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Understanding Gap Fees

Gap fees (or out-of-pocket expenses) can sometimes sneak up on you, often at the worst possible time. It's important to have a clear understanding of gap fees, how they work, and how to minimise them. Find out everything you need to know about gap fees below.

Close-up of person with prosthesis hand and a calculator
Close-up of person with prosthesis hand and a calculator

What are gap fees?

Gap fees are the left-over amount, or gap amount, remaining after Medicare or your private health cover a portion of the cost for a support or service. Essentially, it’s an out-of-pocket expense that you need to pay for a support or service.

Medicare, Private Health Insurance & Gap Fees

If you have Medicare, there will typically be a gap fee that will need to be paid by you. However, if you also have private health insurance, depending on your cover, most or all the cost may be covered.

For example:

The image below, there are three bar lines showing the total medical cost, potential combined Medicare and private health insurance cover, and the covered medical fee and potential gap fee.

Here is an example using the image above as reference, for further clarification.

If you need surgery and you have both Medicare and private health insurance, Medicare will cover part of your fee as will your private health insurance policy. If you have no excess attached to your private health insurance and your doctor only charges the scheduled fee for your treatment, then your Medicare and private health insurance may cover the total cost, meaning you won’t have a gap fee to cover.

If you only have Medicare, or if you have Medicare and private health insurance but your doctor charges above the scheduled fee for your treatment, then there may be a gap fee that needs to be paid by you.

NDIS & Gap Fees

Gap fees are typically associated with medical costs, which means the NDIS will not cover the gap fees that may be associated with those costs. One of the main reasons behind this is that a support paid for by the NDIS is not claimable against any other Commonwealth Program (such as Medicare).

The NDIS is not designed to fund supports more appropriately funded or provided by the health system. Things like assessment, diagnosis, and treatment of health conditions, along with medications and hospital care are the responsibility of the healthcare system.

The NDIS won’t typically fund the following health-related services and supports:

  • Items and services covered by the Medicare Benefits Schedule (MBS), Pharmaceutical Benefits Scheme (PBS), Medicare gap fees

  • Treatment, services or supports delivered by a doctor or medical specialist, including diagnosis and assessment of a health condition

  • Items and services provided as part of diagnosis, early intervention and treatment of health conditions, including ongoing care of chronic health conditions

  • Medically prescribed care, treatment or surgery for an acute illness or injury including post-acute care, convalescent care, and rehabilitation

  • Sub-acute care including palliative care, end of life care and geriatric care

Your NDIS Plan should cover the full costs of any ‘reasonable and necessary’ supports, so there should be no additional costs or gaps.

If you are unsure about what you can buy with your NDIS funding, you can check with our First2Care support team, your Local Area Coordinator (LAC) or NDIA planner.

How can you reduce or avoid gap fees?

Although the NDIS won’t cover gap fees, there are ways that you may be able to reduce the out-of-pocket expense.

If you have private health insurance:

Some private health funds have an agreement with specific hospitals or medical professionals to help reduce out-of-pocket expenses. These are known as gap cover schemes and there are two types:

  1. No-gap is when your health fund has a no-gap agreement, and your health fund will cover costs not covered by Medicare.

  2. Known gap is when your health fund has a known gap agreement and will cover the gap cost at a capped amount.

If you’re privately insured, get in touch with your health fund and ask for a list of healthcare professionals with gap cover arrangements. That way, you can choose a provider that won’t leave you with high out-of-pocket expenses.

If you only have Medicare:

Private health insurance can offer more flexibility when it comes to receiving treatment. If you need a surgery or specific type of treatment, and you can use the public health system, your Medicare cover may be able to cover some or most of the associated costs.

Whether you are only covered by Medicare or you have Medicare and private health insurance, it is vital that you discuss any decisions based around your health and wellbeing with a professional.

Read more about the benefits of working with an independent, professional Plan Manager. Alternatively, contact our friendly team on 1300 322 273 or


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