Private health deadlines for permanent residents — Medicare Levy Surcharge and Lifetime Health Cover
The moment you are granted permanent residency (PR) and register for Medicare, an invisible private health insurance clock starts ticking. This guide, based on official Australian sources, covers LHC loading — which makes premiums more expensive the later you sign up — and the MLS extra tax that applies to higher earners.
Why is there a deadline in a country where private health insurance is 'optional'?
Thanks to Medicare, Australian permanent residents can receive free treatment as public patients in public hospitals, and taking out private health insurance is not mandatory. However, the government uses two mechanisms to encourage those who can afford it to take out private health insurance (particularly hospital cover): LHC (Lifetime Health Cover) loading, which makes premiums permanently more expensive the later you sign up, and the MLS (Medicare Levy Surcharge), which taxes you extra if your income is high and you have no hospital cover. For new permanent residents, both of these clocks start ticking the moment you register for Medicare, so it is important to understand the structure first, regardless of whether you intend to sign up.
The 2% Medicare levy and the MLS are separate items
The Medicare levy is a base charge of 2% of taxable income paid by most taxpayers, and it applies regardless of whether you have private health insurance (reductions apply for low incomes). The MLS is a separate item added 'on top' of it, levied only when your income exceeds the threshold and you do not have hospital cover. Also, this guide is a different topic from OSHC/OVHC for temporary visas — it is about private health insurance that permanent residents take out with domestically registered insurers.
LHC loading — the 12-month countdown that starts after Medicare registration
LHC is a scheme that adds a lifetime-style surcharge to your premium the later you take out hospital cover. For new migrants, the reference date (base day) is the later of 'the 1 July following your 31st birthday' and 'the first anniversary of your full Medicare registration'. In other words, if you were granted permanent residency after turning 31, you need to start hospital cover within roughly 12 months of registering for Medicare to sign up without loading. If you first take out cover after your base day, a surcharge of 2 percentage points for each year you are over 30, up to a maximum of 70%, is added to your hospital cover premium.
It is a 'lifetime surcharge', but there are conditions for its removal
If you maintain hospital cover with loading for 10 continuous years, the loading is removed. Also, once you have started cover, you can have gaps of up to 1,094 days over your lifetime (one day short of three years) without affecting your loading. The loading applies only to hospital cover premiums and is not added to extras premiums.
- My base day = the later of 'the 1 July following my 31st birthday' vs 'the first anniversary of my full Medicare registration'
- Start hospital cover before your base day and your loading is 0% regardless of age
- Signing up after your base day: +2 percentage points per year over 30 (up to 70%), removed after 10 continuous years of cover
There are exceptions such as special rules for long-term overseas residents and exemptions for older people, and the calculation differs for each person. Always check your exact base day and loading on privatehealth.gov.au.
MLS — the extra tax that applies when your income exceeds the threshold
The MLS (Medicare Levy Surcharge) is an additional tax levied when your income for MLS purposes exceeds the threshold and you and all of your family do not hold appropriate hospital cover, at 1% to 1.5% depending on your income tier. It is 'added' separately from the basic 2% Medicare levy, and is calculated pro rata for the number of days you were without cover. Thresholds are adjusted every year, so check the specific amounts against the latest ATO figures.
- The assessment is based on your income for MLS purposes, not just taxable income — it also adds reportable fringe benefits, reportable super contributions, net investment losses, and more
- Extras alone do not exempt you — only hospital cover from an Australian-registered insurer counts
- Where the family threshold applies, not only you but your spouse and all dependent children must be covered to be exempt
To be exempt, your hospital cover must also meet 'appropriate level' requirements such as the excess cap (currently $750 or less for singles, $1,500 or less for couples/families). Income thresholds and rate tiers change every year, so always check the latest figures with the ATO.
Which case am I? — a breakdown of 4 situations
These are four situations new permanent residents commonly find themselves in. Which item is urgent depends on your age and income.
Your base day is 'the 1 July following your 31st birthday', so you have some time before LHC becomes an issue. However, if your income exceeds the threshold, the MLS applies regardless of age from that year.
Your base day becomes 'the first anniversary of your full Medicare registration', which is effectively a 12-month deadline. To sign up without loading, you need to start hospital cover before then.
Without hospital cover, you may be charged the MLS (1–1.5%) every year. Compare your expected MLS amount with the hospital cover premium (after applying the rebate) to decide.
Free treatment in public hospitals stays the same, so this is a legitimate choice. The key point is whether the decision was made knowing the structure: loading if you sign up later, and the MLS if your income rises.
Action checklist — what to check in your first year as a permanent resident
Check the items below in order right after registering for Medicare and you will not miss the deadlines.
- Confirm your full Medicare registration date via your myGov/Medicare records and write the date down
- Calculate your base day — the later of 'the 1 July following your 31st birthday' and 'the first anniversary of your registration'
- Compare this year's expected income for MLS purposes against the ATO threshold (the family threshold applies if you have a spouse)
- If considering cover, compare hospital cover on privatehealth.gov.au — prioritise the official government comparison over insurer advertising
- Check your rebate (premium subsidy) income tier — your actual premium cost may be lower than the listed price
5 common mistakes
These are misconceptions and mistakes new permanent residents often make. If any apply to you, check now.
- Taking out only extras (dental, optical, etc.) and assuming you are exempt from the MLS — only hospital cover counts
- Assuming the deadline starts from your visa grant date or arrival date — the reference is your full Medicare registration date (plus the 31st birthday rule)
- Assuming the OSHC/OVHC you had on a temporary visa meets the requirements — it is generally not recognised as hospital cover for LHC/MLS purposes, so recheck when you transition to PR
- Covering only yourself while your spouse and children remain uncovered — the family-basis MLS exemption requires the whole family to be covered
- Putting off even checking out of fear of loading — calculating your base day takes only a few minutes, and deciding whether to sign up is a separate question for afterwards
Useful official links
- ATO — Medicare Levy Surcharge(opens in a new window)
Official ATO MLS guidance — latest income thresholds, rate tiers, and exemption requirements
- ATO — Medicare Levy(opens in a new window)
Official ATO Medicare levy guidance — the basic 2% levy and reduction/exemption rules
- privatehealth.gov.au — Lifetime Health Cover(opens in a new window)
Official government LHC explanation — base day calculation, loading rules, and exceptions
- privatehealth.gov.au — 사보험 공식 비교(opens in a new window)
Official government private health insurance comparison site — neutral comparison of products from all registered insurers
- Services Australia — Medicare(opens in a new window)
Services Australia Medicare — how new permanent residents enrol and eligibility
Frequently Asked Questions
Can't I get hospital treatment without private health insurance?▾
You can. Permanent residents are covered by Medicare, so you can receive free treatment as a public patient in public hospitals. Private health insurance is optional, not mandatory. However, if you delay signing up there is a tax and pricing structure — LHC loading, plus MLS if your income is high — so it is important to know this before you decide.
What exactly is LHC loading?▾
Lifetime Health Cover loading is a surcharge added to your premium the later you take out hospital cover. If you first take out cover after your base day, 2 percentage points are added for every year you are over 30 (up to a maximum of 70%) on top of your hospital cover premium. If you take out cover before your base day, you start with no loading regardless of your age.
When is the deadline (base day) for new permanent residents?▾
For new migrants, the base day is the later of 'the 1 July following your 31st birthday' and 'the first anniversary of your full Medicare registration'. If you were granted permanent residency at age 31 or older, your deadline is effectively about 12 months after registering for Medicare. Check your exact date on privatehealth.gov.au.
Am I exempt from the MLS if I only take out extras cover?▾
No. Only hospital cover from an Australian-registered insurer counts toward the MLS exemption — extras-only products (dental, optical, etc.) do not qualify no matter how much you pay in premiums. This is a common misconception, so always check the product type before signing up.
How much MLS would I have to pay?▾
If your income for MLS purposes exceeds the threshold and you do not have hospital cover, an extra 1% to 1.5% is levied depending on your income tier. The thresholds are adjusted each year, and the income used for the assessment includes not only taxable income but also reportable fringe benefits and more, so check the latest ATO figures. It is calculated pro rata for the number of days you were without cover.
Once loading applies, do I pay it for life?▾
No. If you maintain hospital cover with loading for 10 continuous years, the loading is removed. Also, you can have gaps in cover of up to 1,094 days over your lifetime (one day short of three years) without affecting your loading. Until then, however, you keep paying the higher premium, so it is better to avoid it from the start.
Is there anything that helps reduce the cost of premiums?▾
Yes. The private health insurance rebate is a scheme where the government subsidises part of your premium based on your income tier and age, which you can receive as an upfront premium reduction or as a refund through your tax return. Check your rebate percentage for your tier with the ATO. Note that the rebate does not apply to the LHC loading component.