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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 not cover?’

Let’s help you understand this topic.

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 cost or a reduced cost. For Australians without private health insurance, Medicare eliminates or helps lessen the cost of these services. Keep in mind that Medicare doesn’t cover all medical treatment and operations.

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

  • hospital treatment as a public patient in a public hospital
  • medical services provided by doctors, specialists and other health professionals
  • pharmaceutical medication listed on the Pharmaceutical Benefits Scheme (PBS).

What does Medicare cover in the hospital?

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

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

If you want to see a certain doctor or have your own room, then you need to be admitted as a private patient. Without private health insurance, you’ll incur out-of-pocket expenses for this treatment.

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 doesn’t Medicare cover in the hospital?

Medicare won’t cover the following:

  • entire private patient hospital expenses. Medicare covers 75% of MBS-listed treatments, and you or your insurer cover the remaining 25%, depending on your policy. If the specialist charges more than the MBS, you would then pay the difference – ‘the gap’;
  • most cosmetic surgeries. Procedures must be medically or clinically necessary;
  • overseas hospital and medical expenses incurred while outside of Australia – unless that country has a Reciprocal Health Care Agreement with Australia; and
  • ambulance services. Only two state governments (Queensland and Tasmania) pay for emergency ambulance services. Some Aussies in the other states take out ambulance cover to help reduce potential out-of-pocket expenses.

The Reciprocal Health Care Agreement allows people from participating countries access to Medicare. At time of writing, Australia has an agreement with 11 countries that covers the cost of medically necessary healthcare when Australians visit these countries and people from these countries visit Australia.

A doctor discussing Medicare cover

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

When you visit the 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; and
  • 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 surgery and procedures performed by doctors
  • eye tests by optometrists
  • certain necessary dental surgeries
  • psychology services through the mental health care plan.

Which out-of-hospital costs does Medicare not cover?

Medicare doesn’t subsidise all out-of-hospital services and treatment, items 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 if you need cover. Extras cover is designed to cover out-of-hospital medical care that Medicare doesn’t subsidise. The price of this type of policy is usually peanuts compared to the value of services you can receive, so 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 medications, 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 medicines.

If you have a comprehensive extras policy, you might be able to claim some non-PBS medications.

See which medications are on the PBS.

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 12 months)
  • Australian permanent residents
  • those applying for permanent residency
  • a temporary resident covered by a ministerial order
  • citizens and permanent residents of Norfolk Islands, 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 above the recommended MBS fee, and they charge $120. The difference ($20) is called the gap payment. This gap 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.

However, if your provider doesn’t have this facility, you can alternatively 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 then post it 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?

Medicare is funded by the Australian Federal Government via the Medicare levy, which is payable by you during tax time. At the time of writing, the Medicare levy is charged at two per cent 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 $90,000 as a single or $180,000 as a couple/family annually.

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.

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.


1 Australian Government Department of Human Services – What’s covered by Medicare. Sourced January 2020.

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