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What is a Hospital Out-of-Pocket Cost

Sometimes you’ll have to pay for part of a treatment out of your own pocket. Discover when this happens and how to minimise the cost.

Any situation where you must pay part of the bill out of your own pocket is called an ‘out-of-pocket’ cost. Depending on what you’re covered for on your hospital policy, you might have to pay some of your hospital bill out of your own pocket. If you’ve chosen to pay an excess or co-payment, you’ll also have to pay these out of your own pocket.

A ‘gap’ is the most common type of out-of-pocket. Gaps happen when the total cost of your treatment is more than the combined amount Medicare and your health fund pays towards treatment. When you go to hospital, gaps can happen in two ways:

Medical Gap

You might have heard of the Medicare Benefit Schedule (MBS). This is a list of the medical procedures Medicare covers, as well as what they’ll pay towards treatment.

When you go to a private hospital as a private patient, your doctor and specialist’s bill is covered between Medicare and your health fund. Medicare pays for 75% of the bill, and your health fund pays the remaining 25%. The amount Medicare and your health fund contributes towards your treatment equals the standard cost of treatment listed in the MBS.

Medical gaps happen when your doctor or specialist charges more than the price listed in the MBS. Doctors and specialists can charge as much as they want above the MBS. That means, depending on your doctor or specialist, you might be hit with a large out-of-pocket cost.

Most health funds have special arrangements with doctors and specialists to help members avoid medical gaps.

HBF has fully covered and known gap arrangements with a large network of doctors and specialists across Australia. We call these doctors and specialists Member Plus providers. The arrangements we have with Member Plus providers help our members avoid or limit medical gaps.

Hospital Gap

A hospital gap happens when the cost of your stay in hospital (e.g. accommodation and theatre fees) is more than the amount your health fund covers. To help members avoid hospital gaps, many health funds have arrangements with hospitals to fully or partially cover costs relating to hospital accommodation.

It’s important to note that even if your health fund has an arrangement with a hospital to cover costs, you will still need to pay any excess or co-payment you’ve agreed to on your policy.

HBF has special arrangements with a large network of Member Plus hospitals across Australia. These arrangements help our members avoid hospital gaps.

What can I do when there is an unavoidable gap?

To help members cover the cost of unavoidable gaps, HBF has GapSaver. GapSaver is a product you can add to your policy that helps cover out-of-pocket costs.

How does GapSaver work?

Think of GapSaver as a way of building up a pool of money you can dip into to cover eligible claims. The money you put into it (an extra contribution on top of your policy premium) accumulates over time and helps cover unexpected out-of-pocket costs. The best thing about GapSaver is the money you contribute never expires. You can use your GapSaver dollars to help cover the cost of both hospital and extras services.

Depending on your income, you may be eligible to access the Australian Government rebate on private health insurance. With the rebate, you’ll get a refund of up to 25.934% for any contribution you make towards GapSaver. That means you could earn more GapSaver dollars than you pay in premiums.

Find out more about gapsaver


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