Medicare is one of those things we tend to take for granted in Australia, but not much of us actually know how the system works, until we realise it isn’t quite working for us.
Unfortunately, realising that Medicare doesn’t cover what you thought it might doesn’t usually happen until you’re at the point where spending big on medical costs is unavoidable. That’s why it’s so much smarter to have a really good idea of what is and isn’t covered by the Medicare system. Not only does this allow you to make the most of the system, particularly if you don’t have private health insurance, it also means you’ll know whether it’s worthwhile getting private health insurance depending on your own personal situation.
So, what exactly do you need to know about Medicare? Well, here are a few things we’d start with.
1. Medicare Doesn’t Cover Everything
If you’ve been living under the impression that Medicare is there for your every medical need, we are about to pop that bubble. The truth is that there is a fair bit that Medicare doesn’t cover, and you should definitely know about it.
Medicare will not pay for any private hospital costs, or the cost of an ambulance, even to go to a public hospital. It doesn’t cover the fees of GPs who do not bulk bill, and you can kiss your celebrity teeth out the window because most dental exams and treatments are also not covered. Along with this exclude occupational therapy, speech therapy, eye therapy, chiropractic services, podiatry and psychology, most of which are not covered. Glasses and contact lenses are also off the Medicare table of responsibility, along with hearing aids. Think that’s all? Nope, there’s more, but those are definitely the main ones you should be aware you aren’t covered for.
2. You Will Only Pay So Much
In the world of Medicare, everything has a set price, which is laid out on a document called the Medicare Benefits Schedule. In it, the government has listed what it believes to be an equitable base price for all the medical services that it is happy to subsidise. These are known as MBS fees. There’s a certain percentage that Medicare will cover, generally 85%, and the remaining 15%, sometimes called the gap, is paid by you.
However, the good news is that there’s a cap on how much you have to pay for those treatments. This is known as the Greatest Permissible Gap (GPG), a rule that keeps those super expensive specialists accessible to people on normal wages. The capped payment gap fee in 2016 is $79.50, so when you visit a specialist, the maximum you will pay is $79.50 or 15% of the MBS fee, whatever is less. That fee can get pretty expensive if you have a medical condition that requires you to spend a lot of money, but there’s also something called the Original Medicare Safety Net (OMSN) which limits the total amount you can spend in one year to $447.40. Once you’re over that line, Medicare covers the rest of your MBS fees.
3. And There’s Even A Limit On That
Now, there are other costs to medicine outside of the MBS fees, amounts that your doctor may charge above that, and pretty soon these costs and the gap payments can get out of hand. Medicare also has answer for that, called the Extended Medicare Safety Net (EMSN). The EMSN starts to matter when your out-of-pocket expenses for everything hits $2,030 for singles and families, or about $650 if you’re on Family Tax Benefit A or have a Commonwealth Concession Card. Once you go past this amount, Medicare will cover as much as 80% of your out-of-pocket expenses for the rest of the calendar year (not for everything, some things are capped lower). Sure, you still had to spend a fairly large amount on medical expenses, but it’s nice to know there’s something stopping you from spiralling into an enormous debt.
4. But There Are Changes Coming
It should surprise nobody that the Australian government is planning some pretty big changes to Medicare in the coming years. We are in an age of money-saving wherever possible, and governments are trying to save as well. They’ve specifically targeted Medicare because it is a large expense for our country, and that means that changes may be coming.
One of the new changes is a new safety net. Yes, the EMSN is far from a perfect system. It’s typically detailed and complex (isn’t everything in the government?) and some reviews have indicated it might increase the fees of medical providers. So the government is intended to get rid of the GPG, OMSN and EMSN and make a new Medicare Safety Net. The new version of this policy will mean Medicare will pay 80% of out-of-pocket expenses (capped at 150% of MBS fees) on the top 85% of the MBS fee. Hardly crystal clear now is it?
Luckily, these reforms did not get through in 2016, but 2017 is a new year, and we anticipate that some kind of changes to cut costs will be forthcoming in the budget.