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By William Truong, Technical Services Manager
This article considers how clients who hold any of the three common concession cards, such as the Pensioner Concession Card (PCC), Commonwealth Seniors Health Card (CSHC) and Health Care Card, can benefit from the Pharmaceutical Benefits (PBS), bulk-billed General Practitioner (GP) visits and Medicare Safety Net.
Your advice may ensure your clients obtain or retain their concession cards, and with it, some valuable medical related entitlements for themself and their family. By understanding how these benefits work, advisers may assist their clients to understand the value these cards can provide.
Department of Veterans' Affairs (DVA) card holders (such as DVA Gold or Silver cards) may have equivalent or additional medically related benefits not covered in this article. More information on these can be located on the DVA website.
Holders of the above three concession cards, may benefit from the medical related benefits below:
The scheme requires pharmacists, on request by clients, to record the supply of PBS items on prescription record forms.
Concessional card holders can:
In comparison, non-concession card holders:
The table below shows the differences for PBS listed medicines.
Paying brand premiums, therapeutic group premiums and special patient contributions do not count towards the PBS Safety Net thresholds.
In the case of families where one parent holds a concession card and other family members are general patients, the family can choose to apply for either a Safety Net entitlement card to get free scripts or a Safety Net concession card to get concessional scripts once they reach the relevant thresholds above.
Private health insurance can cover some medicines, such as medicines not included in the PBS. You or your clients can ask their insurer directly for more information on this.
Your client's GP may provide free appointments under the Medicare bulk billing system, rather than charging their patient the standard cost of an appointment.
Through bulk billing, most doctors charge Medicare directly for the cost of the appointment. If the service is not bulk billed, clients pay the difference between the Medicare benefit and the total fee (usually by paying the whole fee up front and then claiming the Medicare benefit back). Bulk-billing is at the discretion of the GP and they can receive financial incentives for providing this service to concession cardholders).
Concessional Cardholders can receive a reduction in the cost of out-of-hospital medical expenses above the concessional thresholds through the original and extended Medicare Safety Net.
Original Medicare Safety Net - holders of a Medicare card
The Original Medicare Safety Net (OMSN) is designed to offer extra financial assistance to patients with a high level of medical costs, providing access to additional rebates to help cover out-of-hospital medical expenses.
The OMSN covers certain out of hospital medical expenses such as:
The distinction between in-hospital and out-of-hospital services is not always obvious. It is important that your clients talk with their GP or specialist regarding the classification and likely out-of-pocket costs for their medical treatment, including any rebates paid through Medicare.
Private health insurers can't cover out-of-hospital Medicare services. However, they might cover some of the services Medicare doesn't, like physiotherapy and other allied health services not on the Medicare Benefits Schedule (MBS).
While Medicare covers some out-of-hospital medical costs, it usually doesn't cover the full bill.
A gap amount is the difference between the Medicare benefit you get (MBS rebate) and the Medicare Benefit Schedule fee (MBS) for out of hospital medical services.
Once the gap for out-of-hospital medical costs reached a set threshold each year ($481.20 per person, reset at 1 January 2021), all future medical services you receive for the remainder of the calendar year are paid at 100% of the MBS fee, rather than the standard 85% of the MBS fee. This lowers or can eliminate the out-of-pocket amounts per service.
The table below provides an example of the difference the OMSN can make to the rebate your clients receive. The same medical service may cost $15 less once you have reached the Medicare Safety Net threshold.
* Doctors may charge more than the fee listed in the MBS. Amounts that your doctor charge above the MBS rate is not included in the gap calculation. The Gap amounts is counted towards the OMSN of $481.20).
# Out of pocket cost counts towards the Extended Medicare Safety Net (discussed below).
Extended Medicare Safety Net
The Extended Medicare Safety Net (EMSN) is designed to offer extra financial support for singles and families, who incur a high level of out-of-pocket costs for out-of-hospital medical services.
The EMSN provides an additional rebate on top of the OMSN, covering 80% of any future out-of-pocket expenses for out-of-hospital costs in a calendar year once you have exceeded the EMSN threshold.
For concessional card holders, Medicare covers 80% of your out-of-pocket expenses once you reach the EMSN threshold of $697.00 in a calendar year.
For non-card holders, the 80% rebate does not apply until you reach the extended threshold of $2,184.30 in a calendar year.
The table below illustrates the differences between the OMSN and EMSN.
There is no need for individuals to register for the OMSN as Medicare automatically keeps track of your total out-of-pocket expenses. If you're part of a registered family, you'll need to confirm your family members (even if they all appear on the same Medicare card). But note, only registered Medicare Safety Net family members with a concession card are eligible for the Concessional Safety Net threshold.
There are both capped and uncapped Medicare Benefit schedule charges.
Uncapped Medicare Benefits Schedule - EMSN
To calculate the EMSN benefit for an uncapped MBS service, follow these steps:
Step 1: calculate the out-of-pocket expenses for the service as fee charged by provider minus out-of-hospital MBS benefit
Step 2: multiply the out-of-pocket expenses for the service by 80 per cent, round the result up to the nearest 5 cents.
Out of pocket expense after EMSN (uncapped) =
(Fee charged by provider
– out-of-hospital MBS benefit) *20%)
Capped Medicare Benefits Schedule - EMSN
Some service items may have a capped amount. In such cases, calculate the EMSN as above. If the calculated amount is below the EMSN cap for that service, the benefit is as calculated. If the amount is greater than the EMSN cap for that service, the benefit is the capped amount.
The following scenario assumes your client has already reached their EMSN threshold and is therefore eligible to receive EMSN benefits.
Example - service charged with capped EMSN
Sarah's entitlements are as follows when she visits her doctor:
If the doctor charges $70.00 for the service:
Step 1: Sarah's out-of-pocket cost before EMSN benefits are paid is $29.90 ($70 - $40.10).
Step 2: The EMSN benefit for this service is calculated to be $23.95 (80% x $29.90, rounded up to the nearest 5 cents).
Step 3: As the calculated EMSN benefit is below the EMSN benefit cap amount of $32.95, Sarah will receive the full $23.95 in EMSN benefits.
The total cost incurred by Sarah is $5.95 ($29.90-$23.95).
If Sarah was a non-concession card holder, and has not reached the General EMSN yet, her cost would be $29.90 (ie $23.95 more).
If Sarah's doctor charges $90.00 for the service:
Step 1: Sarah's out-of-pocket cost before EMSN benefits are paid is $49.90 ($90 - $40.10).
Step 2: The EMSN benefit for this service would be calculated to be $39.95 (80% x $49.90 rounded up to the nearest 5 cents)
Step 3: As this item has an EMSN benefit cap, Sarah will receive the cap amount of $32.95. As a result, the total cost incurred by Sarah is $16.95 ($49.90 - $32.95 cap).
If Sarah was a non-concession card holder, and not reached the General ESMN yet, the cost of her visit would be $49.90 (ie $32.95 more).
The Department of Human Services (DHS) automatically calculates the accumulation of out-of-pocket costs to the relevant threshold and the calculation of benefits. Families can register with DHS as a 'safety net family' to pool their out-of-pocket costs towards a shared threshold. While some MBS items have an EMSN cap, there is no limit on the total EMSN benefits each person can receive in a calendar year.
The PCC also provides additional national benefits which the Low Income Health Care Card and Commonwealth Seniors Health Care Card don't, including hearing services - subsidised hearing aids and assistive listening devices.
Clients holding the above concession cards may receive additional State-based benefits, including but not limited to public dental services and some free ambulance services and other non-medical related entitlements. More information on the benefits of Top 3 concession cards was published in June 2021.
The value of your advice can ensure your clients obtain or retain their concession cards, and with it, some valuable medical entitlements for themselves and their family. By understanding the details and intricacies of how these benefits work, advisers can ensure their clients get the full value of their advice.
If you have any questions, or would like more information, please contact the IOOF TechConnect team on 1300 650 414.
The information in this section of the website is intended for financial advisers only and is not to be distributed to clients. It has been prepared on behalf of Australian Executor Trustees Limited ABN 84 007 869 794 AFSL 240023, IOOF Investment Management Limited ABN 53 006 695 021 AFSL 230524, IOOF Investment Services Ltd ABN 80 007 350 405, AFSL 230703 and IOOF Ltd ABN 21 087 649 625 AFSL 230522 based on information that is believed to be accurate and reliable at the time of publication.