What is Medicare?
Medicare is the public health system by which the government provides free healthcare to Australian residents. Medicare pays a certain amount for Australian residents to receive medical treatments such as visiting a doctor or specialist, going to hospital, and more.
How does Medicare work?
If you do not have private health insurance, Medicare is the way you get some money back when you have to pay medical expenses. If you do have private health insurance, you only have to pay the gap between the fees charged and how much Medicare plus your insurance will pay.
The amount Medicare pays is called the Medicare rebate. You can receive your Medicare rebate at the time when you make payment for your treatment (the reception desk at the medical centre can process this for you), or you can take your receipt to a Medicare branch later on and receive the rebate then.
The Medicare Safety Net increases the benefit for patients who have already paid a certain amount (more than the threshold) in out-of-pocket gap payments that year.
The public healthcare system in Australia is quite overburdened, and waiting lists for surgery or specialist treatment in the public system are notoriously long, with frequent delays. Waiting lists for elective or non-emergency surgeries range from 1 month to 1 year. The wait for free dental treatment in rural areas is more than 2 years (NOHA). This is one of the reasons why many people consider it worth it to pay for private health insurance.
You can view the health insurance options available in the table below. Please note that this table has been sorted by star rating (highest to lowest) and was formulated based on a single male seeking hospital and extras health insurance based in NSW born in 1987:
What taxes do we pay to fund Medicare?
All taxpayers who have an income above a certain amount pay a 2% Medicare Levy (a tax) to help the government pay for the benefits provided by Medicare and the Pharmaceutical Benefits Scheme (PBS) in the public system. Taxpayers who have a high income ($90,000 for singles, $180,000 for couples) and do not have private health insurance pay a Medicare Levy Surcharge, which is an extra tax of up to 1.5%. The surcharge exists because the government wants people who can afford to use the private system to pay for private health insurance.
What does Medicare cover?
Medicare covers a benefit payment towards the cost of three types of treatments: Hospital (emergencies and surgeries), Medical (doctors and treatments), and Pharmaceutical (medicines). We address each of these in more detail below.
What Medicare covers: Hospital
Medicare covers a patient to be treated for free as a public patient, in a public hospital, by a doctor appointed by the hospital (the on-call doctor available at the time). As a public patient, you cannot choose your own doctor or choose the day that you undergo examinations, treatment, or surgery.
Medicare will pay 100% of the fee listed in the Medicare Benefits Schedule (MBS) for medical services covered by Medicare, which include the following:
- Treatment by doctors, specialists, and nurses
- Tests and examinations such as X-rays and blood tests (pathology)
- Eye tests by an optometrist
- Surgeries and other therapeutical procedures performed by doctors
- Some dental surgeries
- Cleft Lip and Palate Scheme treatment
- Some allied health services (e.g. psychologists, psychiatrists, chronic disease management)
In the public system, you are seen by whatever doctor is on call at the time you are admitted to hospital or the time you get an appointment. Public patients stay in public rooms or wards, usually with about 4-6 people per room.
If a patient wants to choose what doctor will see them or wants a private room, they will need to be admitted as a private patient. Medicare covers a benefit towards doctor’s fees of up to 75% of the Medicare Benefits Schedule (MBS) fee for a patient to be treated as a private patient in a public or private hospital, but this does not include fees for accommodation, surgery theatre fees, or medicines. The health fund will pay the remaining 25% of the MBS fee with any about above this fee charged by the doctor to be paid by the patient.
Medicare does not cover:
- Private patient hospital costs such as surgery theatre fees for private patients, or accommodation for a private room
- Surgeries or treatments that are not medically necessary to maintain your health, such as elective cosmetic surgery
- Medical and hospital costs you paid while you were travelling or living overseas
- Ambulance services
What Medicare covers: Medical
Medicare covers a patient to visit a doctor or health practitioner in a medical practice (not in a hospital). Medicare covers a benefit for the following treatments not in a hospital:
- Fees to see a doctor or specialist doctor (consultation fees)
- Tests and examinations by doctors needed to treat illnesses, such as X-rays and blood tests (pathology)
- Eye tests by an optometrist
- Most surgeries and therapeutic procedures performed by doctors
- Some surgeries performed by approved dentists
- Some items under the Cleft Lip and Palate Scheme
- Some items under the Enhanced Primary Care (EPC) program
- Some allied health services included in the Chronic Disease Management Plan
In terms of how much of a benefit Medicare covers, Medicare does not always pay the full fee charged by the doctor – or even the full fee listed on the MBS:
- For a general practitioner (GP): 100% of the fee listed on the MBS. A few doctors bulk-bill their patients (they bill Medicare directly) so that the patient does not have to pay anything.
- For a specialist: 85% of the fee listed on the MBS. Many specialists charge fees that are much higher than the MBS fee that Medicare will cover, so the patient has to pay a gap payment.
Medicare does not cover:
- Medical exams required when applying for a job, life insurance, superannuation, memberships, or government bodies
- Most dental examinations and treatment
- Most physiotherapy, occupational therapy, speech therapy, eye therapy, chiropractic services, podiatry, acupuncture, or psychology services
- Glasses and contact lenses
- Hearing aids and other health aid appliances
- Home nursing
- Ambulance services
At present, there is no Medicare benefit to help you pay for dental, optical, chiropractic, physiotherapy, or other alternative/complementary therapies. You would pay the full fee for such services on your own.
What Medicare covers: Pharmaceutical
In the Pharmaceutical Benefits Scheme (PBS), Medicare covers part of the cost of most prescription medicines available at pharmacies. So the PBS pays part of the cost of the medicine, and the patient only pays a smaller part of the cost of the medicine. Patients who have a Concession Card pay even less to buy these medicines.
Can I still use a public hospital and Medicare if I have insurance?
Yes. You can be treated for free as a public patient in a public hospital under Medicare even if you have private health insurance.
There are many benefits to having private health insurance as well as Medicare, but of course it depends on whether or not you can afford a policy that covers what you need. We can help you find a policy that meets your needs.
Canstar regularly researches and rates health insurance for different profiles and life stages such as young singles, couples, older singles, families, and more. We compare health insurance policies and providers for price and value for money, coverage and benefits, and terms and conditions of coverage. Compare your options today: