Medicare Safety Net

Find out exactly how the Medicare Safety Net works and what you are entitled to in a claim in this guide.

If you need to see your doctor regularly or you frequently undergo medical tests, the out-of-pocket costs of these services can quickly add up. The Medicare Safety Net provides an additional level of financial assistance to help patients cover the cost of out-of-hospital medical services. It is designed to help people with high medical costs reduce their out-of-pocket expenses, so let’s take a closer look at exactly how the Medicare Safety Net works and what it covers.

What is the Medicare Safety Net?

While Medicare covers some out-of-hospital medical costs, it doesn’t cover the full bill. There is a difference between the fee your doctor charges and the Medicare rebate – this difference is known as the “gap” and it represents your out-of-pocket medical expenses.

So, if you require ongoing medical assistance, for example if you have a serious health condition requiring frequent medical tests and regular visits to your doctor, the cost of accessing the treatment you need will quickly add up.

This is where the Medicare Safety Net comes in. It is designed to offer extra financial assistance to patients with a high level of medical costs, providing access to additional rebates to help cover out-of-pocket medical expenses.

Once your out-of-pocket expenses for out-of-hospital medical costs reach a set threshold each year ($453.20 per person in 2017), all future medical services you receive for the remainder of the calendar year are paid at 100% of the Medicare Benefits Schedule (MBS) fee. This is an increase from the usual Medicare rebate of 85% and can help relieve the financial pressure of accessing the help you need.

The table below provides an example of the difference the Medicare Safety Net can make to the rebate you receive. As you can see, the same medical service will cost you almost $13 less once you have reached the Medicare Safety Net threshold.

Before Safety Net threshold reachedAfter Safety Net threshold reached
Doctor’s fee$141$141
MBS rebate$72.75 (85% of MBS fee)$85.55 (100% of MBS fee)
Out-of-pocket cost to you$68.25$55.45

There is no need for individuals to register for the Medicare Safety Net as Medicare automatically keeps track of your total out-of-pocket expenses. However, couples and families are required to register, even if all of your family members are listed on the same Medicare card. You only need to register once but you will need to notify Medicare of any changes to your family, such as if you have a new baby.

Original Medicare Safety Net Vs. Extended Medicare Safety Net

There are currently two Medicare Safety Net arrangements in place in Australia: the Original Medicare Safety Net and the Extended Medicare Safety Net. Both these safety nets are available to all Medicare cardholders and work in conjunction with one another.

  • Under the Original Medicare Safety Net, once you’ve reached the annual threshold for out-of-pocket medical expenses, the Medicare benefits you’re eligible to receive increase to 100% of the MBS fee for all out-of-hospital services until the end of the calendar year. Only the difference between the MBS fee and the Medicare rebate – the gap – counts towards the Original Medicare Safety Net threshold, which is indexed annually from 1 January.
  • The Extended Medicare Safety Net is designed to offer extra financial support for families and singles who incur a high level of out-of-pocket costs for out-of-hospital medical services. The Extended net provides an additional rebate on top of the Original Medicare Safety Net, covering 80% of any future out-of-pocket expenses for out-of-hospital costs in a calendar year once you have exceeded the threshold. The Extended Medicare Safety Net is $2,056.30 for most people, but concession cardholders and families eligible for Family Tax Benefit Part A must meet a much lower threshold of $656.30. Your eligibility to be covered under the Extended Medicare Safety Net lapses at the end of each year and must be re-established starting from 1 January.

What can I claim on the Medicare Safety Net?

The Medicare Safety Net covers a wide range of out-of-hospital doctor visits and medical tests listed on the Medicare Benefits Schedule. This includes:

  • Consultations with your GP or healthcare professional
  • Blood tests
  • CT scans
  • Pap smears
  • Psychiatry services
  • Radiotherapy
  • Tissue biopsies
  • X-rays and ultrasounds

Out-of-hospital medical services that are not listed in the Medicare Benefits Schedule do not count towards the Medicare Safety Net.

What are the Medicare Safety Net thresholds?

The Medicare Safety Net thresholds vary depending on your personal circumstances, as outlined in the table below.

ThresholdThreshold amountWho is eligibleHow it is calculatedBenefit once threshold exceeded
Original Medicare Safety Net$453.20All Medicare cardholdersBased on gap amount100% of MBS fee for out-of-hospital services
Extended Medicare Safety Net (Concessional and Family Tax Benefit Part A)$656.30Concession cardholders and families eligible for Family Tax Benefit Part ABased on your out-of-pocket costs80% of out-of-pocket costs or the Extended Medicare Safety Net benefit cap for out-of-hospital services
Extended Medicare Safety Net (General)$2,056.30All Medicare cardholdersBased on your out-of-pocket costs80% of out-of-pocket costs or the Extended Medicare Safety Net benefit cap for out-of-hospital services

What is the new Medicare Safety Net?

The new Medicare Safety Net, which was announced in the 2014-15 Federal Budget but is yet to be introduced, will provide further assistance for patients with high medical costs. The new Medicare Safety Net will replace the existing safety net arrangements and increase the Medicare benefit amount payable once you have reached the annual threshold for eligible out-of-pocket medical expenses.

However, the new arrangements will impose a limit on the out-of-pocket costs that count towards reaching the Medicare Safety Net threshold. As a result, the maximum accumulation amount per medical service will be 150% of the Medicare Benefits Schedule (MBS) fee minus the Medicare rebate. Any out-of-pocket costs you incur beyond this 150% limit won’t be counted when assessing whether you have reached the threshold.

Once the new Medicare Safety Net commences, the new thresholds will be as follows:

  • $400 for singles and families with Commonwealth concession cards
  • $700 for families who qualify for Family Tax Benefit Part (A), and single people without concession cards
  • $1,000 for all other couples and families

Once a patient reaches the relevant threshold for medical costs, Medicare will pay a maximum of 80% of any out-of-pocket costs for out-of-hospital services that patient incurs for the rest of the calendar year. However, the maximum benefit (the MBS benefit plus the Medicare Safety Net benefit) the patient receives cannot exceed 150% of the MBS fee.

At the time of writing, no date had been set for the introduction of the new Medicare Safety Net. However, if you’ve registered for the previous Medicare Safety Net, there is no need to re-register in order to access benefits under the new Medicare Safety Net arrangements.

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Tim Falk

A freelance writer with a passion for the written word, Tim loves helping Australians find the right home loans and savings accounts. When he's not chained to a computer, Tim can usually be found exploring the great outdoors.

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