Psychological services have been funded by the Australian government through Medicare since 2006. Medicare guidelines specify the conditions that psychologists can treat and the types of treatment that will be funded. The current study aimed to carry out an exploratory investigation of possible ethical issues raised by these guidelines. Psychologists' responses to hypothetical ethical dilemmas related to Medicare funding were examined. Two hundred and thirty‐seven registered psychologists responded to an online questionnaire. Results suggest that psychologists base ethical decisions regarding Medicare‐funded services on a number of factors, including the Australian Psychological Society Code of Ethics, best practice/treatment considerations, client interests, and Medicare guidelines. The characteristics of the dilemma and whether the situation can be referred to in the Code of Ethics appeared to influence psychologists' decisions. Participants were more ethically willing (they would do what they believed they should do) when the situation could be clearly related to the Code of Ethics. It was concluded that as psychologists must consider various professional values and standards, Medicare guidelines add a further level of complexity to practice decisions, and further education regarding Medicare rules is recommended.