Proposed Medicare Safety Net (MSN) arrangements

Overview of the Medicare safety net arrangements that are proposed to replace the existing Medicare safety net arrangements in 2016.

Page last updated: 02 February 2016

Update on proposed Medicare Safety Net arrangements

On 1 December 2015, the Minister for Health, Minister for Aged Care and Minister for Sport, the Hon Sussan Ley MP, announced that the new Medicare safety net arrangements will not commence on 1 January 2016.



The Minister announced that the Medicare Safety Net measure will remain on the table while the Government develops its broader Medicare and primary care reform package.

Further information can be found at Medicare Safety Net Arrangements.

Proposed Medicare Safety Net arrangements

Subject to the passage of legislation a new Medicare safety net arrangement will replace the following existing Medicare safety net arrangements:
  • Extended Medicare Safety Net (EMSN)
  • Original Medicare Safety Net (OMSN)
  • Greatest Permissible Gap (GPG).
For the proposed new Medicare safety net there will be a limit on the out-of-pocket costs that count towards the threshold. The maximum accumulation amount per Medicare service will be 150% of the Medicare Benefit Schedule (MBS) fee less the MBS rebate. Any out-of-pocket costs beyond that amount will not count towards the threshold.

Once the relevant threshold has been reached, Medicare will pay up to 80% of any future out-of-pocket costs for out-of-hospital Medicare services for the remainder of the calendar year. However, the maximum Medicare benefit (i.e. the MBS benefit plus the safety net benefit) a patient is able to receive for each service is limited to 150% of the MBS fee.

Under the proposed new Medicare safety net, the thresholds will be:
  • $400 for singles and families with Commonwealth concession cards
  • $700 for families who qualify for Family Tax Benefits (FTB) Part A and single people without concession cards
  • $1,000 for all other couples and families.
See A new Medicare Safety Net for facts and examples showing how the Department of Human Services (DHS) will calculate benefits under the new arrangements.

The existing Medicare safety net arrangements will continue the new arrangements commence with the aim of assisting people with:
  • the cost of out-of-hospital services
  • costs that are compensated by a standard Medicare rebate
  • assistance that is in addition to the standard Medicare rebate (i.e. a Medicare safety net benefit).
The new Medicare safety net is expected to be simpler and more consistent than the previous models. This will make the safety net system more user-friendly and understandable.

Key points

The proposed new Medicare safety net arrangements represent an important change to the current Medicare arrangements that will address:
  • complexity and confusion arising from multiple overlapping arrangements
  • rigid rules that govern how families are treated
  • limited access for single people without concession cards.
Many elements of the current arrangements will continue
The new Medicare safety net arrangement will continue to be payable for out of hospital Medicare eligible services only (i.e. those that are paid at either 85% or 100% of the MBS fee) and will continue to operate from one calendar year to another. Other elements that will continue are listed below.
  • Subject to any upper limits on safety net benefits payable, safety net benefits will be calculated at 80% of out-of-pocket costs.
  • The thresholds will be indexed by the Consumer Price Index (CPI) annually.
  • A concessional threshold will apply to a person who is named or listed on a Commonwealth concession card such as a Department of Social Services (DSS) or Department of Veterans’ Affairs (DVA) Commonwealth concession card.
  • A FTB Part A threshold will apply to a person who is a member of a family receiving FTB Part A.
  • The Department of Human Services (DHS) will continue to automatically keep a tally of out-of pocket costs and calculate a person’s/family’s safety net benefits.
  • Families will be able to register with the DHS to pool their out-of-pocket costs as a safety net family.
Some elements will be improved to help families with family registration and pooling of out-of-pocket costs.
  • When the sum of a patient’s (or family’s) accumulation amounts reach the relevant safety net threshold in a single safety net year, the person (or family) becomes eligible for safety net benefits.
  • A dependent may be registered as part of one or more safety net families at any one point in time. Where a dependent is part of one or more registered families, the out-of-pocket costs accumulate to whichever family incurred the expense.
  • If any person in a registered family receives FTB Part A then the whole registered family is given access to the FTB Part A threshold.
  • Registration will be simplified and provide for online applications.
  • Couples living apart due to illness or infirmity will be able to register as a safety net family. The current legislation does not allow for the pooling of their out-of-pocket costs to meet a family threshold. In effect they are treated as singles.
  • The new safety net will broaden the definition of 'student dependents' to include dependent children over the age of 16, who are temporarily unable to study full time due to illness. Under the new arrangements they will be counted as part of their family and their medical expenses will contribute to meeting the family threshold.
  • The new safety net will introduce a new (lower) threshold for single people without a concession card.
  • There will be no limit on safety net benefits paid to a person each calendar year, however, there will be a limit on safety net benefits payable per MBS item.