What Is Medicare And How Does It Work?

by Anthony Bianco

What is Medicare?

Medicare is Australia’s health care scheme. The scheme is funded by Australia’s Federal Government and is operated by the various State governments. The system was brought into effect in 1984 and is financed by taxpayers in Australia via the Medicare levy.

How Does Medicare Work?

If a Medicare-eligible person is admitted to a public (government run) hospital, Medicare allows them to be treated at the hospital as a public patient at no cost to the patient.

Similarly, of the same person visits a doctor outside of the public hospital system, Medicare will usually reimburse 100% of the Medicare Benefits Schedule (MBS) fee for a general practitioner and 85% of the MBS fee for a specialist.

A doctor may bill Medicare directly (bulk billing) for the exact amount of the MBS fee.  In this case, a patient is not required to pay anything as the cost is fully covered by Medicare. Bulk billing occurs when the doctor accepts the MBS benefit as payment (either 85% or 100% of the MBS fee).

However, some doctors charge more than the MBS fee, which results in an ‘out of pocket’ expense – that is, the patient is required to pay the difference to the doctor at the time they are treated.

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What Does Medicare Cover?

Medicare provides cover for a number of health related issues, such as

  • consultation fees for general practitioners and specialists;
  • tests and examinations requested by doctors, such as blood tests and x-rays;
  • vision tests performed by optometrists;
  • some surgical procedures performed by doctors and dentists; and
  • specific items under various health programs.

Medicare also helps with the cost of medical services in hospital.

Do You Need To Be A Citizen To Get Medicare?

No. You need to be at least a permanent resident to access Medicare. Medicare eligibility depends on a number of factors.

The following groups are eligible for Medicare:

  • Australian citizens
  • Australian permanent residents
  • New Zealand citizens
  • Temporary residents who have applied for most permanent visas and meet certain other criteria
  • Foreign citizens who are covered by a Reciprocal Health Care Agreement.

You can read more about Medicare eligibility at the Department of Human Services website.

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How to Apply For Medicare

If you are eligible for Medicare and a Medicare card, you will need to visit your nearest Medicare office and bring your visa information and passport. A temporary card will be issued which can be used immediately, with an official Medicare card sent via post a few weeks later.

Is Medicare considered to be Health Insurance?

Medicare is the foundation of Australia’s health system. However, health care in Australia is made up of a mixture of services funded by the Australian Government and private health insurance which provides eligible residents with different health care options.

Australian residents are automatically covered for many hospital and medical costs under the Government’s Medicare scheme, but many Australians choose to take out additional cover through the private health care system.

How Does Medicare Relate to OSHC and OVHC?

For international students and visitors who may not be covered under Medicare, you can purchase Overseas Visitors Health Cover (OVHC) or Overseas Student Health Cover (OSHC) depending on your visa type.

If you have a valid Allianz Global Assistance OSHC or OVHC policy, we’ll cover the cost of your admission and treatment in a shared ward of a public hospital subject to the coverage outlined in the policy wording. As an admitted public patient, your doctors will be nominated by the hospital. When you leave hospital, your care may be continued in a clinic or a specialist's private rooms or you may be referred to your local general practitioner. Note, if you have an Allianz Global Assistance OVHC Budget Visitors policy, you will not be covered for out of hospital treatment (i.e. specialists or doctors' consultations).

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If you choose to be treated in a private hospital, we’ll contribute benefits towards your admission and treatment and shared ward accommodation. You may need to pay more than what you would if you chose to be admitted to a public hospital if there are any out of pocket costs for private hospital expenses or if the private hospital does not have an arrangement with the Australian Health Service Alliance to charge patients according to the agreed schedule of fees. If you call us before you are admitted to a private hospital, we’ll be able to provide you with an estimate of what it might cost you. Please refer to the policy wording for more information.

If you visit one of our direct-billing medical providers, such as local doctors or specialists that charge Allianz Global Assistance and process your claims automatically you will not have to pay anything.  This happens while you are visiting the direct-billing medical provider. Direct-billing is a seamless process which means you do not have to fill out paperwork to have your claim processed.

There may or may not be an out-of-pocket fee to pay to the Doctor, depending on if they charge the MBS fee or higher.  You should always check the amount you will need to pay with the doctor prior to your treatment.

Other Resources

You can see more information regarding Medicare at the following pages:

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Are you studying, working or visiting Australia on a temporary visa? Get health insurance from Australia’s international health cover experts - Allianz Global Assistance.