Medicare, Gaps and Safety Net (Part 4) - Medicare Safety Net Explained
With the recent discussion of paying $7 to see a General Practitioner (GP) in the budget, it seems it will be the demise of Bulk Billing.
The system is indeed very complex. I hope this series about Medicare would help explain how it all works. In this post, I will focus on the Medicare Safety Net.
Medicare, Gaps, Safety Net (Part 2) - How do I make a Medicare Claim?
Medicare, Gaps and Safety Net (Part 3) - How much can I get back from Medicare?
But what exactly is Bulk Billing? When do we pay extra and how much do we get back from Medicare? What does the safety net mean? And what's the difference between scheduled fee and Australian Medical Association recommended fees? What's the Medical Levy Surcharge?
The system is indeed very complex. I hope this series about Medicare would help explain how it all works. In this post, I will focus on the Medicare Safety Net.
The Medicare Safety Net is designed to assist families and individuals with high healthcare needs. In short, it tapers off the amount one has to pay in gap payment once an upper limit (called “threshold”) has been reached. Only out of hospital services are counted towards this limit (e.g. seeing a GP, specialist in their private rooms, allied health outside a hospital).
The Medicare Safety Net and Extended Medicare Safety Net can be one of the most complicated parts of the Medicare system to understand. I hope to demystify this in this post!
Who is in your Medicare Family?
The Medicare Safety Net combines all the gap payments your family made in a Calender year (January to December). When you are approaching your Safety Net limit, Medicare would confirm with you who is in your family.
Your Medicare Family comprises of:
- Yourself.
- Your partner (Legally married and not separated, or de fecto partner).
- Your child aged under 16.
- Your child who is still a full time student aged between 16 and 25.
What is the Safety Net Threshold?
There are a few Safety Net Thresholds and this depends on your circumstances.
In 2014, the following are the Safety Net Thresholds:
Threshold amount
|
Who it is for
|
How it is calculated
|
What the benefit is
| |
Original
|
$430.90
|
All Medicare cardholders
|
Based on gap amount
|
100% of schedule fee for out of hospital services
|
Extended Concessional
and
FTB Part A |
$624.10
|
Concession cardholders
and
families eligible for FTB Part A
|
Out of pocket costs
|
80% of out of pocket costs or the EMSN benefit cap for out of hospital services
|
Extended general
|
$1,248.70
|
All Medicare cardholders
|
Out of pocket cost
|
80% of out of pocket costs or the EMSN benefit cap for out of hospital services
|
Out of pocket cost is the difference between the Medicare benefit and what your doctor charges you.
Schedule fee is a fee for service set by the Australian Government.
Gap amount is the difference between the Medicare benefit (normally 85% of scheduled fees) and the schedule fee.
EMSN is the Extended Medicare Safety Net
What does this actually mean?
I would explain this in a series of examples.
Example 1 - A trip to the GP
This is an example of a typical GPs visit (MBS item number 23, Scheduled Fee = $37.05).
Let’s say the doctor charges you $70.
Amount you get back BEFORE safety net calculation
|
= $37.05 x 100%
= $37.05
|
GP services as they pay at 100% of the scheduled fees.
|
Gap amount
|
= $37.05 - $37.05
= 0
|
This amount is what you normally count towards the Original Safety Net.
|
Out of Pocket Cost
|
= $70 - $37.05
= $32.95
|
This amount adds up towards your Extended General Safety Net.
|
Assume you have reached the Original Safety Net (and not the Extended General)
Amount you get back AFTER safety net calculation
|
= $37.05 x 100%
= $37.05
|
There is no difference because GP services as they pay at 100% of the scheduled fees.
|
Assume you have reached the Extended General Safety Net
Amount you get back AFTER safety net calculation
|
= Scheduled fees + 80% of Out of pocket cost
= $37.05 + (80% x 32.95)
= $63.41
| |
New Out of Pocket Cost
|
= $70 - $63.41
= $6.59
|
Example 2 - A trip to a specialist outside of a hospital
When you visit various specialists, the Extended Medicare Safety Net applies. This is an upper limit to claiming on the Safety Net.
The next two examples are a visit to a psychiatrist on a 35 minute appointment (MBS item number 304 = $133.10).
Let’s say your doctor charges you $200 for the visit.
Amount you get back BEFORE safety net calculation
|
= $133.10 x 85%
= $113.15
|
Out of Hospital specialist services as they pay at 85% of the scheduled fees.
|
Gap amount
|
= $133.10 – $113.15
= $19.95
|
This amount is what you normally count towards the Original Safety Net.
|
Out of Pocket Cost
|
= $200 - $113.15
= $86.85
|
This amount adds up towards your Extended General Safety Net.
|
Assume you have reached the Original Safety Net (and not the Extended General)
Amount you get back AFTER safety net calculation
|
= $133.10 x 100%
= $133.10
| |
New Out of Pocket Cost
|
= $200 - $133.10
= $66.90
|
This continues to add up towards your Extended General Safety Net
|
Assume you have reached the Extended General Safety Net
Amount you get back AFTER safety net calculation
|
= 85% of Scheduled fee + 80% of Out of pocket cost
= $113.15 + (80% x $86.85)
= $182.63
| |
New Out of Pocket Cost
|
= $200 - $182.63
= $17.37
|
Example 3 - A trip to a specialist who charges alot
This third example shows the effect of the Extended Medicare Safety Net. The EMSN cap for this particular item is $500.
Let’s say your doctor now charges you $700
Out of Pocket Cost BEFORE safety net calculation
|
= $700 - $113.15
= $586.85
| |
Extended Medicare Safety Net (EMSN fees)
|
= $113.15 + ($586.85 x 80%)
= $582.63
|
This is over the EMSN cap of $500.
|
Amount you get back AFTER safety net calculation
|
= $113.15 + $500
= $613.15
|
Only $500 is applied instead of the full
|
New Out of Pocket Cost
|
= $700 - $613.15
= $86.85
|
From experience, you will most likely get to the Extended General Safety Net before you reach the Original Safety Net.
I hope this helps you understand the Medicare Safety Net. The rules do change every year, which makes it even harder to keep up. I will endeavour to keep up the blog to keep up with the changes.
In my opinion, if you have high health needs, it is quite important to set aside at least your respective Extended General Safety Net in your budget every year. I would set aside at least another $500 on top of that to cover the out of pocket costs. Do remember that this does not include medication, which is covered in another safety net (Pharmaceutical Benefit Scheme).
References
Related Posts
Medicare, Gaps and Safety Net (Part 1) - Bulk billingMedicare, Gaps, Safety Net (Part 2) - How do I make a Medicare Claim?
Medicare, Gaps and Safety Net (Part 3) - How much can I get back from Medicare?
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