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What are out-of-pocket expenses?

16 August 2013 - 4:26pm

Australia's health insurance providers are, on the whole, providing sound advice to customers about the out-of-pocket expenses they are likely to encounter when receiving medical treatment.

However, the Private Health Insurance Ombudsman's (PHIO) Quarterly Bulletin reveals that there is still room for improvement - especially when it comes to talking about hospital costs versus medical costs.

PHIO states in this Quarterly Bulletin, which documents complaint statistics and trends for the period April 1 to June 30, that private health insurance providers need to make sure consumers are aware that hospital costs and medical costs are dealt with separately.

An out-of-pocket or 'gap' cost is the amount of money you are required to pay for medical treatment on top of what Medicare and your Australian health insurance policy cover.

If people undergo medical treatment without first consulting their health insurance provider, they can sometimes be faced with significant out-of-pocket costs - perhaps because their policy did not cover quite as much of their expenses as they thought.

There is a difference between the out-of-pocket costs associated with hospital cover and those experienced as a result of medical charges.

PHIO explains that some hospitals will have an "arrangement" with particular family health insurance providers that will make sure you do not have to pay out-of-pocket costs for hospital accommodation if you have hospital cover.

Should you undergo treatment at a hospital that does not have this arrangement with your health insurance provider, you could be required to pay for this accommodation and other hospital-related expenses.

There can also be out-of-pocket costs associated with medical charges. Again, it all depends on whether the doctor you have chosen to perform your medical procedure or treatment has a pre-existing arrangement with your health insurance provider.

If they do, you may not have to pay any doctors' fees out of your own wallet. PHIO states that it is completely up to each individual doctor whether they want to honour a "gap cover arrangement".

So, before you agree to undergo any sort of medical treatment, it is a good idea to sit down with your doctor and ask them for a complete run-down of what they are planning to do and what they are going to charge you for it.

You can then share this information with your health insurance provider, and they can explain to you how much will be covered by your policy.

For more information, or a private health insurance comparison, talk to HICA today.