How Does The Pharmaceutical Benefits Scheme (PBS) Work?

Overview

When it comes to health care costs and health insurance comparison, there's more to think about than just doctor and hospital bills.

For many people, especially those dealing with chronic conditions, prescription medication costs can mount up quickly and cause added financial stress.

That's where the Pharmaceutical Benefits Scheme (PBS) comes in.

Designed to help Australians pay for their prescription medicines, the PBS is a huge help to many, whether they need an occasional prescription, or access to medications on a regular basis.

How the PBS works

The scheme works by allowing participants to purchase medicines on the PBS schedule at a government-subsidised price which is much lower than the actual cost of the medicine.

The Schedule is a list of hundreds of drugs.

All Australians who hold a current Medicare card are eligible for this benefit.

In order to receive the subsidised price, you simply show their Medicare card and prescriptions at the pharmacy and their discount is applied automatically.

To help cover the cost of the PBS, you pay part of the price for your medicine (this is called a ‘co-payment’) and the Government pays the rest. These co-payments usually change each year on 1 January. From 1 January 2025, pharmacists can choose to give you a discount - up to 80 cents off for concession card holders, and up to 10 cents off for general patients.

The Pharmaceutical Benefits Scheme Schedule can be found online and is updated each month.

How some of us get a bigger discount

Some Australians can receive a concessional benefit which provides an even lower co-pay on medicines.

To be eligible for a concessional rate, you must have one of the following cards:

• Pensioner Concession Card

• Commonwealth Seniors Health Card

• Health Care Card

• DVA White, Gold or Orange Card.

How the safety net helps even more

Even though these co-pays are relatively small, they can add up if you or a family member has a serious illness or chronic medical condition, like diabetes.

The Safety Net is designed to help those of us dealing with higher medical expenses.

If you reach the Safety Net threshold during a calendar year, you may be eligible for an even greater discount on your medicines.

If you are nearing your Safety Net threshold, talk to your pharmacist about applying for a Safety Net card.

Medicines are normally free for concession card holders with a Safety Net card.

How much the PBS costs

Providing such a benefit to citizens isn't cheap, and the cost of the PBS has risen dramatically in recent years. Government expenditure on the PBS is currently around $17.7 billion* each year.

Obviously, this is a huge expense for the government and they are always looking for ways to cut back on costs.

Consumers can help reduce the cost of the PBS via simple steps such as:

• Filling prescriptions only as required.

• Maintaining a healthy lifestyle by eating right and exercising.

• Being open to various treatment options.

• Choosing a generic branded medicine.

• Making sure your regular prescription medicine is actually maintaining your health (definitely speak to your medical practitioner if this does not seem to be the case).

The Pharmaceutical Benefits Scheme is an important part of Australia's overall health care program, and it is a great help to Australians when it comes to paying for prescription drugs.

Take time to understand the PBS and you are well on your way to saving money and taking care of your health.

This guide is opinion only and should not be taken as medical or financial advice. Check with a financial professional before making any decisions.

References

*What you pay for PBS medicines

Chris Stanley is the sales & operations manager of health insurance at Compare Club. With extensive experience and expertise, Chris is a trusted leader known for his deep understanding of health insurance markets, policies, and coverage options. As the sales & operations manager of health insurance, Chris leads a team of dedicated professionals committed to helping individuals and families make informed decisions about their health insurance needs.

Meet our health insurance expert,  Chris Stanley

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  Family health cover means your children are covered under the same policy as you.

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