Medicare and private health insurance, simply explained

Public, private, bulk billed, gap fee, extras. Australia’s health system works well once you know how the pieces fit, and the gaps are where new arrivals get caught out. Here’s the plain version.

Medicare: the public system

Medicare is Australia’s public health insurance. If you’re eligible (permanent residents, and some people who’ve applied for permanent residency or come from countries with a Reciprocal Health Care Agreement), it covers or subsidises:

• treatment as a public patient in a public hospital, free of charge
• visits to GPs and specialists, either fully (bulk billed) or partly
• many tests, scans and some other health services

It generally doesn’t cover most adult dental work, glasses and contact lenses, or ambulance transport. More on that last one below, because it matters.

Bulk billing and gap fees

When a clinic bulk bills, it charges Medicare directly and you pay nothing. When it doesn’t, you pay the fee and Medicare refunds part of it. The difference you pay yourself is the gap. Clinics set their own fees, so always ask when you book.

Medicines and the PBS

The Pharmaceutical Benefits Scheme (PBS) subsidises a long list of prescription medicines. Since 1 January 2026, the most a Medicare card holder pays for a PBS medicine is $25 per script, or $7.70 with a concession card. Some brands add a small premium on top. Bring your Medicare card to the pharmacy.

How Medicare is paid for

Most Australian residents for tax purposes pay a Medicare levy of 2% of their taxable income, usually taken out with your pay and settled in your tax return. Lower incomes pay less or nothing, and some people are exempt, including people not entitled to Medicare.

The ambulance gap

Medicare doesn’t pay for ambulances, and without cover an ambulance trip can be expensive. Who covers you depends on your state. Queensland and Tasmania cover their residents’ emergency ambulance costs. In Victoria, free transport is limited to concession card holders, and everyone else needs ambulance cover, either a membership with Ambulance Victoria or through a private health insurer. Other states have their own rules.

Private health insurance: do you need it?

Private cover comes in two main types. Hospital cover pays towards treatment as a private patient, with more choice of doctor and often shorter waits for non-urgent surgery. Extras cover (also called general treatment) helps with things Medicare doesn’t cover, like dental, optical and physio. You can buy one, the other or both, and some policies include ambulance.

Three things to know before you decide:

• Lifetime Health Cover. If you’re over 30 and take out hospital cover after your deadline, you pay 2% extra for every year you’re aged over 30. For new migrants the deadline is the later of 1 July after your 31st birthday, or 12 months after you registered for full Medicare benefits. Our first month guide covers this.
• Medicare levy surcharge. Above a certain income, you pay an extra levy if you don’t have appropriate private hospital cover. The ATO sets the thresholds each year.
• Visa conditions. Some temporary visas require you to keep adequate health insurance for your whole stay. Check your visa conditions on VEVO.

To compare policies, use the government’s independent site, privatehealth.gov.au. Every policy has a standard information statement, so you can compare like with like.

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