The Medicare Safety Net

For all out-of-hospital medical treatments covered by Medicare, the government sets a fee that they think is reasonable to charge (known as a schedule fee). Medicare rebates a percentage of the schedule fee and you’re expected to pay the remaining amount unless your doctor charges the amount Medicare contributes, which is known as bulk billing. The difference between what Medicare pays and the schedule fee is known as the gap amount and is what counts toward the OMSN threshold.

Example: George requires an x-ray, which has a schedule fee of $246.55. Medicare reimburses George 85% of the fee ($209.56), meaning the gap he pays is $36.99. This $36.99 is the amount that contributes to the OMSN threshold.

When you reach your threshold in a calendar year, you’re entitled to a 100% rebate of the schedule fee until 31 December.

Before reaching the threshold, you’re able to claim 85% of the schedule fee for out-of-hospital service costs and 100% for GP consultations through Medicare. Single people are automatically paid their OMSN amount after they reach the threshold, but you’ll need to register all family members with Medicare to receive OMSN benefits as a family.²

Health professionals can set their own fees above the MBS, and when this happens, you’re left with out-of-pocket expenses in addition to any gap payments you make. It’s these out-of-pocket expenses that contribute to your EMSN threshold.

Example: Anne requires a CT scan with a schedule fee of $100, but her specialist charges $125. Medicare reimburses Anne 85% of the schedule fee, which is $85. She’s still required to pay the gap ($15) as well as the remaining $25 out of pocket expense on top of it. The $25 fee is the amount that contributes to the EMSN threshold.

The total amount that Anne pays is $40: $15 (gap fee) plus $25 (out-of-pocket cost).

You’ll either qualify for:

• The general EMSN threshold
• The Concessional and Family Tax Benefit Part A EMSN threshold (if you’re eligible for Family Tax Benefit Part A or hold a valid Pensioner Concession Card, Commonwealth Seniors Health Card or Health Care Card).

The Concessional and Family Tax Benefit Part A threshold is much lower than the general threshold, meaning those with valid eligibility could meet it quicker and be left with fewer out-of-pocket expenses each calendar year (depending on how regularly they’re paying for medical services).

Medicare will generally reimburse 80% of your out-of-pocket costs when you meet the EMSN threshold. However, several MBS items are subject to EMSN benefit caps.² These caps, which apply to items such as assisted reproductive services, restrict the amount you can get back from Medicare. If the listed EMSN benefit cap is less than 80% of the out-of-pocket cost, that’s the amount you’d get back from Medicare.

Example: Sally has reached her EMSN threshold for the year and has been left with an out-of-pocket expense of $3,000 for an outpatient procedure. Medicare would normally reimburse Sally 80% of her out-of-pocket expenses ($2,400). However, the procedure is subject to an EMSN benefit cap of $1,500, and so that’s the maximum amount Medicare can reimburse. If the EMSN benefit cap was higher than $2,400, she would be reimbursed that amount instead.

Like the Medicare Safety Net, the Pharmaceutical Benefits Scheme (PBS) offers a Safety Net to provide financial relief once you spend a specified amount each calendar year on PBS-listed medication. Medication is reduced to $7.70 or less for general patients and is free for concession card holders once you meet the threshold.³

Services Australia states that the PBS Safety Net threshold in 2024 is $1,647.90 for general patients and $277.20 for concession cardholders.³ Before reaching the threshold, general patients can pay up to $31.60 for PBS-listed medicine, while concession cardholders pay up to $7.70 per script.

Example: Gerri requires several PBS-listed medicines, leaving her $162 out of pocket each month. By October, she’s spent more than $1,657.90 on her medication and has passed the threshold, meaning each PBS-listed medicine will cost her no more than $6.80 for the rest of the calendar year.

All Medicare Safety Nets have thresholds, which are set and begin each calendar year on 1 January. You must pay the medical fees before you claim with Medicare for the cost of that treatment to contribute to your Medicare Safety Net threshold. Your circumstances determine which threshold you’re eligible for.

The Medicare Safety thresholds for 2024 are as follows:

You can claim the Medicare Safety Net as a family, individual or couple. Individuals are automatically registered and are paid benefits once they reach their threshold, but couples and families need to register by filling in a form or contacting Medicare.

Registering as a Medicare Safety Net family ensures that Medicare records any out-of-pocket expenses or claims. By combining the costs of family members, you may hit thresholds faster than you would as an individual. A family is considered to be:

• A married couple with or without dependent children (which can be a child under 16 or a full-time student aged between 16 and 25)
• Any de facto couple, either with or without dependent children
• A person not in a relationship, but with dependent children.

While the Medicare Safety Net covers many pregnancy services, some have EMSN benefit caps, meaning you won’t always be reimbursed 80% once you’ve reached EMSN thresholds. These caps were implemented in 2010 to prevent specialists from unfairly raising fees for patients.²

Medicare would previously contribute 80% of the bill when a health professional hiked a price regardless of the procedure fee set by the government. This made it unfair for patients who weren’t eligible for the EMSN and simply had to pay an inflated price, so caps were introduced. Common pregnancy services that can contribute to the Medicare Safety Net threshold include:

• Assisted reproductive surgery
• IVF
• Fertility treatments
• Midwifery services
• Obstetric services
• Pregnancy ultrasounds.

Couples need to register in order for any valid treatments to count towards EMSN thresholds. Taking out private hospital insurance is another way to help manage expenses for private care if you’re planning on starting a family, but you’ll need to serve a 12-month wait before you can claim on inpatient obstetrics services.