Many people expect a combination of Medicare and private health insurance to completely cover treatment costs but, in reality, this may not be the case. Being hit with an unexpected shortfall can be extremely unwelcome, but there are ways to prevent the situation.
Why Shortfalls Can Occur
For most treatments covered on private health insurance, your health fund will cover a certain percentage of the Medicare schedule fee and Medicare will pick up the remainder. In theory, this should cover the full costs, but problems can arise if your doctor or specialist charges more than the Medicare schedule fee.
If you’re treated as a private patient (in either a private or public hospital), 75 per cent of the Medicare Benefits Scheme (MBS) schedule fee will be picked up by Medicare, with the remaining 25 per cent to be paid by you or through your health fund, along with any shortfall that occurs beyond the MBS schedule fee. As private hospital treatment can become very expensive, even high levels of private health insurance coverage may not be enough to avoid a ‘gap’ between the amount that is covered and the amount charged by your doctor or specialist.
Do your homework
If you intend to be treated privately, check that you’re fully aware of the fees and how much of your treatment will be covered. Include fees for things like anesthetists and assistant surgeons that can quickly bump up the costs.
Health fund agreements
Some health funds have agreements in place with hospitals so that patients won’t experience shortfalls, or will only have to pay minimal out-of-pocket expenses. Check to see if your health fund does this, and whether you can benefit by using a specific hospital. You can use the search facility here to see which hospitals have an agreement with your health fund. Some health funds also have agreements in place with dental and optical providers, as well as hospitals. If you choose to use a hospital that doesn’t have an agreement with your health fund, out-of-pocket costs are inevitable.
Your health fund may also have agreements in place with certain doctors, which may cover some or all of the doctors involved in your treatment for hospital services. If you choose to be treated by a doctor who doesn’t have an agreement with your health fund, be prepared to contribute towards the fees.
Access Gap Cover schemes
These can be included in private health insurance policies as part of the cover but, in other cases, you may need to take out additional coverage to be sure that any shortfalls will be covered. Some of the health funds that do offer Access Gap Cover schemes include:
- ACA Health Benefits Fund
- Australian Health Management
- BUPA Australia
- CBHS Health Fund Limited
- Defence Health
- Healthcare Insurance Limited
- Health Partners
- Manchester Unity Australia
- Mutual Community
- NIB Health Funds
- Peoplecare Health Insurance
- Phoenix Health Fund
- St Luke’s Health
No gap / known gap policies
As part of Access Gap Cover, doctors can choose to be part of a health fund’s “no gap” or “known gap” policies for medical treatments performed in a hospital setting. For “no gap” policies, patients don’t pay for out-of-pocket costs for medical procedures. For “known gap” policies, patients pay a “known” or “capped” amount for medical procedures. If a doctor chooses not to be involved in either policy, you’ll need to pay the full amount for out-of-pocket expenses if the costs exceed the MBS schedule fee.
Arranging Gap Cover insurance can go a long way towards minimising out-of-pocket expenses or avoiding them altogether, especially if your health fund has agreements with certain hospitals and doctors that you can benefit from.