What is a hospital out-of-pocket cost?

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

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Out-of-pocket explained

A hospital out-of-pocket expense is the portion of a hospital bill that you pay from your own pocket for which you won’t be reimbursed – by either us or Medicare. 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’re required to pay an excess or co-payment, you’ll also have to pay these out of your own pocket. In this article we’ll explain the two scenarios where you’ll have to pay an out-of-pocket gap after being admitted to hospital.

Out-of-pocket costs

A ‘gap’ is the most common type of hospital out-of-pocket. Gaps happen when the total cost of your treatment is more than the combined amount Medicare and HBF 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 are admitted to hospital as a private patient, your specialist’s bills will be covered up to the MBS fee. Medicare will cover 75% of the MBS fee, while we will cover the remaining 25%. An out-of-pocket expense occurs when there is a difference between your specialist’s fees and the combined benefit provided from Medicare and HBF.


To help eliminate or reduce these out-of-pocket expenses for you, HBF participates in the Australian Health Service Alliance (AHSA) Access Gap Cover (AGC) arrangement for all states outside of Western Australia.


If your specialist participates in the AGC arrangement, they have the option to opt-in or opt-out of the arrangement on a case by case basis. When your specialist chooses to opt-in to AGC they have the option of billing one of two ways:

Medical Cost Breakdown

*HBF has a “HBF Limited Surgical Items List” (HBF List), which is subject to change from time to time. Where your treatment involves an item on the HBF List, HBF will not pay a benefit greater than the Medicare Benefit Schedule (MBS) fee for that item and any services you receive from an anaesthetist associated with that item. As such, out-of-pocket costs may apply. This applies regardless of whether your chosen provider is a full cover or known gap.

Save with HBF Member Plus

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.

Find a provider

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, including HBF, 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.

More ways we can help

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What are hospital waiting periods
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How do hospital insurance policies work?
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