Medicare is a public healthcare scheme that gives Aussies (and some overseas visitors) access to health and hospital services at low or zero cost.
It pays for treatment in public hospitals and subsidises other health services and medicines.
Dental, optical and physio are 3 examples of services not covered by Medicare.
What is Medicare?
Medicare is Australia's universal health system. It ensures that all Australians, permanent residents and some overseas visitors have little or no out-of-pocket expenses when they need to go to the hospital or visit a doctor.
However, Medicare won't cover everything — Medicare doesn't cover most dental work, for example. That's part of why more than half of all Australians also take out private health insurance.
What does medicare cover?
Medicare benefits can be placed in 3 main groups: cover for hospital treatment, cover for treatment outside a hospital and subsidies for medications.
Medicare provides you with free treatment at a public hospital. Keep in mind that:
The hospital will appoint you a doctor. The Australian public hospital system is world-class, and in most cases the doctor who'll be appointed to you will have years of experience. Private hospital insurance allows policyholders to select who treats them and have some control over when they're admitted to hospital. Other perks can include a private room, if available.
If you choose to be treated as a private patient, either in a public or private hospital, Medicare generally covers 75% of the cost of your treatment. The other 25% needs to be paid out-of-pocket, either by you or your health plan, or a combination of these.
Ambulance costs aren't covered (unless you're a resident of Queensland or Tasmania). Medicare doesn't pay a benefit to cover the cost of ambulance transportation and treatment on the way to a hospital. Most health insurers and state ambulance services offer affordable policies or subscriptions to cover these costs.
Out of hospital
Out of hospital
Medicare will cover the cost of going to see a doctor or general practitioner. If you need to see a specialist, Medicare will pay a benefit up to a percentage of the specialist's fee. The non-hospital related services that are eligible for benefit payments are outlined in more detail below.
Medical service type
What's covered
Consultations
General practitioner and specialist consultations.
Examinations
Treatments for an illness that doesn't require hospitalisation (for example, X-rays and blood tests).
Out-of-hospital surgery
Procedures performed at a doctor's surgery.
Dentistry and the Cleft Lip and Cleft Palate Scheme
Medicare pays a benefit for dental procedures performed at a hospital. Out-of-hospital dental procedures are not covered except for diagnostic imaging services or administration of anaesthesia for dental procedures.
The Cleft Lip and Cleft Palate Scheme includes orthodontic procedures, tooth extraction, prosthodontics services and maxillofacial surgery.
Optometrist
Initial consultations and eye examinations.
Chronic disease management
Treatment of a chronic or terminal illness through a GP management and Team Care Arrangements.
The PBS Schedule outlines which medications are subsidised by the government and the price of the drug. Dentists and optometrists have a schedule for patients too.
Even with the PBS, you may be responsible for paying part of the cost of the medication. The amount that's covered by the PBS varies depending on the medication.
In many cases, you will be able to choose between 2 versions of the same drug, although the benefit will remain the same so if one is more expensive than the other you will have to make up the difference.
You're eligible for further concessions on the price of medication under the Medicare Safety Net if your out-of-pocket expenses reach the safety-net threshold.
Finder survey: How many people worry that Medicare will not be enough?
Response
Female
Male
Yes
54.41%
48.33%
No
23.95%
28.54%
Not sure
21.65%
23.13%
Source: Finder survey by Pure Profile of 1006 Australians, December 2023
What doesn't Medicare cover?
There are a number of hospital and non-hospital related services and treatments that aren't covered by Medicare. These include as follows:
An out-of-pocket expense, also known as "the gap", is essentially the difference between how much a doctor charges and the rebate you get from Medicare.
Medicare rebates are paid as a percentage of the overall bill for a health service. This fee can be up to 100% for consultations provided by a GP.
To avoid out-of-pocket expenses, you can restrict your doctor's visits to medical centres and practices that offer bulk billing. Alternatively, you could take out private health insurance, which reduces or in some cases fully covers these extra costs.
The Medicare benefit for getting specialist treatment only covers 75-85% of the overall cost. In this case:
You'll have to pay "the gap" amount, and
Any out-of-pocket expense, if the consulting specialist charges more than the schedule fee
A doctor sets their fees according to the benefit costs outlined in the MBS, meaning there won't be any cost to the patient. There's no out-of-pocket expenses or gap payments to worry about. Ask if a GP offers bulk billing before you make a booking.
Non bulk-billing
Many GPs and specialists won't offer bulk billing, and will usually charge a fee higher than that listed in the MBS. You might get discounted rates if you're a concession or pension card holder. The gap between your rebate from Medicare and the consultation fee is the amount you must pay.
Who is eligible for Medicare?
Australian citizens
Medicare is available to all permanent residents (including holders of Resident Return visas) and Australian citizens living in Australia.
Citizens from other countries
You're eligible for some cover under Medicare if you're a New Zealand citizen living in Australia, applying for Australian permanent residency, or from a country that has a Reciprocal Health Care Agreement with Australia.
Medicare vs private health insurance
Having access to top-quality health care for free, or at a subsidised price, is not something that's available everywhere in the world, and the Australian public health system does a good job if you need urgent medical treatment.
On the other hand, you can typically enjoy more choice and flexibility as a private patient, and private health insurance can make your treatment much more affordable. Benefits include your choice of doctor, admittance when you need it, a private room, and more, as our guide to public vs private healthcare explains.
Pros and cons of private health insurance
Pros
Benefit from a more individual level of care as a private patient.
Surgery wait times can be much lower if you go private, instead of opting for public treatment.
You can claim money back on health services that aren't covered by Medicare.
Some can avoid government surcharges, such as the Lifetime Health Cover Loading and the Medicare Levy Surcharge (see below), by having private cover.
Cons
Top tier plans, such as Gold insurance, can be very expensive.
Policies have a number of excluded treatments you won't be able to claim against.
Even with insurance, you could still meet a range of out-of-pocket costs.
Tax and private health insurance
The Australian Government has adopted a carrot-and-stick approach by implementing tax levies and loadings for not being insured by a health fund, while offering rebates for taking out a policy.
Standard cover (a varied mix of hospital
treatments)
Comprehensive cover for most treatments
Pregnancy and childbirth
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Preventative & general dental
Major dental & implants
Optical
Physiotherapy
Podiatry
Non-PBS pharmaceuticals
Chiropractic
Emergency ambulance
Remedial massage
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Frequently asked questions
Medicare is Australia's universal health system which offers Aussies (and some overseas visitors) access to free or subsidised health care.
Broadly, Medicare offers cover for hospital treatment; treatment outside a hospital and subsidies for pharmaceutical medications.
Medicare won't subsidise a range of hospital and out-of-hospital treatments. That may help explain why 54.3% of the population holds some form of private cover, according to APRA figures.
All Australian citizens and permanent residents are eligible for Medicare. You'll also be eligible if you're a citizen of New Zealand, or any other country that has a reciprocal healthcare agreement, and live in Australia. Applicants for Australian permanent residency are also generally eligible.
Health care professionals can bill you for medical services in 2 ways:
Bulk billing. Your doctor accepts the MBS fee as payment for their service and charges Medicare directly. Bulk billing doctors are most common in cities and less so in rural areas where there may be a shortage of health care professionals. Be aware that specialists rarely offer bulk billing, and will usually charge a fee higher than that listed in the MBS.
Patient account. If your doctor doesn't bulk bill, you will be required to pay your fees before claiming your benefit back from Medicare.
Several options are available for lodging your claims with Medicare:
In person. Your doctor sends your claim to Medicare via EFTPOS when you pay your bill, and the benefit is paid directly into your bank account. This is the most efficient way to claim, although not all medical centres and practices offer it.
Smartphone app. You can link your Medicare online account to the Express Plus Medicare mobile app and claim from your IOS, Android and Windows 10 devices.
Over the phone. Make a claim over the phone by providing your Medicare number, your bank details and your doctor's receipt.
Medicare online claim. Rebates for some services can be claimed through the Department of Human Services website using your Medicare Online Account. Be aware that you can't claim online if you have been bulk billed or if your claim is for a service provided by a hospital. Additionally, you can't lodge claims for persons who are not listed on your Medicare card or lodge claims that are more than 2 years old.
Traditional mail. Complete a Medicare claim form and return it by post to Medicare, GPO Box 9822, "your capital city", or drop it off at your nearest Medicare Service Centre. Your doctor can provide you with the claim form or you can get it in PDF format from the Department of Human Services website. People with private health insurance can drop their claim forms off at their nearest health fund office if they are Medicare Two-way participants.
The Medicare Safety Net increases your Medicare benefit once your out-of-pocket expenses reach certain thresholds, to help ease the financial burden of these extra costs.
The amount of out-of-pocket expenses that count toward the Medicare Safety Net are now capped at 150% of the MBS fee per treatment or services, minus the Medicare rebate.
Here are some examples of the gap payment threshold that must be reached for each eligibility category, before the Medicare Safety Net benefit increase is applied:
Gap payment threshold
Who's eligible?
How is it calculated?
What's the benefit increase amount?
$481.20
All Medicare card holders
The gap amount (difference between the Medicare benefit and the schedule fee)
100% of the schedule fee for out-of-hospital services
$697.00
Valid Concession card holders and families eligible for the Family Tax Benefit (FTB) Part A
Out-of-pocket expenses
80% of out-of-pocket expenses or the Extended Medicare Safety Net (EMSN) benefit cap for out-of-hospital services
$2,184.30
All Medicare card holders
Out-of-pocket expenses
80% of out-of-pocket expenses or the EMSN benefit cap for out-of-hospital services
Source: Australian Government Department of Human Services, Medicare Safety Net Thresholds 2021
James Martin was the insurance editor at Finder. He has written on a range of insurance and finance topics for over 7 years. James often shares his insurance expertise as a media spokesperson and has appeared on Prime 7 News, WIN News, Insurance News, 7NEWS and The Guardian. He holds a Tier 1 General Insurance (General Advice) certification and a Tier 1 Generic Knowledge certification, both of which meet the requirements of ASIC Regulatory Guide 146 (RG146).
This guide looks at how the PBS works, who is eligible and what you’re likely to pay at the prescription counter.
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