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Let’s talk about out of pocket expenses. You may think that health insurance and Medicare cover all your medical expenses, but this isn’t always the case.

What is ‘the gap’?

When you’re charged for medical treatment, and it costs more than what you get back from Medicare or health insurance, that cost is called the gap. It’s also known as an out of pocket expense.

Here’s an example for a trip to your dentist. You’ll notice in the below graph that Medicare covers part of your fee, and so does your private health insurance policy (PHI). In fact, if it were a standard cost treatment, you’d pay nothing!

This dentist charges a little bit more than the standard, and you need to pay the gap to make up the difference.

Private health insurance gap

As you can see above, Medicare does contribute a significant amount towards your treatment. Here’s what Medicare covers when it comes to treatment:3

  • Getting treated in a hospital? Medicare pays 75% of the Medicare Benefits Schedule (MBS).
  • Do you need out-of-hospital services? Medicare pays 85% of the MBS amount.

What are Australians paying?

There are a large number of hospitals and physicians in Australia that do not charge a gap payment. Let’s take a look at the stats!4

Percentage of services with no gap payment 88.%
Average gap payment where gap was paid* $155.72
* i.e. the average out of pocket payment by patients for services where there was a gap

You can see that the number of institutions in Australia who don’t charge a gap is quite high, but you can also see that Aussies are paying significantly for their treatment in the event a gap is owed – more than one hundred dollars!

Why are we charged out of pocket expenses?

Each physician or practitioner charges something different for their services. Perhaps their clinic costs more to run than other doctors. It will vary from place to place.

How can I find out what my medical gap will be?

If you ask your doctor about their fees before you’re treated, they will be more than happy to break down the costs – including how much is covered by Medicare and insurance. In fact, they’re obligated to reveal these costs to you.2

Make sure you also ask if other doctors or specialists will be involved with your treatment, and if you’re expected to pay for their help. When you’re informed of the gap in advance, it’s called a ‘known gap’.

You can find a list of no gap doctors on PrivateHealth.gov.au.

Can I avoid out of pocket expenses?

Of course! If you’re privately insured, get in touch with your health fund and ask them for a list of healthcare professionals (e.g. hospitals, doctors) with gap cover arrangements. If you’re treated by anyone on the list, you shouldn’t have to pay for your treatment. Keep in mind that you may still need to pay an excess or co-payment, depending on your policy.

Getting covered by a private health policy means you’re protected from lots of different costs. Why not try out health insurance comparison tool to see if you can find a better deal?


  1. http://www.privatehealth.gov.au/healthinsurance/howitworks/outofpocket.htm
  2. http://www.health.gov.au/internet/main/publishing.nsf/Content/health-privatehealth-outofpocket-expenses
  3. http://www.ombudsman.gov.au/__data/assets/pdf_file/0016/35611/09115-CO_Doctors-bills_04.pdf
  4. http://www.apra.gov.au/PHI/Publications/Documents/1708-QPHIS-20170630.pdf

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