't count.
- The excess must be $750 or less for singles or $1,500 or less for couples and families.
- It must cover you and all your dependants, including your partner.
The cheapest basic hospital policy that meets these rules is often cheaper than the surcharge. Use the calculator to see your monthly break-even.
2. Timing: it's worked out by the day
The surcharge is charged for each day you're above the threshold without cover. Taking out cover part-way through the year stops it from that day. Waiting until 30 June doesn't undo the earlier months.
3. Factor in the rebate
The government's private health insurance rebate lowers your premium, but it's income tested and shrinks as your income rises. In the top income tier there's no rebate. Compare the premium after your rebate with the surcharge.
4. Don't forget lifetime health cover loading
If you don't have hospital cover by 1 July after you turn 31, you pay an extra 2% on hospital premiums for each year you're over 30 when you do take it out, up to 70%. The loading drops off after 10 years of continuous cover. Buying cover to avoid the MLS earlier can avoid this loading too.
What doesn't work
- Salary-sacrificing super doesn't lower your income for MLS purposes — it's added back.
- Negative gearing losses are added back too.
- Extras-only or travel insurance doesn't count as hospital cover.
Check your own numbers. Use the MLS calculator to see what you'd pay and the monthly break-even for hospital cover.