House of Representatives

Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon Peter Costello, MP and the Minister for Health and Aged Care, the Hon Dr Michael Wooldridge, MP))

Chapter 1 - Purpose and date of effect

Purpose of amendments

1.1 The PHII Bill will provide a non income-tested financial incentive for individuals and families to take out or maintain private health insurance cover. It is provided by way of a 30% reimbursement of premiums paid, or a 30% premium reduction. The incentive is generally available to an individual who pays for appropriate private health insurance cover with a fund registered under Part VI of the National Health Act 1953 .

1.2 The measure is complemented by amendments made to the ITAA 1997 by the TLA(PHI) Bill which provides the incentive in the form of a tax offset.

1.3 The amendments contained in the PHIIA Bill will amend the PHIIA 1997 as a consequence of the introduction of the new scheme. The amendments provide for the cessation of the PHIIS on 31 December 1998, to coincide with the operation of the new scheme.

Date of effect

1.4 The incentive and offset available under the PHII and TLA(PHI) Bills will apply from 1 January 1999, affecting the 1998-99 and later financial years. Amendments made by the PHIIA Bill will close off the current scheme at 31 December 1998.