Avoiding out-of-pocket costs

What are out-of-pocket costs?

Out-of-pocket costs or ‘gap fees’ are the difference between what your doctor charges and what Medicare and your health fund will pay for a particular service. You must pay these extra costs out of your own pocket.

Some doctors have arrangements with health funds and don’t charge a gap fee. However, whether or not you have to pay out-of-pocket costs will often depend on your level of health cover.

Doctors’ fees

The Government sets a fee for every medical service in the Medicare Benefits Schedule (MBS). When you have hospital treatment as a private patient, Medicare will pay 75% of the MBS fee. Your private health insurer will pay 25%.

Gaps for doctors’ fees arise when your specialist or another doctor involved in your hospital care, charge more than the MBS fee. Your insurer can pay more than 25% of the MBS fee if the doctor is prepared to use their “gap cover arrangements”. In this circumstance, you will either have no gap to pay, or you will be informed in advance about any gap payment. Many doctors are prepared to use gap cover arrangements.

Doctors can choose, on a case-by-case basis, whether they wish to use an insurer’s gap cover arrangements. If your doctor chooses not to use your insurer’s gap cover arrangements, you would be required to pay the gap between the MBS fee and the total charge out of your own pocket.

How can I find out about any out-of-pocket costs?

Many people with private health insurance are concerned about extra costs. Right now, over 80% of all privately insured medical services performed in a hospital have no gap fee at all. But you still have the right to find out what extra charges, if any, there might be for your medical treatment.

  • Before going to hospital as a private patient, you should ask your doctor for an estimate of their fees. You should also ask about other doctors likely to be involved in your care (e.g. anaesthetist, assistant surgeon) and how to get information about their fees.
  • Check with your health insurer about how much is likely to be covered by your health insurance policy.
  • Check with your hospital about any likely out-of-pocket costs relating to your hospital accommodation.

The Government’s fee transparency website

The Federal Government’s fee transparency website is a helpful tool to help private patients manage out-of-pocket costs.

The website publishes specialists doctors’ fees, giving consumers the power to compare costs and avoid getting ripped off by the small number of specialists who charge inappropriately high fees.

It can also be used by GPs at the point of referral, to help patients avoid potential bill-shock.

Out-of-pocket cost checklist

We have produced a simple checklist to help you find out about any gaps, from your doctor, health fund and hospital.

So before you begin your treatment or hospital stay, you can feel confident in knowing whether there will be any out-of-pocket costs and how much they will be. Some funds have information about gap fees on their website. Alternatively, contact them directly for details of their gap cover arrangements.