The Short Version
Medicare is Australia’s universal healthcare system, offering citizens and permanent residents access to a wide range of medical services for free or at a subsidised cost. Medicare covers hospital treatments, GP consultations, diagnostic tests, and some dental procedures. While it is funded through a 2% levy on taxable income and general taxes, Medicare doesn’t cover all medical expenses, often leaving patients with out-of-pocket costs. Private health insurance complements Medicare by covering additional services and reducing waiting times, making it an essential part of Australia’s healthcare system.
It’s important to seek professional advice to fully understand how Medicare and private health insurance can work together to meet your healthcare needs. Fair Health Care Alliance can guide you in choosing a better policy tailored to your specific situation, ensuring you maximize your healthcare benefits and minimize out-of-pocket expenses. Contact Fair Health Care Alliance today for expert advice and support in navigating your healthcare options.
What is Medicare?
Medicare is Australia’s universal healthcare system, providing access to a wide range of medical services either for free or at a subsidized cost. As someone who has been immersed in the health insurance industry for quite a number of years, let me explain how it works and provide bit of background on it.
When Medicare was introduced in 1984, it provided a basic level of coverage for all Australian citizens and permanent residents. This dramatically changed the healthcare landscape in Australia, and it is still a vital part of our healthcare system to this day. When it was introduced private insurers had to adapt by finding ways to offer additional coverage, including benefits for services that were not fully covered or not covered at all by the medicare public system, such as:
- Private hospital treatment
- Ancillary services (e.g., physiotherapy, psychology)
This shift impacted the entire healthcare system and marked a significant change in Australia with a move towards providing healthcare access for all Australians and permanent residents.
Is Medicare Free?
While Medicare provides free or subsidized access to healthcare, it is not a completely free service provided by the Australian Government. The scheme is primarily funded through the income that you and I earn. It is broken down in the following way:
- All working residents of Australia contribute a 2% Medicare levy on their annual taxable income.
- Additional revenue from general taxes paid by all Australians is also used to subsidize the scheme.
Although it doesn’t cover every medical service 100%, Medicare has significantly shaped how we access and pay for healthcare in this country, giving those that may be unable to afford private health coverage access to high-quality medical treatment.
What Does Medicare Cover and how do I get access to it?
Medicare covers a wide range of medical services for all Australian citizens and permanent residents, including:
- Hospital treatment as a public patient
- Consultations with general practitioners (GPs) and specialists
- Diagnostic tests (e.g., X-rays, blood work)
- Some dental procedures (e.g., cleft lip and palate treatment)
It essentially acts as a baseline coverage, and many people choose to purchase private health insurance to top up additional services that Medicare does not fully cover. Speaking to a comparison service like Fair Health Care can help ensure you’re getting all the extra coverage you might need.
To take advantage of Medicare’s benefits, you need to enroll in the program through Services Australia. If you’re an eligible resident, you’ll receive a Medicare care card with a distinctive 10 digit number. Families will have all their members displayed on one card with individual reference numbers.
With your Medicare card, you can access a wide range of medical services. However, it’s important to be aware that not all services are fully covered by Medicare, and you still may incur an out of pocket cost.
Your Medicare card serves multiple purposes and can be used in the following ways:
- Making claims for paid or unpaid doctor’s accounts
- Visiting doctors who bulk bill (directly bill Medicare)
- Receiving treatment as a public patient in a public hospital
- Filling prescriptions under the Pharmaceutical Benefits Scheme (PBS) at pharmacies
Medicare Rebates and Refund Amounts
When you visit the doctor or get a medical procedure done under Medicare, you’ll usually get a rebate to help cover the costs. The rebate amount is based on the Medicare Benefits Schedule (MBS), which are pre-determined rates set by the Australian government. If your healthcare provider bulk bills Medicare directly, you won’t have to pay anything out of your pocket. However, in Australia health practitioners are able to charge what they feel is appropriate, and if they charge more than the MBS rates, you’ll need to cover that extra “gap” payment yourself. Generally, Medicare rebates are deducted from your bill on the spot and claimed immediately at the health practitioner’s office, making the process a lot more streamlined.
Portability
Don’t re-serve waiting periods when you switch to a new health fund or policy
“John was immediately covered for a hip replacement in private hospital because he had already served his waiting periods for joint replacements on his old policy”
Medicare and Private Health Insurance
A common question I often get when speaking with customers is, “If Medicare gives me gap-free access to medical services and allows me to receive treatment at public hospitals, why do I need to pay for private health insurance?” It’s a valid question.
In theory, Medicare is a fantastic system that provides great benefits for Australians. However, with rising healthcare costs, Medicare is struggling to keep up with these increases. The benefits it pays out today are falling far short of the actual costs of treatment, which intern is leaving more and more people with out-of-pocket expenses. Not to mention that the public hospital system is struggling under the weight of the increased number of medical procedures that need to be done, post-COVID lockdowns. This has resulted in extended waiting lists for hospital admissions as well as getting into see specialists for simple consultations.
While Medicare provides a solid foundation to start with, it’s not enough to cover all the costs of high-quality healthcare. That’s where private health insurance comes in. It acts as a crucial supplement, bridging the gap between what Medicare cover and the true expense of medical treatment. Without private insurance, many Australians would be left with a much bigger financial burden when seeking medical attention and would be left on much longer waiting lists to get the treatment they require. Private insurance will also enable the member to access treatment in private hospitals, and choose their own specialist for care, giving them much greater control over the health care needs.
Medicare plays an important role in private health insurance and they work together when you need treatment at a private hospital. Here is how they team up to provide you with high cover when seeking private care in a hospital.
- Your private health insurer will cover the full cost of your accommodation charges and any fees for using the operating theatre, provided you are accessing treatment in one of their contracted private hospitals.
- For the actual medical procedure itself, Medicare steps in and pays 75% of the fee according to their scheduled rates.
- Your private health fund then chips in the remaining 25% of that scheduled fee.
So, in simple terms, your private health insurer takes care of the hospital costs whilst Medicare handles the bulk of the doctor’s fee for the procedure. Your health fund can top up the last portion to ensure your out-of-pocket for the medical treatment can be dramatically reduced or eliminated depending on the doctors participation in the funds medical gap scheme.
It’s important to note that doctors in Australia are not required to stick to the scheduled fees set by Medicare. They have the freedom to charge whatever fee they believe is appropriate based on their expertise and experience. This can sometimes result in a “gap fee” for the patient.
An example of this could be, if Medicare’s scheduled fee for an operation is $500, but your doctor charges $700, there would be a $200 gap fee that you’d need to pay, unless your private health insurance policy covers some or all of those potential gap costs.
While Medicare and private health insurance help make healthcare more affordable, doctors can still charge above the scheduled rates, which could leave you with additional out-of-pocket expenses.
Seek Professional Advice
When navigating the world of Medicare and private health insurance, it’s always a good idea to speak with a professional in the industry. They can help ensure you choose the policy that works best for your specific situation and needs and guide you through the process and explain things in simple terms.
The team at Fair Heath Care can help you understand how Medicare and your private health insurance provider can work together to give you the most cost-effective outcome for any health needs you might have now or in the future.
