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Gap cover and out-of-pocket expenses

What you need to know about private health insurance and gap payments.

When a hospital or healthcare provider charges more for a treatment or service than what is covered by Medicare and your private health insurance, the amount left to pay is known as “the gap”.

The gap is an out-of-pocket expense that you must pay yourself, unless your policy includes gap cover insurance.

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Details Features
High 65 / 75 / 85% - $0/$250/$500 Excess
High 65 / 75 / 85% - $0/$250/$500 Excess
Combines High Hospital Cover with its highest level of extras cover.
  • Cover starting from $44.74 weekly
  • 12 month waiting period for pregnancy
  • 65% back on extras
  • Choice of $0, $250 and $500 excess
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Deluxe flexi
Deluxe flexi
Deluxe flexi provides cover for a range of treatments including hip replacement, spinal fusion, dialysis and major eye surgery.
  • No excess for kids
  • All joint replacements
  • Major eye surgery
  • Rehabilitation
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Premier Package
Premier Package
Top tier combined hospital and extras policy that covers you for an extensive range of hospital and general treatment services.
  • All the benefits of HCI's Premier Hospital policy
  • All the benefits of HCI's Premier Extras policy
  • Cover for pregnancy and IVF treatment
  • Cover for general and major dental
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Smart Combination
Smart Combination
Smart combination provides a high level of cover for both hospital and extras.
  • Claim up to $2725 back on extras
  • Hip and knee replacements
  • General and major dental
  • Physio
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Bronze Hospital (no pregnancy) and Bronze Extras Set Benefits
Bronze Hospital (no pregnancy) and Bronze Extras Set Benefits
High level of hospital cover and extras cover for a range of popular services including knee and should reconstructions.
  • Most comprehensive hospital options
  • Cover for general and major dental
  • Shared or single room in a private hospital
  • Intensive and coronary care
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Combined cover designed to suit young people who want value money health insurance, but don’t want to pay for services that they may not use. Restricted fund: Only current and former members of an education union and their families can join.
  • Cover for 5 key services in a private hospital
  • Access Gap Cover
  • $500 general dental annual limit
  • $150 Healthy Lifestyle annual limit
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Highest level of combined cover offered by CBHS. Includes the same benefits as Comprehensive Hospital and Top Extras plus more. Restricted fund: Only current or former staff (and their families) of Commonwealth Bank Group and their subsidiaries which include Aussie, Bankwest, Colonial First State and more can join.
  • No excess or co-payments on hospital cover
  • Non-student dependent under 25 can be kept on policy
  • Access to Chronic Disease Management Programs
  • Widest range of extras including orthodontics
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Premium Hospital and Silver Extras Cover
Premium Hospital and Silver Extras Cover
Comprehensive hospital cover including pregnancy cover. Also included affordable mid-level extras cover for dental, optical and therapies.
  • Cover from $39.50 per week
  • Pregnancy and birth-related services cover
  • Heart surgery cover
  • 100% cash back on two dental check per year
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Top Hospital with Top Extras
Top Hospital with Top Extras
Get comprehensive hospital and extras cover and tailor your policy to your needs.
  • Pregnancy and birth services cover
  • Back surgery cover
  • $1000 general dental annual limit
  • $600 physiotherapy annual limit
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Young Couples Combined Cover
Young Couples Combined Cover
Mid-level hospital and basic level Extras package with an excess for young, healthy couples that are not quite ready to start a family.
  • Emergency ambulance cover
  • Cancer-related surgery cover
  • 70% back on extras
  • $300 dental annual limit per person
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How does gap cover work?

Gap cover is insurance that protects you from out-of-pocket expenses and it’s usually offered in some form by most insurers. It’s available in three levels of protection:

  • Partial gap cover. Partial gap protection covers some of the gap, but not all, meaning you must pay the rest.
  • Known gap cover. Known gap protection covers each treatment up to a maximum capped amount, with any remaining gap payable by you. The advantage is that you know what your out-of-pocket expenses will be before receiving treatment.
  • Full gap cover. Full gap protection covers 100% of any fees in excess of the Medicare Benefits Schedule (MBS).

Gap cover only covers treatments and services provided by a doctor or a hospital that participates in your insurer’s gap cover scheme, so it’s important to find out if they do or are willing to do so before you receive any treatment. If the doctor or hospital is registered with your insurer, they will bill the insurer directly for the treatment. However, if there is a gap to be paid by you, they must notify you and obtain your consent prior to treatment.

What are the different types of gap?

There are several circumstances in which a gap can occur, leaving you with an out-of-pocket expense to pay:

  • If your doctor or hospital is not registered with your insurance company’s gap cover scheme
  • If they charge a fee higher than what is covered by Medicare and your insurer
  • If the treatment is not covered by the MBS (ancillary services such as optical, dental and physiotherapy)
  • If the treatment is excluded from cover by your insurer
  • If you are required by your insurer to pay an excess or a co-payment towards your treatment (a co-payment is a daily amount you must contribute towards the cost of your hospital accommodation)

How can I avoid unexpected medical costs?

There are several ways you can avoid or at least limit your out-of-pocket medical expenses:

  • Choose a health fund that provides 100% gap cover. If this is unaffordable for you, at the very least opt for known gap cover, so you can budget for any expenses you will have to pay.
  • Choose a policy that doesn’t include excesses or co-payments.
  • Make sure your doctor or hospital participates in your health fund’s gap cover scheme or is at least willing to do so.
  • Before your hospital treatment, find out what fees are charged by other health care providers such as your anaesthetist and any assisting surgeons and check whether they are registered with your health fund.
  • Only seek treatment from health care providers who charge the MBS scheduled fee.

What are the different type of gaps in healthcare?

Hospital gaps

There are two main types of gaps: hospital gaps and medical gaps. Hospital gaps are the out-of-pocket expenses incurred while being treated in hospital and they include:

  • Any excess or co-payment your health fund requires you to contribute towards your hospital stay
  • Any treatment you’ve received at a hospital that charges above the MBS fee but does not have a gap cover arrangement with your health fund
  • Any fees charged by additional caregivers who are not registered with your health fund
  • Any out-of-hospital treatment you receive prior to being admitted (specialist consultations, tests, etc), unless they are covered by Medicare
  • Any personal services you use during your stay in hospital (telephones, newspapers, magazines, etc)

Medical gaps

Medical gaps are the out-of-pocket expenses incurred for out-of-hospital treatments and services and they can include:

  • Treatment by a doctor who charges above the MBS fee and does not have a gap cover arrangement with your health fund
  • Treatments not covered by Medicare or your health fund (some natural therapy treatments)
  • Specialist consultations and tests not covered by Medicare
  • Specialist consultations and tests partially covered by Medicare but not by your health fund (health funds are not permitted to cover these services)

Are there gap payments for prostheses?

Prostheses are artificial replacements for human body parts such as eye lenses, artificial hips, pacemakers and heart valves. The Prostheses List is a list of surgically implanted prostheses that health funds are required to pay a benefit for when the procedure is covered by the MBS.

While health funds are required to pay for one prosthesis (known as a “no gap” prosthesis), if the prosthesis costs more than the prescribed amount on the Prostheses List, then you will be required to pay the gap between the amount on the list and the amount charged by the prosthesis supplier. It’s important to always speak to your insurer before having a procedure that involves a prosthesis to determine if there will be a gap to pay.

Gap cover doctors

A gap cover doctor is one who has an arrangement with a health insurer and participates in their gap cover scheme. Medical practitioners have arrangements with various insurers, and in return for a greater volume of patients they agree to charge a set fee for their services.

You can find out which gap cover doctors are registered with your particular health fund by calling the health fund direct or asking the doctor’s office when making an appointment for treatment. It’s important to do this, as seeking treatment from a doctor who charges above the MBS fee and is not associated with your health fund could see you paying much of the bill yourself.

What can I do if my bill is much higher than expected?

If, after treatment, you receive a bill that is much higher than you anticipated, there are several things you can do:

  • Contact the doctor or the hospital and query the charges.
  • Explain the amount you expected to pay and ask if there were any unexpected costs that you were not informed of at the time.
  • If you are unhappy with their answers, pay the amount you expected to pay and enclose a letter stating why you are paying that amount for the time being and that you cannot afford to pay the requested amount.
  • You can then either negotiate for a payment plan or a reduction in the amount owing or, if that is not successful, consider taking the matter further by going to a health complaints agency.

Does private health insurance eliminate the gap?

The short answer to this question is no. If a medical practitioner charges more for a treatment than the amount designated by the MBS, there will be a gap between what is being charged and what Medicare and your insurer will pay.

As this guide has shown, the only way to reduce or eliminate this gap is to have a policy that includes gap cover, ideally for 100% of costs, but at least with enough cover to substantially reduce your out-of-pocket expenses. The only other way to avoid paying a gap is to only seek treatment from health care providers who don’t charge above the MBS limit. However, doing this will severely restrict your choice of providers and defeat one of the main purposes of having private health insurance, which is to be able choose your own doctor.

Compare health cover options today

Picture: Shutterstock

Richard Laycock

Richard is the senior insurance writer at and is on a mission to make insurance easier to understand.

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