Last Updated on 19 February 2020

How to Avoid the “Gap” When You Go to Hospital

Many people assume that Hospital cover will automatically pay for everything if you need to go into hospital but unless you stay solely within the public system, there will usually be some out-of-pocket costs to contend with. This can have a devastating impact on your family’s finances and can potentially run into thousands of dollars for certain procedures.

With some forward planning, you can minimise or completely avoid out-of-pocket costs if any member of the family needs to be admitted to hospital. Here’s what you need to know about health insurance “gaps” and how to protect your family’s budget against the potential damage.

Why Do Out of Pocket Costs Occur?

As a private hospital patient, Medicare will cover 75 per cent of the Medicare Benefits Schedule (MBS) fee for some of the costs associated with being a private patient. The remainder can be covered by Hospital cover (provided that you have a policy that does this) or must come out of your own pocket. There may also be some additional costs for things like hospital accommodation, intensive care, theatre fees, diagnostic tests and medicines (depending on your policy).

On top of this, a “gap” can occur if the doctor that treats you decides to charge above the MBS fee or if you use a hospital that does not have an agreement with you health fund. Doctors can choose whether to participate in a health fund’s “gap cover scheme” on a case-by-case basis, depending on the situation.

Can I Get Help In Bridging “Gaps”?

Some health funds offer “gap cover” schemes to address shortfalls that occur when your doctor charges above the MBS. Not all doctors are willing to participate in these kind of schemes so it’s important to check whether they will get involved in your health fund’s gap scheme before a procedure is arranged. Otherwise, you risk finding out too late that there will be a sizeable “gap” to cover if they don’t participate.

There are two main types of gap cover that health funds may have in place to reduce out-of-pocket costs for their members: No Gap schemes and Known Gap schemes.

No Gap: This is the best option as it eliminates the “gap” completely. In this situation, there will be an agreement between your doctor and your health fund to cover any “gap” so that you will not have to bridge it from your own pocket.

Known Gap: In this scenario, there will be a “gap” but this will be made obvious to you so that you know exactly what you will be paying. You must be informed of the “gap” in writing before a procedure takes place.

“Gap cover” schemes therefore give financial peace of mind and remove uncertainty relating to out-of-pocket costs.

What to Do Next

First of all, you’ll need to know what the situation is with your health fund, as not all of them have “gap cover” arrangements for their members.

  • See whether your health fund has a “gap cover” scheme. If they don’t, you might want to look at the possibility of switching health funds to one that does, although bear in mind that it’s not always as black and white as this in terms of getting long term value for money.
  • If your health fund does have a “gap cover” scheme, is it of the “no gap” variety or can you still expect some out-of-pocket costs?
  • If you don’t have health insurance at the moment, don’t shop around solely based on “gap cover”. Your main priority should always be to choose a health insurance policy that fits your needs and budget and if you move away from this focus, you can easily find that you’re paying more in out-of-pocket costs for services that you need but aren’t covered for than you would if you paid a “gap”.
  • Next time a member of the family needs hospital treatment, you’ll need to see whether your doctor will participate in your health fund’s “gap cover” scheme. They don’t have to and can choose whether they want to on a patient by patient basis.
  • If you find that a particular doctor won’t get involved with your health fund’s “gap cover” scheme, you can look at whether you have the option to see a different doctor or be treated at a hospital that has an agreement with your health fund. This opens up the possibility for taking advantage of your health fund’s “gap cover” arrangements but in some cases, you may need to use a particular doctor and accept their “gap cover” stance.
  • You may want to think about putting a little bit of money aside each month to ease the financial blow on your family’s budget if a “gap” does arise, especially if your health fund doesn’t have “gap cover” arrangements or you want to protect against the possibility of needing to see a doctor or use a private hospital that has no agreement with your health fund.


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