Explanatory Memorandum
(Circulated by authority of the Minister for Health and Aged Care, The Hon. Dr Michael Wooldridge, MP)Schedule 3 - Private health insurance incentives
Part 1 - Private Health Insurance Incentives Act 1998
Introduction - Items 1 to 6
These amendments make it clear who is entitled to receive an incentive payment and that a receipt will be issued by the health fund concerned. Under the new arrangements the HIC will have 14 days to pay a claim for the incentive payment and a decision to refuse payment will be reviewable by the HIC before it is reviewable by the Administrative Appeals Tribunal.
This item repeals subsection 4-5(1) and replaces it with a new subsection. The new subsection 4-5(1) provides that a person is entitled to receive the incentive payment if they have paid a premium under an appropriate private health insurance policy and the policy was issued by a health fund. A health fund is defined in section 20-5 as a "registered organization within the meaning if Part VI of the National Health Act 1953 ".
This item inserts new section 4-6.
4-6 - Receipt for payment of premium
The new section 4-6 requires a health fund to issue a receipt to a person who pays a premium. The receipt must contain information and be in such form as determined in writing by the Managing Director of the HIC (subsection 4-6(1)).
Subsection (1) does not apply if the premium to which the payment relates has been reduced under the premium reduction scheme (subsection 4-6(2)).
This item repeals subsection 6-20(1) and inserts a new subsection. The new subsection
6-20(1) provides that the HIC has 14 days in which it must grant or refuse a claim made by a person for the incentive payment.
This item inserts new sections 6-25, 6-30 and 6-35.
6-25 - Application for reconsideration of decision refusing claim
The new section 6-25 provides for a person who has been refused a claim for the incentive payment to apply to the HIC to have the decision reconsidered (subsection (1)).
The application for reconsideration must be in writing and made within 28 days of notification of the decision to refuse, unless the HIC has extended the period for making an application (subsections (2) and (3)).
The new section 6-30 provides that the HIC has to reconsider the decision and either affirm or revoke the decision.
6-35 - Deadline for reconsideration
The new section 6-35 provides that the HIC must reconsider its decision within 28 days after receiving the application for reconsideration (subsection (1)).
If the HIC does not advise the applicant of its decision on reconsideration before the end of the 28 day period, it is taken to have made a decision confirming the original decision (subsection (2)).
This item amends subsection 8-5(1) by removing the word written.
This item repeals section 8-10 of the PHIIA . Section 8-10 has been incorporated into new section 18-2 at item 50.
Introduction - Items 7 to 28
These amendments allow a person to register for premiums reduction once only, rather than each financial year. If a person, already registered for the premiums reduction scheme, obtains a further policy from the same fund that issued the first policy, there is no need to register again. Under the amendments a person who pays for a policy but is not covered by the policy is also entitled to register for the premium reduction scheme. Notification requirements have also been amended to make it clear when and to whom notification of registration and revocation of registration in the premiums reduction scheme is be given.
This item amends section 10-5 by removing the words for a financial year.
Item 8
This item amends paragraph 10-5(b) by removing the words , for that year.
This item amends paragraph 10-5(c) by removing the words for that year.
This item amends subsection 11-5(1) by removing the words for a financial year.
This items amends subsection 11-5(1) by removing the words for that year.
This item repeals subsection 11-5(3) and inserts two new subsections.
The new subsection 11-5(3) enables a person to register once only for the premiums reduction scheme.
The new subsection 11-5(3A) provides that if a person who is registered with a fund in respect of an appropriate private health insurance policy becomes eligible to be registered in relation to another appropriate private health insurance policy issued by the same fund, they are deemed to be registered. If a person becomes eligible for registration in relation to an appropriate private health insurance policy that is issued by a different fund, they must submit another application to register for premiums reduction.
This item amends subsection 11-5(4) by removing the words for a financial year.
Item 14
This item repeals section 11-10 and inserts a new section.
11-10 - Eligibility to apply for registration
The new section 11-10 sets out who is eligible to apply for registration under the premiums reduction scheme, including:
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- a person or employer who has paid a premium;
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- a person who is covered by the policy; or
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- a parent, if everyone the policy covers is a dependent child.
This item repeals redundant subsection 11-15(4).
This item repeals subsection 11-20(1) and inserts a new subsection with two paragraphs. The new paragraph 11-20(1)(a) provides that a health fund must notify the HIC when it receives an application for registration. New paragraph 11-20(1)(b) requires a health fund to notify the HIC of a person who is already registered for the premiums reduction scheme and subsequently becomes eligible to be registered in respect of another appropriate private health insurance policy.
This item repeals subsection 11-25(1) and inserts a new subsection. The new subsection 11-25(1) requires the HIC to notify a person that it is refusing to register them for premiums reduction and also the health fund that issued the policy to the person. The HIC must do so within 28 days of the refusal occurring.
This item amends subsection 11-25(2) by removing the words for a financial year.
This item amends paragraph 11-30(1)(a) by removing the words for a financial year.
This item amends paragraph 11-30(1)(b) by removing the words for the year and substituting the words for a financial year.
This item amends subsection 11-30(1) by removing the word written.
This item repeals subsection 11-30(4) and inserts a new subsection. The new subsection 11-30(4) requires a person who no longer wishes to be registered in the premiums reduction scheme to notify their health fund.
This item amends subsection 11-40(1) by removing the words for a financial year.
This item amends subsection 11-40(1) be removing the words for that year.
This item amends section 11-40 by inserting a new subsection. The new subsection 11-40(3) requires the HIC to notify the person if it revokes their registration in the premiums reduction scheme and to also notify the fund that issued the policy. The HIC must issue the notification within 28 days of the revocation occurring.
This item amends subsection 12-5(1) by removing the word scheme and substituting the words for that year.
This item amends subsection 12-5(3) by inserting a new subsection. The new subsection 12-5(3A) provides a formula for the amount of reduction a participant in the premiums reduction scheme will receive if their policy is less than 1 year.
This item repeals section 12-10 and substitutes a new section.
12-10 - Participant in premium reduction scheme
The new section 12-10 provides that a person is a participant in the premiums reduction scheme in respect of an appropriate private health insurance policy if:
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- where the financial year is the financial year that began on 1 July 1998 - the individual was registered under the Private Health Insurance Incentives Act 1997 immediately before 1 January 1999 in respect of the policy; or
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- where the financial year is the financial year that began on 1 July 1998 or a later financial year - the individual was registered under the premiums reduction scheme in respect of the policy and the registration has not been refused.
Introduction - Items 29 to 38
These amendments require a health fund to only register once to become a participating fund in the premiums reduction scheme. A fund will have its status revoked if it does not issue a recept to a person for the purposes of the incentive payment, does not comply with the regulations or on or after 1 July 2000, the fund does not offer no gap or known gap policies.
This item amends subsection 14-5(1) by removing the words for that financial year.
This item amends subsection 14-5(2) by removing the words for the financial year beginning on 1 July 1998 or later financial year and substituting the words for the purposes of this Act.
This item repeals subsection 14-5(3) and inserts a new subsection. Under the new subsection 14-5(3) a health fund, if approved by the Minister, will become a participating fund.
This item amends paragraph 14-10(1)(d) by removing the words until the end of the financial year concerned.
This item inserts is a new subsection 14-10(1A) providing that any undertaking given by a health fund prior to the date on which Schedule 3 to the Health Legislation Amendment Act (No. 3) 1999 receives Royal Assent is taken to comply with paragraph 14(1)(d) of the PHIIA .
This item repeals redundant subsection 14-10(2).
This item amends subsection 14-15(1) by removing the words subsections (2) and (3) and substituting the words subsection (2).
This item repeals subsections 14-15(2) and (3) and inserts a new subsection. The new subsection 14-15(2) provides that the Minister must not approve an application by a health fund to participate in the premiums reduction scheme on or after 1 July 2000 unless the health fund offers its members no gap and known gap policies.
This item amends subsection 14-20 by removing the words in writing.
This item inserts new Division 14A.
Division 14A - Revocation of status of health fund as a participating fund
14A-1 - Revocation of status of participating fund
Subsection 14A-1(1) provides for the Minister to give notice to a health fund revoking its status as a participating fund if any one of the following occurs:
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- if the fund fails to issue a receipt to a person who has paid a premium;
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- if the fund fails to comply with a condition of participating in the premium reductions scheme as contained in the regulations; or
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- if the fund does not offer its members the choice of no gap and known gap policies on or after 1 July 2000.
Subsection 14A-1(2) declares that, upon the giving of the notice, the fund ceases to be a participating fund.
Introduction - Items 39 to 46
The HIC is processing claims by health funds using summary data. Consequently, these amendments are required to facilitate summary data claiming and payment by the HIC and to ensure there is a suitable mechanism for the HIC to pay part of a claim by a health fund and to reconsider that decision.
This item amends subsection 15-5(1) by removing the words a financial year for.
This item amends subsection 15-5(2) by removing the words The HIC must pay a health fund and substituting the words If a health fund makes a claim that the HIC decides is correct, the HIC must pay to the fund.
This item repeals subsection 15-10(1) and inserts two new subsections.
The new subsection 15-10(1) enables the HIC to refuse to pay a claim, or part of a claim, by a health fund if it considers that the claim is not correct.
Under the subsection 15-10(1A) the HIC must notify the health fund of its decision.
This item amends subsection 15-20(2) by removing the number (1) and substituting it with the number (1A).
This item repeals subsection 15-25(1) and inserts a new subsection.
The new subsection 15-20(3) provides that the HIC will be taken to have made a decision that a claim from a health fund is correct if it does not give the health fund notice on or before the day on which the claim would be payable.
This item amends subsection 15-25(1) by removing the number (1) and substituting it with the number (1A).
This item repeals redundant paragraph 15-25(2)(a).
This item repeals subsections 15-25(3), (4) and (5) and inserts two new subsection, being subsections 15-25(3) and (4).
The new subsection 15-25(3) states that the HIC, as soon as practicable after receiving a request from a health fund, must reconsider its decision not to pay a claim or only pay a part of the claim.
The new subsection 15-25(4) states that if the HIC varies its original decision or revokes it and makes a fresh decision, the varied or fresh decision has effect from the time that the original decision was made.
This item amends subsection 16-5(3) by removing the words in writing.
This item amends section 16-5 by inserting a new subsection. The new subsection 16-5(7) provides that, if the HIC gives a health fund notice, it is required to give the HIC a certificate from a registered company auditor as to the correctness of the funds accounts and records as they relate to the participation of persons in the premiums reduction scheme, the reductions of premiums and the receipt of money from the HIC.
This item amends subsection 16-10(1) by removing the words written.
Introduction - Items 50 to 55
These amendments ensure that amounts are recoverable as debts to the Commonwealth and provides for the HIC to set off a Commonwealth debt owed by a person or a health fund with an amount due to be paid to the person or health fund.
This item amends paragraph 18-5(1)(b) by inserting a new paragraph. The new paragraph 18-5(1)(ba) provides that the incentive payment is recoverable from a person who withdraws their claim.
This item repeals paragraph 18-5(1)(c) and substitutes it with two new paragraphs.
The new paragraph 18-5(1)(c) provides that an amount is a debt due to the Commonwealth if it was a payment to a health fund in relation to a reduced premium and the person to whom the appropriate private health insurance policy relates was a participant in the premiums reduction scheme and not eligible to participate in the scheme.
The new paragraph 18-5(1)(ca) provides that, a payment made to a health fund that relates to a premium for which a reduction was not allowable, is a debt due to the Commonwealth.
This item repeals subparagraph 18-5(1)(d)(ii) and inserts a new paragraph.
The new subparagraph 18-5(1)(d)(ii) provides that an amount is a debt due to the Commonwealth, owed by a health fund, where the health fund has not retained a persons application for registration with the premiums reduction scheme.
This item amends subparagraph 18-5(1)(d)(iii) by removing the words to a financial year and.
This item amends paragraph 18-5(2)(a) by removing the words or (b) and substituting the words , (b) or (ba).
This item amends paragraph 18-5(2)(b) by removing the words (c), (d) or (e) and substituting the words (c), (ca), (d) or (e).
The item inserts a new section.
18-20 - HIC may set off debts against amounts payable
The new subsection 18-20(1) provides that where an amount would be payable to a person or a health fund and there is an amount that is recoverable under section 18-5, the HIC may set off the HIC may set off the whole or part of the amount that is owing against the amount of the debt.
Under new subsection 18-10(2), if the HIC makes a set off, it must be pay the person or the health fund the amount remaining after the set-off and the amount that is owing to the Commonwealth is reduced by the amount that has been set off.
This item amends Division 19 by inserting 3 new sections.
19-1 - Notification requirements-health funds
The new subsection 19-1(1) provides that the HIC may require a health fund to provide certain information in relation to the premiums reduction scheme and the incentive payments scheme relating to person who:
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- is covered at any time during a financial year specified in the notice by an appropriate private health insurance policy issued by the fund; or
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- paid premiums under such a policy.
Subsection 19-1(2) states that the information that the HIC can require a fund to produce includes:
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- the name, residential address and date of birth of each person covered by a policy or the person who paid premiums under the policy;
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- the fund membership number of the policy;
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- the name, residential address and date of birth of the person covered by the policy whom the health fund treats as the contributor in respect of the policy;
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- whether the policy provides hospital cover, ancillary cover or combined cover;
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- the date on which the policy was issued;
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- whether the policy has terminated or been suspended, and, if it has, the date on which it was terminated or was suspended;
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- the amount of the premium under the policy
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- the period to which the premiums relates;
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- any increase or decrease in the premium;
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- whether a payment in respect of a premium that was due within a period specified by the HIC was not paid; and
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- any other information relevant to Chapters 2 or 3 that has been determined in writing by the Managing Director.
The new subsection 19-1 (3) provides that the Managing Director must not make a determination that requires a health fund to provide a persons tax file number or information relating to the physical, psychological or emotional health of any person.
The new subsection 19-1(4) provides that determinations referred to in paragraph 19-1(2)(l) are disallowable instruments for the purposes of section 46A of the Acts Interpretation Act 1901 .
The new subsection 19-1(5) states that the information that a health fund is required to provide must be in a form approved by the HIC and provided within the period specified in the notice.
The new subsection 19-1(6) provides that a health fund is guilty of an offence if it fails to provide the information within the time as specified on the notice issued by the HIC. The maximum penalty for the offence is 20 penalty units. The obligation to provide information is a continuing obligation and a health fund is guilty of an offence for each day, after the period specified in the notice, until the information is provided.
The new subsection 19-2(1) provides that a notice under the PHIIA by the Minister or the HIC to a health fund, or a notice, request or application by a health fund to the Minister or the HIC may be in writing or in electronic form.
The new subsection 19-2-(2) provides that a notice under the PHIIA by the HIC to a person, other than a health fund, or a notice, request or application by a person other than a health fund to the HIC must be in writing.
19-3 - Use of information to determine whether persons covered by private health insurance policies are eligible for medicare benefits
The new section 19-3 provides that, to determine whether a person covered by appropriate private health insurance policy is an eligible person under either section 3, 6 or 7 of the Health Insurance Act 1973 , the HIC can use information it has obtained in determining whether the person was eligible to receive Medicare benefits.
This item inserts a new section 19-6.
19-6 - Principles relating to personal information
The new subsection 19-6(1) provides that the Minister may make principles in relation to the acquiring of personal information under the PHIIA and the storage, security, correction and use and disclosure of such personal information.
The new subsection 19-6(2) provides that a health fund must comply with such principles.
The new subsection 19-6(3) provides that the principles are disallowable instruments for the purposes of section 46A of the Acts Interpretation Act 1901 .
The new subsection 19-6(4) provides that personal information has the same meaning as in the Privacy Act 1998.
This item repeals paragraph 19-10(a) and inserts a new paragraph. The new paragraph 19-10(a) provides that the decision of the HIC confirming a decision to refuse to pay a claim for the incentive payment is reviewable by the Administrative Appeals Tribunal.
This item amends paragraph 19-10(b) by removing the words for a financial year.
This item repeals paragraph 19-10(e) and inserts two additional paragraphs.
The new paragraph 19-10(e)(da) provides that a decision to revoke a health funds status as a participating fund is reviewable by the Administrative Appeals Tribunal.
The new paragraph 19-10(e) provides that a decision by the HIC that a claim submitted by a health fund is incorrect is reviewable by the Administrative Appeals Tribunal.
This item amends subsection 19-15 by inserting five additional paragraphs after paragraph 19-15(b). Section 19-15 requires the HIC to give the Commissioner of Taxation certain information within 90 days after the end of the financial year. The additional information is:
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- the fund membership number of the policy;
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- the identification code of the fund that issued the policy;
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- the type of membership provided by the fund in respect of the policy;
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- whether the policy has been terminated or suspended;
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- if the policy has been terminated or is suspended, the date of the termination or suspension.
This item amends section 19-15 by adding two additional paragraphs of information to be given by the HIC to the Commissioner of Taxation and two new subsections.
The additional paragraphs of information to be provided are:
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- the total amounts paid by the HIC under Chapters 2 and 3 for the financial year;
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- any other information that the Commissioner determines in writing.
The new subsection 19-15(2) provides that the Commissioner must not make a determination that the HIC provide a persons tax file number or information relating to the physical, psychological or emotional health of any person.
The new subsection 19-15(3) provides that determinations by the Commissioner are disallowable instruments for the purposes of section 46A of the Acts Interpretation Act 1901 .
This item amends section 19-15 by inserting a new section.
The new subsection 19-16(1) provides that the Minister may delegate, in writing, all or any of his or her powers under the Act to:
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- the Secretary of the Department of Health and Aged Care;
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- the Managing Director;
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- an officer or an employee of the Department of Health and Aged Care; or
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- a staff member of the HIC.
The new subsection 19-16(2) provides that the HIC may delegate, in writing, all or any of its powers under the PHIIA to the Managing Director or to a staff member.
The new subsection 19-16(3) provides that the Managing Director may, in writing, delegate, all or any of his or her powers under the PHIIA to a staff member of the HIC.
Introduction - Items 65 to 66
These amendments include changes and additions to the definitions contained in the Private Health Insurance Incentives Act 1998 .
This item amends paragraph (b) of the definition of appropriate private health insurance policy by inserting or 7 after 6. This is a reference to section 7 of the Health Insurance Act 1973 .
This item repeals the definition of participating fund and substitutes a new definition. Participating fund means a health fund referred to in subsection 14-5(1) or (3), other than a fund whose status as a participating fund has been revoked under subsection 14A-1(1).