Medicare vs Private Health Insurance

What is Medicare?

Medicare is Australia’s universal health insurance scheme, available to all Australian citizens and most Australian residents. Under Medicare, you can be treated as a public patient at a public hospital for free. As a public patient, however, you can’t choose your doctor or what hospital you are treated at, and you may be put on a waiting list for non-emergency treatment.

Medicare helps to cover the cost of seeing doctors, specialists and some other health professionals out-of-hospital. For example, Medicare subsidies consultation fees for doctors, tests and exams by doctors (such as x-rays) and eye tests by optometrists. If your doctor bulk bills, Medicare will cover all the costs and you won’t need to pay anything out-of-pocket.

To assist individuals and families who require more frequent healthcare services, such as regular GP visits, blood tests, or other medical treatments for certain illnesses, Medicare also provides a ‘Medicare Safety Net’—designed to reduce out-of-pocket medical expenses further if you reach Medicare’s annual claim threshold. You can register for Medicare Safety Nets as a family or couple. Individuals with no dependents are automatically registered. Find out more at Services Australia. 

Having a Medicare card also allows you to access the Pharmaceutical Benefits Scheme (PBS), which subsidises the cost of a range of prescription medicines.

However, Medicare doesn’t cover everything. For example, it doesn’t cover the cost of ambulance services and it generally doesn’t provide benefits for out-of-hospital services such as dental and physiotherapy. Instead, this can be covered by private health insurance.

How to apply for Medicare

There are two ways that you can apply for Medicare; by completing a Medicare enrolment form sent to Services Australia or online through the MyGov portal. If you were born in Australia, you were likely enrolled at birth, however others may need to apply. Below are some of the Medicare eligible groups and what they need to apply.

• Australian citizen: An Australian passport or birth certificate and two documents proving your address from the last 6 months.
• Indigenous Australian: Standard identity documents if Available. If not, indigenous Australians can apply for Medicare with a referee and the Aboriginal and Torres Strait Islander Medicare enrolment and amendment form.
• Permanent resident: A current passport or ImmiCard and proof of permanent residency from the Department of Home Affairs.
• New Zealand citizen: A New Zealand passport and two documents proving your Australian address from the last 6 months.

What is private health insurance?

Private health insurance allows you to be treated in a hospital as a private patient and can help pay for health care costs that aren’t covered by Medicare (such as dental, physiotherapy and optical). Private health insurance can be purchased from a registered health insurer with regular premium payments.

Private health insurance can include hospital cover, extras cover or combined hospital and extras cover. You may also be able to get ambulance cover as a separate or combined policy (except in Queensland and Tasmania, where the state governments fund this service at no cost to residents).

With hospital cover, you can be treated as a private patient in a private or public hospital and you can typically choose your own doctor. Medicare will then help pay some of the costs if the medical service is listed on the Medicare Benefits Schedule (MBS). Depending on your policy, your health insurer may pay for all or some of the remaining costs of your treatment and some or all of your hospital costs (such as accommodation).

If you have extras cover, you’re covered for a range of out-of-hospital services that aren’t  covered by Medicare. Depending on your policy, this could include services such as dental, chiropractic, physiotherapy and optical, including glasses and contact lenses.

What is the difference between Medicare and private health insurance?

There are several differences between private health insurance vs Medicare. Medicare only covers the cost of your treatment as a public patient and a set range of non-hospital health services. Private health insurance can give you more choice about the type of health services used and more coverage for different types of services. 

We’ve summarised some of the main differences below:

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Another factor to consider is the cost. Medicare is partly funded by the Medicare levy, which typically makes up 2% of your taxable income. This is collected in the same way as income tax. If you don’t have an appropriate level of hospital cover and your income is above a certain amount (currently $97,000 or less for singles and $194,000 or less for families) the government also charges the Medicare levy surcharge.

If you decide to take out private health insurance, you will have to pay regular premiums to your insurer. The government also charges a lifetime health cover loading on top of your premium if you don’t take out and maintain hospital cover from the year you turn 31.

Can you claim Medicare if you have private health insurance?

Yes, having private health insurance should never prevent you from claiming medical expenses on Medicare. For private inpatient care, Medicare will pay a percentage of your costs up to the MBS fee and your private cover will pay towards the rest.

For out-of-hospital services, your private health insurance is unable to pay towards anything that Medicare covers. This means you may find a scenario where claiming on Medicare prevents you from claiming on your private cover. For example, if you receive a Medicare rebate for a psychologist appointment through a mental health care plan, you won’t be able to also claim on your private health insurance, even if it’s included on your policy.

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