Out of pocket expenses: how do I avoid them?

When you’re forced to seek out specialist care for an illness or injury, there’s usually enough to worry about already—from the underlying ailment itself to the potential risks or side effects of the treatment.

But for many Australians, the cost of covering that medical care has become the biggest cause for concern.

A recent report from the Australian Institute of Health and Welfare (AIHW) revealed that almost 11 million Australians incurred out-of-pocket costs for non-hospital Medicare services in 2016-17, with the cost of services forcing around 1.3 million people to delay, or avoid, treatment required.

Since private health insurance may not cover all the in-patient specialists’ fees charged for a privately insured hospital procedure – and doesn’t cover any of the cost of a specialist out-patient consultation – out-of-pocket costs are becoming an increasing burden for private patients.

However, there are ways to avoid, or reduce, out-of-pocket expenses.

The cost of care

Out-of-pocket costs – often referred to as ‘gap’ payments – are the difference between the fee a doctor charges for a treatment or service, and the combined amount of Medicare rebate and private health insurance benefit.

In Australia, public patients admitted to public hospitals have their hospital and medical services covered by Medicare. However, privately insured patients who choose to be treated as a private patient in a public or private hospital may be charged the gap fee. Typically, people seek private health care to avoid lengthy public hospital waiting lists.

Outside of hospital, out-of-pocket costs are also incurred. Medicare contributes 85% of the Medicare Benefits Schedule fee for a specialist out-patient consultation. But the patient must pay the difference between the Medicare rebate and what the specialist actually charges.

Highlighting the problem

Following the completion of a Ministerial Advisory Committee report into the issue of unexpected out-of-pocket costs, the Federal Government has recognised the burden of gap payments and is working to make the industry more transparent for patients.

The report found that while the majority of doctors appropriately inform their patients of the full costs of their treatment, a small percentage of practitioners were charging very large or unexpected out-of-pocket fees.

As a result, the Federal Government has committed to developing a national website where patients can search for information around the fees and charges for specialist services.

The website is designed to “reduce the burden of bill shock” and allow Australians to make informed choices about their medical care.

The website will use government data to reveal the range of fees charged for common treatments within geographic areas, and also source information from individual specialists to clearly break down their fees for treatment.

The Medicare rebates for services and procedures will also be highlighted.

Reducing the gap

While the website is still some years from being developed and rolled out, there are measures patients can take now to help reduce their out-of-pocket costs.

Sometimes it can pay to shop around when you need to see a specialist. The AIHW report revealed that geography can play a factor in the level of your out-of-pocket costs, with large variations between patients living in different geographical and socioeconomic areas.

There are already a number of comparison tools and websites created by private health insurers and other organisations to help consumers research potential out-of-pocket costs before they book in to see a specialist, including the Healthshare website.

The Healthshare website can be used by a patient or GP at the time of referral to find a specialist who is likely to use an insurer’s gap-cover scheme to remove or cap out-of-pocket costs.

Private health members should talk to their insurer to find out if their policy covers the treatment they require, and to understand how a gap-cover agreement can reduce the potential out-of-pocket costs incurred.

When you go to see a specialist, ask them to clearly outline their fees and let them know early in the process if the costs aren’t affordable for your financial circumstances. Doctors can decide on a patient-by-patient basis whether to use a gap-cover agreement.

Don’t forget to consider the anaesthetist’s fee as well, as this will be on top of what the surgeon charges. Ask your specialist if they know what those costs will be or if they can give you the contact details so you can ring the anaesthetist’s office yourself.

Gap-cover schemes will cap or eliminate out-of-pocket costs. It is definitely worth talking about with your specialist.


Defence Health’s Access Gap program is a benefit that can reduce or eliminate your out-of-pocket costs. Get a quote on our website or call us on 1800 335 425 for more information.

Category: HealthYour Insurance


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Article by: Defence Health