If you’ve been injured at work in New South Wales and are making a workers’ compensation claim, you may come across something unexpected; the 10% Medicare payment rule. Many workers are surprised to learn that Medicare is legally entitled to claim 10% of their compensation settlement and to hold those funds until Medicare has worked out whether it has paid for any treatment which should have been paid by the workers compensation insurer.
This blog will explain why this happens, how the process works, and what it means for your final payout. Don’t worry, we’ll keep it simple and clear.
Why Does Medicare Take 10%?
Medicare is Australia’s public health system. It helps cover GP visits, specialists, X-rays, scans, and other medical services. If you’re injured at work and Medicare pays for some of your treatment, but later you receive workers’ compensation, the law says you can’t be paid twice for the same treatment. This is to prevent “double dipping.”
The law that sets this out is the Health and Other Services (Compensation) Act 1993. It allows Medicare to recover money it has already paid for workplace injury treatment. To make sure nothing is missed, Medicare is entitled to 10% of your settlement upfront. Think of it as a safety net rather than a penalty.
How the 10% Payment Works
Here’s a step-by-step look at what happens:
- 10% is withheld – When your claim settles, 10% of your payout is sent to Medicare.
- Checking your history – You complete a Medicare History Statement, identifying any medical services Medicare covered for your injury.
- Repayment deducted – If Medicare has paid for injury-related treatment, those costs are taken from the 10%.
- Refund to you – If there’s money left after the repayment, Medicare refunds the unused portion back to you.
Sometimes, if you complete a Section 23A Statement confirming Medicare has not paid for any related treatment, the 10% may not be withheld at all.
Why This Rule Exists
Medical records aren’t always up to date at the time of settlement. For example, a GP visit or scan might not yet have been processed in Medicare’s system. The 10% rule protects the public health system by ensuring Medicare can claim back what it’s owed if extra costs appear later.
At the same time, the rule ensures you’re still compensated fairly, because any unused portion comes back to you.
Example Scenario
Let’s say Mark injures his shoulder at work. He sees his GP, a specialist, and has a couple of X-rays. Medicare pays $600 towards these services.
When Mark’s claim settles for $40,000:
- $4,000 (10% of $40,000) is sent to Medicare.
- $600 is deducted from that amount for treatment Medicare covered.
- Medicare refunds $3,400 back to Mark.
- The insurer then reimburses Mark the $600 he was out of pocket.
In the end, Mark only loses the $600 temporarily, he gets it back from the insurer once Medicare finalises the claim.
What This Means for You
- The 10% is mandatory – unless you provide Medicare with a Section 23A Statement confirming no treatment was paid by them.
- You’ll usually get most of it back – unless Medicare has covered significant costs.
- It takes time – refunds can take a few months to process.
- Your lawyer or insurer handles it – you don’t need to chase Medicare yourself.
How a Lawyer Can Help
Workers’ compensation claims are stressful enough without the extra layer of Medicare rules. An experienced worker’s compensation lawyer can:
- Notify Medicare early to reduce delays.
- Review your Medicare History Statement and remove unrelated items.
- Explain the process clearly so you know what to expect.
- Help recover your refund once Medicare completes its review.
For related information, you can read:
- Ugh…paperwork! What records should I keep about my injury?
- Why is Medicare involved in your personal injury claim?
- What should you look for in a Personal Injury Lawyer?
Practical Tips for Workers
- Keep your medical records – Referrals, invoices, and reports all help confirm what’s related to your injury.
- Tell your doctors about your claim – This ensures your treatment notes are clear.
- Be patient with the refund – It can take time, but you’ll either get your refund or know exactly what’s been deducted.
- Get advice early – A lawyer can make sure you don’t repay more than you should.
Final Thoughts
The 10% Medicare payment might feel frustrating, but it’s simply a safeguard. In most cases, you’ll see the majority of that money returned once Medicare finishes its checks. Understanding the process, keeping records, and working with an experienced lawyer will make the journey much smoother.
Need Help?
If you’ve been injured at work and want to understand how the 10% Medicare rule affects your settlement, we’re here to help. At Bourke Legal, we specialise in workers’ compensation claims and will guide you every step of the way.
📞 Call us today on 1300 026 875 or visit bourkelegal.com to arrange a free consultation. Let us help you secure the compensation you deserve.