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04.Mind the gap

If you receive treatment as a private patient, your hospital insurance will not always cover the full cost. This difference between the hospital and/or doctor’s bill after you receive your Medicare and health fund benefits is called a gap. This is on top of any excess and co-payment you agree to pay when taking out your policy.

A 2007 report from the Department of Health and Ageing found the average gap was $1011 for overnight patients in a private hospital and $557 for overnight patients receiving treatment as a private patient in a public hospital. These charges vary state by state, with the highest average gaps occurring in NSW. Before you are charged a gap, you must give informed financial consent beforehand, which means you will know about additional charges. 

Gaps can apply to hospital bills but are mainly charged on doctor’s fees, such as those for specialists. There may also be a number of doctors involved in your treatment; the 2007 survey found close to 70% of hospital patients were treated by an anaesthetist, of which about a third had to pay a gap charge for this treatment. The average out-of-pocket expense was $320 for the anaesthetist alone.

How to avoid the gap

Many hospitals have agreements with private health insurers under which you are not charged a gap for hospital fees. Health insurers also have arrangements with doctors under which the doctor does not charge you a gap, or you may pay a “known gap” amount. 


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The doctor is free to decide on a case-by-case basis if they will treat you under these arrangements. By using a hospital and doctors that have an agreement with your fund, you have a better chance of reducing out-of-pocket costs. 

Your local hospital or doctor may not have an arrangement with your fund, in which case you may be able to save money by switching to a fund that does. You can do this even a short time before treatment, such as surgery, without having to serve a waiting period, so long as you switch to the same level of cover (such as full cover with no excess) with the new fund.

Fast tips for avoiding out-of-pocket fees

  • Doctor’s gap cover arrangements Ask your doctor if he/she has gap cover arrangements with your fund and if you will have to pay any out-of-pocket costs. Get this information in writing.
  • Other services Ask your doctor if you will be billed by other doctors who may treat you, such as an anaesthetist or surgeon’s assistant, and how you can get an estimate of their fees.
  • Hospital gap agreement Ask the hospital if it has a current agreement with your fund and if there will be any out-of-pocket costs. Confirm any information you get from the hospital and doctor with your fund.
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