Overview
Australian Public Health System
“Medicare”
May 2014
CONTENTS
INTRODUCTION
1
The Public Healthcare System in Australia
1
MEDICARE
1
Medicare Benefits Schedule (MBS)
Medicare Services
What is not covered by Medicare?
Pharmaceuticals – Physician Prescribed Drugs / Medicines
GP’s and Specialist Doctors
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2
PUBLIC AND PRIVATE HOSPITALS
2
PRIVATE HEALTH INSURANCE
2
INCENTIVES AND PENALTIES
2
Premium Penalty – Lifetime Health Cover rating (LHC)
Tax Penalty – Medicare Levy Surcharge (MLS)
2
1
SPONSORED EMPLOYEES IN AUSTRALIA ON 457 VISAS
3
Reciprocal Health Care Agreement (RHCA) Countries
Implications for Employees from RHCA Countries
Medicare Levy Surcharge (MLS) Exemption
3
3
3
SPONSORED EMPLOYEES WHO APPLY FOR PERMANENT RESIDENCY (PR)
Who is Covered
Excess or Deductible
Schedule of Benefits and Compensation
4
2
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3
GLOBAL POLICIES
4
Medicare Legislation
Health Insurance Act 1973 – Sect 126
Health Insurance in Australia
Other Insurers – Global or Australian based
4
4
4
4
BENEFITS AVAILABLE IN AUSTRALIA UNDER RECIPROCAL HEALTH CARE AGREEMENTS
5
PROPRIETARY NATURE OF DOCUMENT
This document is prepared for the sole and exclusive use of the party or organisation to which it is addressed. Therefore, this
document is considered proprietary to Willis Australasia Limited and may not be made available to anyone other than the
addressee or person within the addressee’s organisation. Willis Australasia Limited documents may be made available to other
persons or organisations only with written permission of Willis Australasia Limited.
© COPYRIGHT 2013
All rights reserved. No part of this document may be reproduced or transmitted in any form by any means, electronic or
mechanical, including photocopying and recording, or by information storage or retrieval system, except as may be permitted,
in writing, by Willis Australasia Limited.
INTRODUCTION
Medicare Services
The aim of this overview is to provide you with some
background and complexities of the Australian public health
system Medicare.
Services covered by Medicare include the following:
The Australian National Health Act legislation is a labyrinth of
conflicting and confusing rules and regulations, with some
financial traps for both individuals and also companies who
wish to provide private health insurance for their employees.
The Public Healthcare System in Australia
The Australian public healthcare system, Medicare, is simple,
provides very comprehensive health care to all Australian
citizens but can also be quite confusing and costly due to
legislation changes.
The following endeavours to explain how the Australian public
health system operates and;
•
How it affects all Australian citizens and Permanent
residents.
•
The impact of our public health system on people from
countries with whom Australia has Reciprocal Health Care
Agreements (RHCA).
The impact on employers wishing to provide private health
fund benefits to Australian citizens.
•
•
Why the provision of private health insurance to Australian
citizens is restricted to Australian registered health funds.
MEDICARE
Medicare is the publicly funded Australian health system and is
subsidised by a 1.5% Medicare levy payable by all taxpayers.
This levy is included in the “pay-as-you-go” payroll system.
It ensures a high level of health care for all Australians and
permanent residents regardless of their level of income.
Medicare is the sole provider of all medical benefits in
Australia and provides access to GP’s, specialists etc. and
public hospital treatment.
There are co-payments for a number of services and costs for
Medicare services are set by the Government under a
Medicare Benefit Schedule*.
It is not available for the benefit of Temporary Residents or
Overseas Visitors and they cannot receive any benefits under
the Medicare system except for sponsored employees from
RHCA countries.
*Medicare Benefits Schedule (MBS)
The Medicare Benefits Schedule (MBS) is the list of fees and
charges established by the Commonwealth Government for the
purpose of paying benefits under the national Medicare
Scheme.
The MBS covers all medical procedures and treatments
provided by or on behalf of doctors (including specialists and
general practitioners). The fees and charges are determined to
be fair to both patient and doctor.
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Consultation fees from doctors and specialists
Eye tests performed by an optometrists
Blood tests and x-rays
Most surgical / therapeutic procedures performed by doctors
Some surgical procedures performed by an approved dentist
What is not covered by Medicare?
Medicare provides comprehensive medical and public hospital
benefits however many services are not covered by Medicare and
these can be covered by private health insurance.
Some examples of what Medicare does not cover:
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Private hospital accommodation
Most dental services
Ambulance services
Home nursing
Physiotherapy
Occupational therapy
Speech therapy
Podiatry
Chiropractic services
Acupuncture
Cosmetic surgery due to injury or illness
Hearing aids and other appliances
Glasses and contact lenses
Prostheses
Medication not covered by Pharmaceutical Benefits Scheme
(PBS) [See below for details on PBS].
Cosmetic surgery
Compensation claims
Medical services which are not necessary
Pharmaceuticals- Physician-Prescribed Drugs / Medicines
All Australian citizens and Permanent Residents have access to a
subsidised Pharmaceutical Benefits Scheme (PBS).
The (PBS) is an Australian Government program that subsidises
medicines to make them more affordable.
All prescribed drugs and medicines dispensed via the PBS are
free subject to a patient co-payment of a dispensing fee.
Eligibility to the PBS is for;
• All Australian residents who hold a current Medicare card.
•
Overseas visitors from Reciprocal Health Care Agreement
(RHCA) countries eligible for a Medicare card (refer to page 4
for more details).
•
Visitors from the Republic of Ireland and New Zealand are not
eligible for full Reciprocal Health care benefits but are eligible
for subsidised medicine.
Visitors from all other countries are not eligible for PBS
benefits.
MBS pays a benefit equal to 85% of the MBS fee for an
outpatient service.
•
It should be noted that most doctors choose to charge more
than the MBS fee and in these instances the patient has to pay
this cost in addition to the 15% difference.
Overseas Visitors from non RHCA countries who do not have
access to the PBS will have to pay full price as a private
prescription. Medicine is not subsidised by the Australian
Government.
The difference between the actual cost and scheduled fee is
totally uninsurable and, controlled through legislation, and is at
the cost of the patient.
There is a safety net in place for pensioners and unemployed
or citizens on Government pensions due to disability etc. and
limits are CPI indexed annually.
Physician-prescribed pharmaceuticals can be expensive items
for overseas visitors hence it is important to "shop around" for
the best price for your drugs and medicines.
To assist you in assessing the costs which you may incur for
drugs and medicines, visit the website of Pharmacy Direct
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GP’s and Specialist Doctors
INCENTIVES AND PENALTIES
For day to day routine medical care people are free to seek
medical care from the doctor of their choice and they can go to
any clinic.
On July 1 2000, the Federal Government introduced legislation
reforms designed to increase the number of Australians
purchasing Private Health Insurance by way of a Tax Rebate
incentive and also tax and premium penalties.
This
legislation was introduced to encourage private health fund
participation in an effort to reduce reliance on the public health
system.
There are no preferred provider networks in Australia.
In Australia, a distinction is drawn between General
Practitioners (GPs) and Specialist Physicians, e.g.
Dermatologists, Orthopaedic surgeons and Anaesthetists.
A GP will refer you to a Specialist Physician or Surgeon if
necessary and this GP referral will be accompanied by a case
code.
Direct access to a specialist is prohibited. They will not provide
services without a referral from a GP.
Non-compliance can jeopardise a claim.
PUBLIC AND PRIVATE HOSPITALS
A tax rebate was applied to all private health fund premiums
paid for both hospital and ancillary expenses which, at the time
was not means tested.
However, effective 1 July 2012 the tax rebate incentive was
renamed “Private Health Insurance Incentives Tiers” and is
now means tested with the nominated thresholds in three tiers:
Please refer to the below website to ascertain which tier would
apply to you:
http://www.privatehealth.gov.au/healthinsurance/incentivessurc
harges/insurancerebate.htm
There are both private and public hospitals in Australia.
Public hospitals are funded and managed by State
Governments.
If you are admitted as a Medicare patient in a public hospital,
care and treatment will be covered in full by Medicare with no
out-of-pocket expenses by the patient
The doctors and specialists attending to you will be nominated
by the hospital.
If you are eligible to join a private health fund but decline to do
so the Government has introduced two penalties which in the
end means you either pay a premium and receive a benefit or
you pay a tax penalty in lieu of benefits – either way you pay.
Premium penalty
A)
Private hospitals are owned privately and are run as
businesses within the private sector.
If you are admitted as a private patient in a private or public
hospital you can choose which doctors will treat you.
What this means is that for every year people are eligible
to join after age 30, and decline to do so, a 2% premium
loading (cumulative) is added to the cost of the private
health insurance premiums up to a maximum of 70%.
Medicare will pay 75% of the government determined
scheduled fee and your private health fund will cover most of
the outstanding fees.
Private hospitals charge for services provided and these
charges can be paid by the patient direct, or can be provided
via private health insurance.
Example of penalty:
A person is eligible to join at age 31 and elects not to join
until age 40 will have a premium penalty of 20% (10yrs @
2%).
*The scheduled fee for services is set by the Commonwealth
Government. The Government determines the appropriate fee
the doctors should charge for a particular service. Health
practitioners can however choose to charge more than the set
scheduled fee which is at your cost and cannot be insured.
This penalty was applied as a lifetime penalty when
introduced, however a legislation change in November
2010 under section 34-10 of the Private Health Insurance
Act 2007 (the Act) has reduced this penalty to 10 years
continuous membership.
Those born before 1 July 1934 are exempt from the
penalty.
The private Health funds in Australia are required to be
the tax collectors for this penalty hence health funds
charge the loadings on top of premiums and charge
different premiums based on the age of each particular
member depending on when they first took out private
health insurance.
Clearance certificates from previous health funds now
take on a different priority of importance.
PRIVATE HEALTH INSURANCE
Private health insurance is available to all Australian citizens
and Permanent Residents to provide coverage for treatment in
private hospitals.
Private health funds are not allowed to pay medical expenses
incurred as an outpatient.
For inpatient treatment health funds are allowed to top up
Medicare benefits to 100% of the scheduled fee and under new
regulations may also cover up to 100% of the cost.
Note:
Most private health funds have agreements with hospitals as to
what costs and treatments are covered by their insurance but it
is important you ask if there are any costs not covered as outof- pocket expenses may still be substantial.
The hospital and health funds will advise what is not covered
and what your potential out-of-pocket costs may be.
Private health insurance will also provide for the services not
covered by Medicare such as ambulance, dental, optical and
other ancillary benefits
.
Lifetime Health Cover rating (LHC)
The Lifetime Health Cover (LHC) premium penalty was
introduced in July 2000 with a Certified Age of Entry
(CAE) set at age 30. It involves a penalty for people
aged over 30, who are eligible to join the private health
system, but decline to do so.
Tax Penalty
B)
Medicare Levy Surcharge (MLS),
From 1 July 2000, in addition to the 30% tax rebate
incentive and the premium penalty (LHC), the
Commonwealth Government also introduced the
Medicare Levy Surcharge (MLS) tax penalty.
Individuals and families on higher incomes who do not
have appropriate private patient hospital cover are liable
to pay an additional 1% to 1.5% Medicare levy surcharge
(MLS) on gross income earned including exempt income
earned overseas.
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Unfortunately these penalties also apply to Temporary
Visitors from countries with whom Australia has Reciprocal
Health Care Agreements (RHCA).
Under Australian Taxation Law, anyone who holds a
Medicare Card, or who is entitled to hold a Medicare Card,
and does not have "appropriate"* Private Health
Insurance, has to pay the Medicare Levy Surcharge (MLS).
This Tax penalty is levied by the Australian Taxation Office
(ATO) after assessment of an individual's tax return at the
end of each financial year.
This levy applies to singles, couples and families with an
income over a nominated threshold which is adjusted
annually.
For more information about the Medicare Levy Surcharge
visit the ATO website: www.ato.gov.au
What is appropriate* private patient hospital cover?
Private patient hospital cover is cover provided by an insurance
policy which:
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is issued by a registered fund, and
provides benefits in relation to fees and charges for hospital
treatment provided in an Australian:
hospital, or
Day hospital facility.
Private patient hospital cover does not include:
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travel insurance
cover provided by an overseas or unregistered fund, or
ancillary cover (commonly known as extras).
Policies with a high annual front-end deductible (FED) or
excess
You will not be considered to have private patient hospital
cover if you have an insurance policy for hospital cover that
contains an annual FED or excess of:
§
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$500 or more for a policy covering one person, or
$1,000 or more for all other policies.
The exception to this statement is if you took out your policy
before 24th May 2000 and continuous cover has been provided
since that date.
SPONSORED EMPLOYEES IN AUSTRALIA
ON 457 VISAS
RECIPROCAL HEALTH CARE AGREEMENT (RHCA) COUNTRIES
If you are a sponsored Employee recruited directly from a
country with which Australia has a Reciprocal Health Care
Agreement (RHCA) then for taxation purposes you will be
treated the same as Australian citizens and will be subject to
the same tax payments (Medicare Levy) and tax penalty the
Medicare Levy Surcharge (MLS).
On arrival in Australia you will be able to apply for a reciprocal
Medicare card.
RHC Agreements are currently in place for the following
countries:
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Republic of Ireland
New Zealand
United Kingdom
Sweden
Finland
Norway
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The Agreements cover necessary medical treatment, that is,
treatment for any ill health or injury which requires attention
before returning home. The Agreements provide:
§ Public in-patient hospital care,
§ Medicare benefits and drugs under the Pharmaceutical
Benefits Scheme
There are no benefits a provided as a private hospital patient
(refer to schedule of benefits attached).
The Agreements with Ireland and New Zealand are restricted
to public hospital in-patient care and PBS drugs only.
Any out-patient services are out-of pocket.
IMPLICATIONS FOR EMPLOYEES FROM RHCA COUNTRIES
Effective 1 July 2012 Individuals and families on higher
incomes who do not have appropriate private patient hospital
cover are liable to pay an additional 1% to 1.5% Medicare levy
surcharge (MLS) on gross income earned including exempt
income earned overseas.
This levy applies to singles, couples and families with an
income over a nominated threshold which is adjusted annually.
For information on whether you may be in the bracket to pay
the MLS, please access the Australian Health Industry
Association (AHIA) calculator at:
www.privatehealth.com.au/surcharge
You may also wish to refer to the Australian Tax Office at
www.ato.gov.au.
If you fall into one of the income groups, having a Bupa
Overseas Visitors Health Plan will not exempt you from the
MLS tax penalty.
Medicare Levy Surcharge (MLS) exemption
Sponsored Employees from RHCA Countries, who lodge a tax
return in Australia, are able to purchase a Reciprocal Health
Care Agreement (RHCA) cover to eliminate the MLS for less
than the cost of the surcharge.
With this endorsement they will be issued with a “Private
Health Insurance Statement” to accompany their tax return.
It is advised that they seek their own independent financial
advice before taking out the Reciprocal Health Care Agreement
(RHCA) Cover.
Reciprocal Health Care Agreement (RHCA) Cover
(Medicare Levy Surcharge exemption)
This cover is paid for by the employee as a deduction from
their post-tax salary.
This premium is subject to a rebate of up to 30% (depending
on the level of income).
Sponsored Employees from Non RHCA Countries are able to
request a refund for the Medicare Levy Surcharge in arrears by
calling Medicare on 1300 300 271 and requesting an
"Application for Medicare levy exemption certificate" to
accompany their tax return. A downloadable version of the
"Application for Medicare levy exemption certificate" is
available via the website:
www.humanservices.gov.au/customer/forms/3169
The Netherlands
Malta
Italy
Belgium
Slovenia
Visitors are eligible for benefits for the duration of their stay,
except in the cases of Italy and Malta, where benefits are for
six months only.
Page No 3
SPONSORED EMPLOYEES WHO APPLY
FOR PERMANENT RESIDENCY (PR)
Once sponsored employees lodge their Permanent Residency
(PR) application and receive acknowledgement from the
Department of Immigration and Border Protection (DIBP), they
immediately become eligible for full Medicare benefits.
When they enrol in Medicare they will be issued with a blue
Medicare card marked “interim” which will be replaced with a
permanent card on the granting of PR.
This means that they will be affected by tax and premium
penalties that apply to all Australians who are not appropriately
insured. They can no longer be covered under an Overseas
Visitors Cover health plan. When transferring to a registered
Australian Health Fund plan full continuity benefits apply,
however transfer must occur within 30 days.
To avoid the Lifetime Health Cover loading (LHC*) penalty they
must enrol into the domestic health system no later than;
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the 1 July following their 31st birthday, or
if over age 31 the first anniversary of the date they became
eligible for Medicare (PR application).
* From 1 July 2014 the Private Health Insurance Incentives
Tiers Tax rebate will not apply to LHC loading.
GLOBAL POLICIES
Many multinational companies have global policies.
Why can’t Australian employees be covered under global
policies?
As mentioned previously the provision of health insurance in
Australia is strictly controlled by legislation under the Health
Insurance Act 1973 and the National Health Act 1953 +
National Health regulations.
MEDICARE LEGISLATION
Medicare is the sole provider of all medical benefits in
Australia and provides access to GP’s, specialists etc. and
public hospital treatment as legislated in the Health Insurance
Act 1973 under;
HEALTH INSURANCE ACT 1973 - SECT 126
Prohibition of certain medical insurance
(1) A person shall not make a contract of insurance with
another person that contains a provision purporting to
make the first-mentioned person liable to make a
payment in the event of the incurring by the other person
of a liability to pay medical expenses in respect of the
rendering in Australia of a professional service for which
a Medicare benefit is, or but for subsection 18(4)* would
be, payable.
A person who contravenes subsection (1) is, in respect of each
day on which the person contravenes that subsection guilty of
an offence punishable on conviction by a fine not exceeding:
a)
b)
If the person is a body corporate , $20,000; or
If the person is a natural person, $2,000”
S67 (4) Health insurance business = fees for Australian
hospital treatment or an ancillary health benefit
OTHER INSURERS – GLOBAL OR AUSTRALIAN BASED
Complimentary insurance to Medicare is totally restricted to
Australian insurers via National Health Act legislation as
follows:
National Health Act 1953 + National Health regulations
S67 (1) Health insurance business to be carried on only by
registered organisations
S67 (4) Health insurance business = fees for Australian
hospital treatment or an ancillary health benefit *
* Ancillary health benefit
a) relevant health services
b) services involving the supply, alteration, maintenance or
repair of hearing aids, spectacles, contact lenses, artificial
teeth ,eyes or limbs(including part of the teeth or
limbos)or other medical ,surgical, prosthetic or dental
aids, equipment or appliances.
c) drugs or medicinal preparations
d) ambulance services
e) services by an attendant of a person who is sick or
disabled or
f) any other benefit, or benefit included in a class of
benefits, prescribed for the purposes of this paragraph ;
but does not include:
Ancillary health benefit is not
g) a professional service for which Medicare benefit is
payable
h) hospital treatment
i) any other prescribed benefit
*does not apply to
§ accident and sickness insurance business
§ liability insurance business (workers comp- motor vehicle)
or
§ prescribed business
Penalty: $1,000 per event.
*18(4) Medicare benefit not payable where compensation
payable (Workers compensation)
HEALTH INSURANCE IN AUSTRALIA
Private health funds known as, Registered Health Benefits
Organizations (RHBO) are the sole providers of complimentary
benefits to Medicare.
Section 67 of the National Health Act 1973 states;
Subsection (1)
A person (other than a registered health benefits organisation)
(RHBO) shall not carry on health insurance business in
Australia.
Subsection (2)
Page No 4
BENEFITS AVAILABLE IN AUSTRALIA UNDER RECIPROCAL HEALTH CARE AGREEMENTS (RHCA)
Applies only to visitors from:
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Republic of Ireland
New Zealand
United Kingdom
Sweden
Finland
Norway
The Netherlands
Malta (limited to 6 months from date of arrival )
Italy (limited to 6 months from date of arrival )
Belgium
Slovenia
NO CHARGE SERVICES
•
Medical Expenses
Medicare benefits for out-of-hospital medical treatment provided by doctors through private surgeries and community health
centres. The doctor may charge medical expenses directly to Medicare and you will not have to pay anything or the doctor gives
you a bill that may be claimed from a Medicare office and you will need to pay any part of the bill not covered by Medicare.
•
Hospital Treatment
Public hospital accommodation and medical treatment while in hospital are provided free of charge, provided you are not treated
as a private patient.
You must show your Reciprocal Health Care card to staff at the hospital when you arrive.
SERVICES WHERE A FEE IS CHARGED
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Medical services not covered by Medicare
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medical or hospital treatment that is not immediately necessary
medicines not subsidised under the Pharmaceutical Benefits Scheme
dental work and chiropractic services
treatment arranged before your visit to Australia
accommodation and medical treatment in a private hospital
accommodation and medical treatment as a private patient in a public hospital
Hospital Treatment
If you elect to be treated as a private patient in a public hospital or as a private patient in a private hospital for immediately
necessary treatment, you will be charged for both medical treatment and accommodation.
These fees cannot be claimed from Medicare
Information obtained from:
http://www.humanservices.gov.au/
Willis Australia Ltd
Berry Treffers
Int’l Employee Benefits Consultant - Expatriate Risk
Phone:
Fax:
Email:
+61 8 8224 4717
+61 8 8223 7223
treffersr@willis.com
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