What are out-of-pocket costs?

Reviewed and updated 9 December 2024

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:

Type of treatment	No out-of-pocket costs	Possible out-of-pocket costs
GP bulk bills for medical service	✓ Australian government pays the full cost
GP does not bulk bill for medical service		✓ You pay the difference between the doctor’s fees and any Medicare payments
Non-GP specialist bulk bills for medical service	✓ Australian government pays the full cost
Non-GP specialist does not bulk bill for medical service		✓ You pay the difference between the doctor’s fees and any Medicare payments
Allied health professional bulk bills for medical service	✓ Australian government pays the full cost
Allied health professional does not bulk bill for medical service		✓ You pay the difference between the allied health professional’s fees and any Medicare payments/health insurer payments
Public patient in a public hospital	✓ Australian government pays the full cost
Private patient in a public hospital		✓ You pay the difference between the doctor’s fees and payments by Medicare or a health insurer. You may also have to pay for hospital charges (accommodation, operating theatre, prostheses, medicines, dressings, physiotherapy and other therapies)
Private patient in a private hospital		✓ You pay the difference between the doctor’s fees and payments by Medicare or health insurer. You may also have to pay for hospital charges (accommodation, operating theatre, prostheses, medicines, dressings, physiotherapy and other therapies)
Diagnostic tests outside a hospital		✓ You pay the difference between the fees and any Medicare payments/health insurer payments.
Private hospital accident and emergency department		✓ You pay the difference between the doctor’s fees and any Medicare payments/health insurer payments

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.

Steve pays $500 in out-of-pocket costs

Steve was admitted to hospital as a private patient. His doctors charged $1,500 for their service. The Medical Benefit Schedule (MBS) fee for the service was $1,000. Medicare paid $750 (75%) and Steve’s health insurer paid $250 (25%). This left a gap of $500 for Steve to pay as an out-of-pocket cost.

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.

What are out-of-pocket costs?

Do I have to pay a Gap for hospital treatment?

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