Gap cover: What it is and how it works

When a hospital or healthcare provider charges more for a treatment or service than what is covered by Medicare and your private health insurance, the amount left to pay is known as “the gap”. A gap payment is an out-of-pocket expense that you usually need to pay yourself, unless you get gap cover insurance.

What is gap cover?

Gap cover is insurance that protects you from out-of-pocket expenses and it’s usually offered in some form by most insurers. It’s available in three levels of protection:

Partial gap cover. Partial gap protection covers some of the gap, but not all, meaning you must pay the rest.
Known gap cover. Known gap protection covers each treatment up to a maximum capped amount, with any remaining gap payable by you. The advantage is that you know what your out-of-pocket expenses will be before receiving treatment.
Full gap cover. Full gap protection covers 100% of any fees in excess of the Medicare Benefits Schedule (MBS).

Gap cover only covers treatments and services provided by a doctor or a hospital that participates in your insurer’s gap cover scheme, so it’s important to find out if they do or are willing to do so before you receive any treatment. If the doctor or hospital is registered with your insurer, they will bill the insurer directly for the treatment. However, if there is a gap to be paid by you, they must notify you and obtain your consent prior to treatment.

Health insurance gap cover

These health insurers all offer some form of gap cover. Remember, ask the insurer before you receive treatment to make sure your doctor is participating in the fund's gap scheme.

Health fund	Gap Cover Offered?	Find out more
AHM	Yes	Get quote
Medibank	Yes	Get quote
HCF	Yes	More info
Australian Unity	Yes	More info
CUA Health	Yes	More info
Frank	Yes	Get quote
HBF	Yes	Get quote
Health Partners	Yes	Get quote
CBHS	Yes	More info
GMHBA	Yes	Get quote

Find a gap cover doctor

To get gap cover, your insurer needs to have an arrangement with a gap cover doctor, meaning, the doctor, provider or hospital needs to have agreed to participate in the insurer's gap cover scheme.

You can often find out if your doctor or provider has an arrangement with your insurer via the Government's private health website. It provides you with a link to your insurer's gap cover information, including what doctors are participating.

If you can't find information about a gap cover doctor, call your health fund or ask the doctor's office when making an appointment for treatment. If you don't do this, and it turns out the doctor charges above the MBS fee and is not associated with your health fund, you'll have to pay much of the bill yourself.

Why is there a medical gap?

Here's why there's a medical gap: Medicare pays 75% of the MBS fee for treatment you receive as a private patient. Your private health insurer pays the remaining 25%. But medical practitioners don't need to adhere to the MBS fee, so many often charge more.

This means that while you may be covered for 100% of the MBS fee costs, you'll sometimes still be hit out of pocket if the doctor decides to charge a higher fee.

How can I avoid unexpected medical costs?

Here's 5 ways you can avoid or at least limit your out-of-pocket medical expenses:

Choose a health fund that provides 100% gap cover. If this is unaffordable for you, at the very least opt for known gap cover, so you can budget for any expenses you will have to pay.

Choose a policy that doesn't include excesses or co-payments.

Make sure your doctor or hospital participates in your health fund's gap cover scheme or is at least willing to do so.

Before your hospital treatment, find out what fees are charged by other medical practitioners such as your anaesthetist and check whether they are registered with your health fund.

Only seek treatment from health care providers who charge the MBS scheduled fee.

Does private health insurance cover the gap?

Unless you get a private health insurance policy that includes gap cover, then private health insurance can't cover the gap — you'll still have some out-of-pocket expenses.

That's because private health insurance is set up to pay the 25% of the MBS fee that remains once Medicare has covered 75%. If a medical specialist charges more than the MBS fee, you'll have to pick up the bill yourself, unless you get gap cover.

How much does health insurance cost?

We ask hundreds of Australians what they're paying for health insurance every month. Here's what their bill looked like in November 2024.

Extras only: $56
Basic: $105
Bronze: $141
Silver: $193
Gold: $223

Price based on 470+ responses for single hospital or extras insurance.

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Written by

Richard Laycock

Editor

Richard Laycock is Finder’s insights editor after spending the last five years writing and editing articles about insurance. His musings can be found across the web including on MoneyMag, Yahoo Finance and Travel Weekly. Richard studied Media at Macquarie University and The Missouri School of Journalism and has a Tier 1 Certification in General Advice for Life Insurance. See full bio

Co-written by

Gary Ross Hunter

Editor, Insurance

Gary Ross Hunter was an editor at Finder, specialising in insurance. He’s been writing about life, travel, home, car, pet and health insurance for over 6 years and regularly appears as an insurance expert in publications including The Sydney Morning Herald, The Guardian and news.com.au. Gary holds a Kaplan Tier 2 General Advice General Insurance certification which meets the requirements of ASIC Regulatory Guide 146 (RG146). See full bio

Gary Ross's expertise

Gary Ross has written 644 Finder guides across topics including:

Health, home, life, car, pet and travel insurance
Managing the cost of living

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Gap cover and out-of-pocket expenses