What are out-of-pocket costs?

An out-of-pocket cost is the amount you have to pay for a medical appointment or treatment.

It is sometimes called a ‘gap payment’ or ‘patient payment’.

Your out-of-pocket cost is the difference between what your doctor, allied health professional or hospital charges for a service and what Medicare or your private health insurer pays for that service.

If you receive medical treatment and there is a gap between what the doctor, allied health professional or hospital charges you and what Medicare or your health insurer pays the doctor for that service, you have to pay the difference.

This is how out-of-pocket costs work:

The out-of-pocket cost you have to pay varies depending on:

• how much your doctor or healthcare provider charges you
• whether you have treatment inside or outside a hospital
• whether your treatment is covered by Medicare and how much Medicare pays for it
• if you are treated in a hospital, whether you are a public or private patient
• whether you have private health insurance for the treatment you are receiving and the level of that cover.

Private health insurance can cover doctors’ fees for treatment in hospital only.

Before you receive treatment, ask your doctor, healthcare provider and your hospital about any out-of-pocket costs you may have to pay. Otherwise, you may pay significant out-of-pocket costs for your treatment.

Do I have to pay a Gap for hospital treatment?

If you are a private patient being treated in a public or private hospital, there are 2 types of out-of-pocket fees that may apply:

• Hospital Gap: the difference between what your hospital charges for accommodation, meals and other hospital costs, and what Medicare and your insurer combined will pay for those services
• Medical Gap: the difference between what your medical providers charge for your treatment, and what Medicare and your insurer combined will pay for that service.

Before agreeing to treatment, ask your doctor for:

• the Medicare Benefits Schedule (MBS) item numbers for their services
• an estimate of your out-of-pocket costs
• whether other doctors or health care providers are involved in your care and how you can get an estimate of their fees.

Always request any estimates in writing, such as informed financial consent documentation.

Once you have the MBS item numbers, your health insurer can tell you exactly how much it will pay under your Hospital Cover for those treatments.