You may think that between health insurance and Medicare, all your medical expenses are covered. However, this isn’t always the case.
A gap payment is an out-of-pocket expense you have to pay when you receive medical treatment that costs more than what you can claim back from both Medicare and your private health insurance. Regardless of whether you’re a public or private patient, Medicare will subsidise some of the cost of your treatment. However, if you’re treated as a private patient, there can sometimes be a gap between the hospital fees and what Medicare will cover, which you may have to pay yourself.
When you are treated in a hospital, there is a ‘scheduled fee’ charged, as outlined in the Medicare Benefit Schedule (MBS) for each different Medicare item number. Together, Medicare and private health insurance cover 100% of this scheduled fee, as well as the cost of your accommodation and theatre fees (if you’re treated in a hospital that has an agreement with your health fund).
The medical gap is the amount above the scheduled fee that your specialist charges.
As an example, say the above example is a hospital admission (as a private patient) for heart surgery. You’ll notice that Medicare covers part of your fee, and so does your private health insurance policy. If your doctor charged only the scheduled fee for your treatment, you might pay nothing!
In this example above though, this doctor charges more than the standard scheduled fee, and you need to pay the gap to make up the difference.
When you receive treatment, you have a right to informed financial consent. This means that your health care provider must inform you of all medical costs before you’re treated so you know exactly how much you may or may not have to pay. The only exception to this is for emergency department treatment as a public patient where 100% of the costs are covered by Medicare.
Medicare does contribute a significant amount towards medical services in Australia, regardless of whether you have private health insurance or not. Here’s what Medicare will cover when it comes to treatment.1
In many cases, yes! Some health funds have agreements with certain hospitals and doctors to help reduce your out-of-pocket costs. There are different types of gap cover schemes, including:
Depending on your treatment, you may have multiple health professionals treating you. If they have their own fees, these might not all have arrangements with your insurer, which might mean you pay out-of-pocket expenses for some of your treatment. You also need to keep in mind any excess or co-payments that you might need to pay as part of your health insurance.
If you’re privately insured, get in touch with your health fund and ask for a list of healthcare professionals (e.g. hospitals, doctors) with gap cover arrangements; that way, you can choose a provider that won’t leave you with out-of-pocket costs.
It’s important to note that while your health fund may have an agreement with a specific doctor, it’s generally up to that doctor whether they will participate in the fund’s scheme on a case-by-case basis. It’s always a good idea to confirm with your doctor before seeking treatment whether they will participate in the scheme for your specific situation.
There are some ways to avoid or reduce the gap payments you may face when receiving medical treatment. For example:
Keep in mind that you may still need to pay an excess or co-payment, depending on your policy and the treatment you’re receiving.
While the treatment fees covered by Medicare are listed in the Benefits Schedule, doctors aren’t required to cap their prices and can charge prices above what Medicare and private health insurance will cover. This means you may be charged an out-of-pocket expense.
Prices vary between clinics and between doctors, so they’re obligated to reveal these costs to you if you inquire about the doctor’s fees before you receive treatment.
There are multiple reasons why you may have to pay a gap payment. Those reasons could be:
Bulk billing is when a doctor or healthcare professional doesn’t charge you for treatment but sends the medical bill direct to Medicare instead. Bulk billing can cover some GP visits, x-rays, pathology tests and eye tests that meet certain criteria.
No, an excess payment isn’t the same as a gap payment. An excess payment occurs when you make a claim on your health insurance for treatments covered by your policy. This means you may have to pay an excess payment and gap payment if you have private health insurance.
You agree to this excess amount when you take out a policy, but you may have the option of choosing your excess. Sometimes, you might find that choosing a higher excess lowers your premium, and vice versa.
Whether you’re after a hospital policy or an extras policy to cover out-of-hospital treatment, private health insurance can help reduce your expenses for private care, provide more choices for treatment, and give you peace of mind. However, it can be difficult to know which policy is a smart purchasing decision.
Our free health insurance comparison service lets you weigh up available options within minutes. It’s easy to use and has tools to help you filter results based on what’s covered, price and additional features. If you see a policy you like, you can apply through us. Simples!
1 Doctor’s Bills. Private Health Insurance Ombudsman, Commonwealth Ombudsman, Australian Government.
