Out of pocket expenses (gap cover)

A 'gap' is the amount you pay either for medical or hospital charges, over and above what you get back from Medicare or your private health insurer. Some health insurers have gap cover arrangements to insure against some or all of these additional payments.

Before you go to hospital, whenever practicable, you should ask the hospital, your doctors and your health insurer to find out exactly what is covered on your policy and what you will need to pay for yourself.

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A 'gap' is the amount you pay either for medical or hospital charges, over and above what you get back from Medicare or your private health insurer. Some health insurers have gap cover arrangements to insure against some or all of these additional payments.

Hospital gaps

Many private hospitals have arrangements with health insurers to fully or partially cover costs relating to hospital fees including accommodation, theatre, and labour ward fees. If you go to a hospital that does not have an agreement with your health insurer, you may face significant out-of-pocket expenses for your treatment.

If your health insurance policy has an excess or co-payment, you will have to pay the agreed amount of excess or co-payment towards the cost of hospital treatment out of your own pocket, even if your hospital has an agreement with your insurer. 

Before you go to hospital, you should ask the hospital and your health insurer to find out exactly what is covered with your policy, and what you will need to pay for yourself.

Excess and co-payment

  • An excess is amount that you agree to pay towards the cost of hospital treatment, in exchange for lower premiums. You may be required to pay an excess every time you go to hospital, or only the first time, depending on the private health insurance policy you take out. 
  • A co-payment is where you agree to pay a set amount for each day you are in hospital, in exchange for lower premiums - for example, you agree to pay the first $50 per day in hospital.

Medical gaps

When you are a private patient in hospital, Medicare will cover 75% of the Medicare Benefits Schedule (MBS) fee for associated medical costs. Provided you have the appropriate private health insurance policy, your health insurer will cover the remaining 25% of the MBS fee.

Gaps for doctors' fees come about when your specialist, surgeon, anaesthetist, and/or other doctors involved in your hospital care, charge more than the MBS fee. 

  • Some health insurers have gap cover doctors agreements made with particular doctors that may cover all or some of the doctors' fees for your hospital treatment. 
  • Unless your health insurer has a gap cover arrangement in place with your doctor which will cover all of your doctor's charge, and your doctor agrees to charge you under this arrangement, you will have to contribute towards the doctor's bill out of your own pocket.
  • While the Government sets a fee for every medical service in the MBS, the Government does not set doctors' fees and the doctor is free to decide on a case-by-case basis whether he or she wishes to use an insurer's gap cover arrangement.
  • Before you go to hospital, you should ask your doctor for an estimate of their costs, if there will other doctors involved in your care (e.g. anaesthetist, assistant surgeon) and what their charges will be. 
  • You should also check with your health insurer to find out exactly how much is covered with your policy.

For more information, see the Ombudsman's factsheet on Informed Financial Consent.

Prostheses

A prosthesis is an artificial substitute for a missing body part, used for functional or cosmetic reasons or both. Surgically implanted prostheses are sometimes required during a medical procedure, such as a replacement lens for a cataract surgery, an artificial hip joint, a pacemaker, or a heart valve.

  • For medical procedures covered by the MBS, your health insurer will fully cover the cost of at least one prosthesis, if required (called a 'no gap' prosthesis).
  • In some cases, an alternate prosthesis may be available which costs more than the 'no-gap' version. If one of these prostheses is used, you will have to pay the difference between the 'no gap' amount and the total amount charged by the supplier for the prostheses.
  • For each procedure, you should check with your health insurer if you are covered, how much your policy will pay for a particular prosthesis, and whether you will have any 'gap' to pay.