What is gap cover and what are gap payments on medical bills?

What is a health insurance gap payment?

A gap payment, also known as an out-of-pocket expense, is the amount outstanding between what a hospital or specialist charges and what the combination of Medicare and your private health insurance fund covers. You, the patient, may have to wear this outstanding amount.

Gap payments can be hefty depending on your level of cover and the medical procedure or appointment. Many people have been caught out by a gap payment after a hospital procedure they thought they were covered for.

A gap can arise from:

• The hospital accommodation costs
• The fee charged by the medical specialists who attend you

Most health insurers have agreements with both hospitals and medical specialists around how much they will pay towards medical costs. If you use a hospital or doctor that either does not have an agreement with your health fund or charges above the amount that the fund will cover, you could end up paying a significant gap amount for your treatment.

Keep in mind that a gap is different to the health insurance excess you may need to pay when making a claim.

What is gap cover?

Gap cover is an arrangement between a health fund and a medical services provider, like a hospital or a particular doctor, that can help reduce costs charged to the patient. Gap cover insures you against some of the out-of-pocket expenses between what the medical services provider charges you and what Medicare will give you back (the gap payment).

In some cases, gap cover means you will have no out of pocket expenses when visiting a participating medical professional for treatment. In others, your gap may be limited to a capped amount, which may be a percentage of the fee for your treatment listed in the Medicare Benefits Schedule (MBS).

If your medical services provider does not have an arrangement with your health fund, you will not have gap cover available and you will have to pay the out-of-pocket expenses on your own. It is important to note that it will be up to the doctor to decide, on a case by case basis, whether to use an insurer’s gap cover arrangement

How to reduce gap payments and make the most of gap cover

There are ways you can narrow or avoid gap payments and get better value from your private health insurance.

Using the doctors and hospitals that participate in your health insurance provider’s medical gap scheme can help to reduce any out-of-pocket expenses that you may be charged. If possible, consider asking your health fund first which specialists and hospitals they have a preferred provider contract with before you go for medical treatment.

It may also be worth asking your medical specialist what their fees will be and how much of that fee will be covered by your private health insurance fund. If your out-of-pocket cost is going to be significant, you may wish to discuss alternative medical specialists with your insurer.

In some cases, you could consider switching health insurers to find an option with gap cover that your regular medical professionals also work with.

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