Medicare Explained — How Australia's Universal Health System Works

By Peakifi Editorial Team · Updated May 2026

This article provides general information only and does not constitute financial advice. For advice tailored to your situation, consult a licensed financial adviser. Learn more.

Contents

Medicare is Australia’s universal health insurance system, established in 1984. It provides subsidised access to medical services, hospital care, and some allied health services for Australian citizens and permanent residents. Medicare is funded primarily through the 2% Medicare levy paid by most taxpayers.

Key Takeaways

Medicare covers GP visits, specialist consultations, public hospital care, and some allied health
You need a Medicare card to access benefits — register via myGov or a Centrelink service centre
The Medicare levy is 2% of your taxable income — most employed Australians pay it automatically through PAYG withholding
Bulk billing means the doctor accepts the Medicare fee as full payment — you pay nothing out of pocket
Medicare does not cover private hospital accommodation, dental, optical (except for specific programs), or most physiotherapy and allied health (except through specific referrals)

What Medicare Covers

Service	Medicare coverage
GP visits	85% of the Medicare Benefit Schedule (MBS) fee
Specialist consultations (referred)	85% of MBS fee (in rooms)
Pathology tests	Covered when ordered by a doctor
Diagnostic imaging	X-rays, CT scans, MRI — partially covered
Public hospital care	Fully covered (as a public patient)
Allied health (limited)	Up to 5 sessions/year under a GP Mental Health Treatment Plan (psychology, social work)
Prescription medicines	Subsidised through the Pharmaceutical Benefits Scheme (PBS) — not Medicare directly

What Medicare Does NOT Cover

Service	Not covered
Dental	Not covered except the Child Dental Benefit Schedule (up to $1,000 for eligible children under 18)
Optical	Not covered (some state programs for concession holders)
Physiotherapy, chiro, osteopathy	Not covered except under specific referral programs
Private hospital accommodation	Not covered — requires private health insurance
Ambulance	Not covered — separate state-based insurance or private cover required
Cosmetic procedures	Not covered
Overseas medical treatment	Not covered

Bulk Billing

Bulk billing means a doctor or other health provider accepts the Medicare benefit as their full fee. You pay nothing and do not need to claim.

Not all doctors bulk bill. Whether a doctor bulk bills is their choice — some bulk bill all patients, some only bulk bill concession card holders or children, and some do not bulk bill at all.

Out-of-pocket cost = Total fee charged − Medicare benefit paid

If a doctor charges more than the MBS fee and does not bulk bill, you pay the difference (the “gap”).

The Medicare Levy

Most Australian taxpayers pay a 2% Medicare levy on their taxable income to fund Medicare.

Example: A person with $80,000 taxable income pays $1,600/year in Medicare levy (automatically withheld through PAYG).

Medicare Levy Exemptions

You may be exempt from the Medicare levy if:

Your taxable income is below the low-income threshold (~$26,000 for individuals in FY2024–25)
You are a foreign temporary resident not eligible for Medicare
You hold certain visa types

Medicare Levy Reduction

If your income is above the low-income threshold but below a higher threshold, you pay a reduced Medicare levy (rather than the full 2%).

Medicare Levy Surcharge

The Medicare Levy Surcharge (MLS) is an additional tax of 1–1.5% on taxable income for higher-income earners who do not have adequate private hospital cover.

Income	MLS rate
Up to ~$93,000 (single)	No MLS
~$93,001 – $108,000	1.0%
~$108,001 – $144,000	1.25%
$144,001+	1.5%

Family thresholds are higher and increase per dependent child. See Medicare Levy Surcharge guide.

Holding hospital cover (with an excess of $750 or less for singles) exempts you from the MLS.

The Medicare Safety Net

The Medicare Safety Net provides extra benefits once your out-of-pocket expenses reach certain thresholds in a calendar year:

Original Medicare Safety Net: once you reach the threshold (~$531/year for concession holders, ~$531 for general patients for some services), you receive 80% of the gap for out-of-hospital services
Extended Medicare Safety Net: a higher threshold providing greater benefits for families and individuals with high ongoing out-of-pocket costs

Once you register a family for the Safety Net, all family members’ out-of-pocket costs accumulate together toward the threshold.

How to Get a Medicare Card

Eligible people: Australian citizens, permanent residents, and some temporary visa holders (from countries with reciprocal healthcare agreements — NZ, UK, Ireland, Belgium, Netherlands, Finland, Norway, Slovenia, Malta, Italy).

How to register:

Visit a Centrelink service centre with identity documents, or
Apply online via myGov (if you already have a Centrelink account)

Your Medicare card is usually issued within a few weeks and mailed to your address.

FAQ

Do I need to pay for a GP visit? Only if the GP does not bulk bill. If bulk billed, you pay nothing. If there is a gap, you pay the difference between the total fee and the Medicare rebate.

Does Medicare cover dental? Generally no. The Child Dental Benefit Schedule provides up to $1,000 over two years for basic dental for eligible children under 18. Adults do not have general dental coverage under Medicare.

Is Medicare available to visitors to Australia? Only visitors from countries with reciprocal healthcare agreements (including NZ, UK, Ireland, and several European countries) can access Medicare on a temporary basis. Other visitors should have travel health insurance.

Does Medicare cover ambulance? No — ambulance is not covered by Medicare. It is covered by state-based ambulance subscriptions (QLD and TAS include ambulance in state funding), private health insurance, or separate ambulance cover. In some states, calling an ambulance without cover results in significant out-of-pocket costs.