What is the Gap?

In Australia, the Government publishes standard prices for medical procedures under the Medicare Benefits Schedule (MBS). If you have had treatment under the private health caresystem Medicare pays 75% of the MBS fee when you undergo a procedure in hospital, and your health fund pays the remaining 25%.

There is no requirement for doctors to charge the MBS, so a health insurance gap occurs when you are treated by a doctor who charges above the MBS. The difference between the MBS price (what your health fund will generally cover) and your doctor's costs are called 'the gap', and this is often payable out of your own pocket.

Some health funds do offer gap cover, but usually this is only with their highest level plans (most comprehensive cover). Depending on your insurer you may even be able to purchase additional gap cover on top of your regular health insurance plan.

How do I know if I'll have a gap to pay?

The Private Health Insurance Ombudsman has stated that 82% of privately insured services in hospital are gap-free. This is great news as it decreases the chances of your treatment incurring a gap.

The best way to find out if you'll have a gap to pay for your procedure is to ask for a list of all costs before the treatment. It's called Informed Financial Consent and it is your right.

Some questions you should ask include:

  • Does this hospital have an agreement with my health fund to cover all my costs
  • How much will my doctor/surgeon charge and will there be a gap to pay?
  • Does my health fund cover the gap or will I be liable for that cost?
  • How can I avoid or minimise the gap?

You can avoid or minimise the gap by getting quotes from several different medical professionals and selecting one that doesn't charge above the MBS fee, or one whose gap cost you can afford.

Remember, the majority of your in-hospital treatment probably won't incur a gap, but do ask questions before any procedure so you won't have to worry about costs afterwards.

These articles are provided as reference material to allow more informed decision making, but are not intended as being a complete source of information on any topic. All readers should make their own independent analysis on the topic to make sure they have considered the aspects that are important to them.