Medicare Explained: What It Covers and What It Costs You

2026-10-12 — Michael Leung

Illustration · image created for this article

Medicare is Australia’s public health insurance. It pays for treatment as a public patient in a public hospital, and it pays part or all of the cost of seeing a GP or specialist. Most people fund it through a 2% Medicare levy on taxable income.

The short version: a GP visit is free if the doctor bulk bills, and 84.1% of GP visits were bulk billed in the June quarter 2026. Dental, glasses, ambulance and private hospital costs are mostly not covered. And if you earn over $105,000 in 2026-27 without private hospital cover, you may pay an extra Medicare levy surcharge.

Medicare in short

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What is Medicare in Australia?

Its legal base is the Health Insurance Act 1973. The Whitlam Government launched the first version, Medibank, on 1 July 1975. The Hawke Government relaunched it as Medicare on 1 February 1984, and it has been part of everyday life ever since.

Two agencies share the work. Services Australia runs the day-to-day side: enrolment, Medicare cards, claims and payments. The Department of Health, Disability and Ageing sets the policy and keeps the Medicare Benefits Schedule, the list of services Medicare pays for.

What does Medicare cover?

1. Public hospital treatment. Free as a public patient, including your doctor and hospital costs. You don’t choose your doctor.
2. GP visits. Medicare pays 100% of the schedule fee. If the GP bulk bills, that is the whole bill.
3. Specialists, tests and scans outside hospital. Medicare usually pays 85% of the schedule fee. You need a referral to claim for a specialist.
4. Medicare Urgent Care Clinics. Walk-in care for urgent but not life-threatening problems, at no cost. All 137 promised clinics were open by June 2026, with more than 3.1 million visits since June 2023.
5. Telehealth. Many GP and specialist consultations by video or phone attract a Medicare rebate.

The gap is the difference between what a doctor charges and what Medicare pays. Doctors set their own fees, so the gap is yours to pay unless they bulk bill. Medicines are a separate scheme, the Pharmaceutical Benefits Scheme (PBS). Since September 2023, 60-day dispensing lets people with many stable chronic conditions get two months of medicine on one script.

Illustration · image created for this article

What doesn’t Medicare cover?

• Most dental care. Exceptions include the Child Dental Benefits Schedule for eligible children and public dental services run by the states.
• Physiotherapy and most allied health. A GP chronic condition plan can get you Medicare rebates for a limited number of allied health visits each year.
• Ambulance. Ambulance services belong to the states and territories, and cover differs depending on where you live.
• Glasses and contact lenses. Medicare can cover an eye test with an optometrist, but not the glasses.
• Cosmetic surgery that isn’t clinically needed.
• Private hospital costs. As a private patient you can choose your doctor, but the hospital bill and most gaps are not Medicare’s.

How does bulk billing work?

Whether a clinic bulk bills is its own choice. To make it more attractive, the government pays doctors an extra bulk billing incentive on top of the rebate. Those incentives have grown in two big steps:

• 1 November 2023: incentives tripled for the most common GP consultations for children under 16 and Commonwealth concession card holders.
• 1 November 2025: incentives extended to every Medicare-eligible patient. A new Bulk Billing Practice Incentive Program also started, paying practices that bulk bill every eligible service an extra 12.5% on their Medicare benefits, split 50/50 between the practice and the GP.

The result shows in the numbers. The Department of Health’s national snapshot puts the GP bulk billing rate at 84.1% for April to June 2026, up 4.9 points on a year earlier. The Health Minister has set a target of 90% by the end of the decade. That is a political goal, not a guarantee. Many clinics still charge a gap, so ask before you book.

The rate counts GP non-referred attendances, not all Medicare services. Other measures give slightly different figures.

What is the Medicare Safety Net?

There are two thresholds. The Original Medicare Safety Net counts your gap amounts; once you pass it, Medicare pays 100% of the schedule fee for out-of-hospital services. The Extended Medicare Safety Net counts your total out-of-pocket costs; once you pass it, Medicare pays back 80% of further out-of-pocket costs, with caps on some items.

2026 calendar-year thresholds, indexed to CPI each 1 January. Concessional = concession card holders and families eligible for Family Tax Benefit Part A.

Who can enrol in Medicare, and how?

Rules for temporary visas are specific to each visa, so check your own case with Services Australia before you rely on it. You can enrol through your Medicare online account in myGov, the Express Plus Medicare app, or at a service centre. Some visitors and temporary residents get an interim card.

The reciprocal health care agreements cover visitors from the UK, Ireland, New Zealand, the Netherlands, Belgium, Sweden, Finland, Norway, Italy, Malta and Slovenia. Cover differs by country:

General information only. Eligibility depends on your visa and circumstances; Services Australia makes the decision.

How much is the Medicare levy, and what is the surcharge?

Low-income earners pay a reduced levy or none. For 2025-26 the thresholds rose 2.9%, backdated to 1 July 2025. Below the lower threshold you pay no levy; between the two, the levy phases in.

ATO figures. Thresholds are means-tested and change each year; check the ATO for your own year before you act.

The surcharge is designed to nudge higher earners into private hospital cover. It is charged on income for MLS purposes, which includes reportable fringe benefits and some other items, so it can be higher than your taxable income.

Family thresholds rise by $1,500 for each dependent child after the first.

Do the surcharge thresholds rise with wages?

Yes, since 1 July 2023. Before that, the thresholds were held at $90,000 (single) and $180,000 (family) from 2014-15 to 2022-23. With wages rising, more people crossed into the surcharge tiers each year without being any better off in real terms. Indexation to average weekly ordinary time earnings (AWOTE) then resumed, and the single threshold has since climbed to $105,000. For how frozen thresholds work in income tax, see Bracket Creep Australia 2019–2026.

Illustration · image created for this article

What to watch next

• 1 January 2027: new Safety Net thresholds, indexed to CPI.
• Quarterly bulk billing data: whether the GP rate keeps moving toward the 90% target.
• The next federal Budget: levy thresholds, surcharge tiers and any new Medicare funding.

Questions, answered

Not medical, financial or tax advice. General information from Services Australia, the Department of Health, Disability and Ageing, MBS Online and the ATO, checked on 12 October 2026. Thresholds and eligibility change; check the official sources for your own situation. The research was AI-assisted and every figure was checked against a primary source.