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When it comes to Medicare and claiming healthcare expenses, it can get confusing. Like many Australians, you’re probably thinking, ‘What does Medicare cover and what are my out-of-pocket costs?’

We’ll take you through how Medicare works in Australia to help you understand your Medicare coverage, and where private health insurance fits into all this.

What is Medicare?

Medicare is Australia’s national public healthcare system that provides many Australian residents with access to a range of healthcare services at no or reduced cost. Keep in mind that Medicare doesn’t cover all medical treatments and operations.

With Medicare, you’re fully or partly covered for:

  • Hospital treatment as a public patient in a public hospital
  • Medical services provided by doctors, specialists and other health professionals
  • Prescription medicines listed on the Pharmaceutical Benefits Scheme (PBS)

What does Medicare cover in the hospital?

When you’re admitted to a public hospital, Medicare covers you to be treated as a public patient by a doctor assigned to you at no cost. As a public patient, you’ll be placed on a public hospital waiting list for the surgeries and treatments you need.

Medicare pays your healthcare costs in line with the Medicare Benefits Schedule (MBS), which is a list of services for which Medicare will pay some or all of the costs. The MBS schedule includes a fee for each service with an indication of how much you can claim.

If you want to see a certain doctor or recover in a private room (subject to availability), you’ll need to be admitted as a private patient. Without private hospital insurance, however, you’ll incur significant out-of-pocket expenses for these services. If you’re admitted as a public patient, you won’t be able to choose your doctor and private rooms are only available to those who need them most.

If you visit the hospital for an appointment to have tests or to see a specialist and you’re not admitted, this is considered an outpatient service. In this instance, Medicare will pay 85% of the MBS fee for the treatment or service. You’ll then need to pay the remaining out-of-pocket fees, including anything extra if your doctor or specialist charges above the MBS fee.

What does Medicare not cover in the hospital?

Medicare won’t cover the following:

  • Entire private patient hospital costs. Medicare covers 75% of MBS-listed treatments, and you or your health insurer cover the remaining 25%, depending on your policy. If the specialist charges more than the MBS, you’ll pay the difference – this is called ‘the gap’.
  • Elective cosmetic surgeries. Procedures must be medically or clinically necessary in order to receive a Medicare benefit or coverage under private health insurance.
  • Overseas hospital and medical expenses incurred while outside of Australia, unless that country has a Reciprocal Health Care Agreement with Australia.
  • Ambulance services. Only two state governments (Queensland and Tasmania) pay for emergency ambulance services. Those in the other states can take out ambulance cover to help reduce potential out-of-pocket expenses.

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What does Medicare cover for out-of-hospital medical care?

When you have a consultation with a general practitioner (GP) or a specialist, Medicare covers you at the following percentages:

  • 100% of the MBS fee for seeing a bulk-billing GP. However, some doctors charge more than the fee listed on the MBS. When this happens, you’ll need to pay the gap.
  • 85% of the MBS fee for seeing a medical specialist. You pay the remaining 15%, plus extra if the specialist charges above the MBS.

Medicare also covers all or part of the costs for the following services:

  • Tests and scans, such as x-rays
  • Most medically necessary surgery and procedures performed by doctors
  • Eye tests by optometrists
  • Certain necessary dental surgeries performed by an approved dentist
  • Psychology services through the mental health care plan

What does private health insurance cover that Medicare doesn’t?

Medicare doesn’t subsidise many out-of-hospital services and treatments, such as:

  • Most dental services
  • Most physiotherapy, occupational therapy, speech therapy, eye therapy, chiropractic services, podiatry and acupuncture services
  • Glasses, contact lenses and hearing aids.

For the above items, you may want to consider extras health insurance. Extras insurance is designed to cover out-of-hospital medical care that Medicare doesn’t subsidise. The price of this type of policy may be cheaper than if you paid for these services out-of-pocket, particularly if you use these services regularly. With so much value on the table, it’s worth comparing cover options to find a great deal.

Our free comparison tool makes it easy to weigh up a range of extras policies to see which covers the services and treatment you require at a competitive price.

Which pharmaceutical medication does Medicare cover?

In Australia, the Pharmaceutical Benefits Scheme (PBS) helps you access PBS-listed prescription medication at a reduced price. You’ll pay part of the cost of most prescription medicines, and the PBS covers the rest. Concession cardholders may pay an even lower price.

It’s worth noting that not all prescription medications are on the PBS, so consult with your health professional for further clarification regarding the cost of prescribed medication. You may be able claim these non-PBS medications through your extras health insurance depending on your policy.

Frequently asked questions

Who can enrol in Medicare?

The following people are eligible for Medicare in Australia:

  • Australian citizens
  • New Zealand citizens (who have lived in Australia for six months or more in the last year, or can prove that they will be living in Australia for the next six months)
  • Australian permanent residents
  • Those applying for permanent residency
  • A temporary resident covered by a ministerial order
  • Citizens and permanent residents of Norfolk Island, Cocos (Keeling) Islands, Christmas Island and Lord Howe Island

How does bulk billing work?

If your doctor doesn’t bulk bill, you pay the difference between what they charge and what Medicare covers (the gap).

For example: Taylor is sick and decides to visit a GP; the MBS fee for that visit is $100. However, the GP charges Taylor $120, which is above the recommended MBS fee. The difference ($20) is called the gap payment, and this is the amount Taylor must pay.

To find a doctor who bulk bills, use the find a health service tool on the Australian Government’s Healthdirect website.

How do you claim the Medicare rebate?

The easiest way is at the point of contact – your doctor’s office or hospital. This is done through the Medicare system electronically. All you need is to be enrolled in Medicare and show your Medicare card. It’s that simple.

Alternatively, if your provider doesn’t have this facility, you can claim through:

  • Your Medicare online account via myGov
  • The Express Plus Medicare mobile app
  • One of Medicare’s service centres
  • The Medicare claim form, which you post to Medicare
  • Over the phone by calling Medicare (simply relay your Medicare number, bank account details and service provider’s receipt)

How is Medicare funded in Australia?

The Australian Government funds Medicare via the Medicare levy, which is payable by you during tax time. The Medicare levy is charged at 2% of your taxable income on top of the tax you pay.

The government also funds Medicare through the Medicare Levy Surcharge (MLS). The MLS is charged up to 1.5% to Australian residents who do not have private health insurance and earn over $93,000 as a single or $186,000 as a couple/family annually (from 1 July 2023).

What is the Medicare Safety Net?

The Medicare Safety Net is a government initiative designed to reduce your out-of-pocket medical costs if you require regular doctor visits and tests. The Safety Net kicks in when you spend over a certain threshold within a calendar year – this threshold then resets at the beginning of the new year.

While your doctors’ visits and tests will still cost you the same, you’ll receive a higher amount back from Medicare if you exceed the thresholds for certain Medicare services.

What does a blue Medicare card cover?

People who have applied for permanent residence in Australia may also apply for an Interim Medicare card which offers the same coverage as the standard green Medicare card.

If your application is rejected, you can stay enrolled in Medicare and maintain your interim card if you lodge an appeal. However, if you don’t lodge an appeal or your appeal is also rejected, you’ll no longer be eligible for Medicare.

Can I still access Medicare if I have private health insurance?

Yes, you can still access Medicare if you have private health insurance, whether you have a hospital or an extras policy.

The benefit of a hospital policy is that you can be treated at a private hospital as a private patient with your choice of doctor, and you can avoid public hospital waiting lists. With an extras policy, you can reduce your out-of-pocket expenses for the services Medicare doesn’t cover outside of the hospital setting.

If you’re in the market for private health insurance, hospital or extras cover, why not compare? Try our private health insurance comparison tool today to find great-value cover! It only takes minutes to compare a range of cover options from some of Australia’s top insurers.

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