How does Medicare work and what does it cover?

In Plain English

Medicare is Australia's universal health insurance scheme. It helps with the cost of a wide range of health services, including: * Seeing doctors, specialists, and other healthcare professionals * Getting treatment in a public hospital * Getting certain prescription medicines at a reduced price

Medicare is funded by the Medicare levy, which is a percentage of your taxable income (Medicare Levy Act 1986). Some people may also pay a Medicare Levy Surcharge if they don't have private health insurance and earn above a certain income threshold (A New Tax System (Medicare Levy Surcharge—Fringe Benefits) Act 1999).

You can access Medicare benefits by: * Enrolling in Medicare * Visiting a healthcare provider who bulk bills (accepts the Medicare benefit as full payment) * Claiming a rebate for out-of-pocket expenses if your doctor doesn't bulk bill

Detailed Explanation

Medicare is governed primarily by the Health Insurance Act 1973. This Act establishes the framework for providing Medicare benefits for a range of health services.

Funding:

• The Medicare Levy Act 1986 imposes a levy on taxable incomes to help fund Medicare. The rate of the levy is specified in the Act (2% according to the latest compilation).
• The Medicare Guarantee Act 2017 established the Medicare Guarantee Fund, consisting of two special accounts: the Medicare Guarantee Fund (Treasury) Special Account and the Medicare Guarantee Fund (Health) Special Account. The purpose of these accounts is to ensure that funds are available for Medicare benefits and payments under the Pharmaceutical Benefits Scheme (PBS).
• The Treasurer can determine amounts to be credited to the Medicare Guarantee Fund (Treasury) Special Account (Medicare Guarantee Act 2017).
• The Medicare Guarantee (Transfers to the Health Special Account) Direction (No. 1) 2025 directs the transfer of funds from the Treasury Special Account to the Health Special Account for Medicare benefits.

Services Covered:

• Medical Services: Medicare benefits are payable for professional services rendered to eligible persons by medical practitioners (Health Insurance Act 1973). These services are detailed in the General Medical Services Table (GMST) and other prescribed tables (Health Insurance Legislation Amendment (2025 Measures No. 3) Regulations 2025).
• Diagnostic Imaging Services: Medicare covers certain diagnostic imaging services, as outlined in the Diagnostic Imaging Services Table (DIST) (Health Insurance Legislation Amendment (2025 Measures No. 3) Regulations 2025). However, benefits may only be payable if the service is requested by a specialist or consultant physician (Health Insurance Act 1973).
• Pathology Services: Medicare also covers certain pathology services, as detailed in the Pathology Services Table (PST) (Health Insurance Legislation Amendment (2025 Measures No. 3) Regulations 2025).
• Pharmaceutical Benefits Scheme (PBS): While not directly managed by the Health Insurance Act 1973, the PBS is an integral part of Australia's healthcare system, providing subsidized prescription medications to eligible individuals. The Medicare Guarantee Act 2017 ensures funding for PBS payments.

Assignment of Benefits (Bulk Billing and Simplified Billing):

• The Health Insurance Legislation Amendment (Assignment of Medicare Benefits) Act 2024 and the Health Insurance Amendment (Assignment of Medicare Benefits and Other Measures) Regulations 2025 modernise and strengthen the requirements for assigning Medicare benefits. This includes bulk billing and simplified billing.
• Bulk Billing: Eligible persons can enter into an agreement to assign their right to the Medicare benefit to the healthcare provider, accepting this as full payment (Health Insurance Act 1973, Health Insurance Legislation Amendment (Assignment of Medicare Benefits) Act 2024).
• Simplified Billing: Patients with private health insurance may be taken to have assigned their right to the Medicare benefit to their insurer or an approved billing agent for hospital or hospital-substitute treatment (Health Insurance Act 1973, Health Insurance Legislation Amendment (Assignment of Medicare Benefits) Act 2024).

Medicare Levy Surcharge:

• The A New Tax System (Medicare Levy Surcharge—Fringe Benefits) Act 1999 imposes a surcharge on individuals who do not have private patient hospital cover and earn above a certain income threshold. The surcharge is in addition to the standard Medicare levy.

My Health Record Integration:

• The Health Legislation Amendment (Modernising My Health Record—Sharing by Default) Act 2025 aims to integrate My Health Record more closely with Medicare. This Act includes provisions for sharing information with the My Health Record system and potential impacts on Medicare benefits.

Rural Generalist Single Employer Model Trial:

• The Health Insurance (Medicare Benefits Payable in Respect of Professional Services – New South Wales - Medical Services performed under the Single Employer Model Trial) Direction (No. 2) 2025 directs that Medicare benefits shall be payable in respect of professional services provided under the Rural Generalist Single Employer Model Trial Memorandum of Understanding.