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 6 - Provisions applying to both the incentive payments and premiums reduction

Explanation of the amendments

6.1 Chapter 4 of the PHII Bill contains general provisions that relate to both the incentive payments scheme and premiums reduction scheme. It includes provisions dealing with the recovery of debts owed either by individuals or health funds under either scheme, secrecy provisions and other miscellaneous provisions. It also includes a dictionary of defined terms which have not been dealt with in previous Chapters.

How and when payments are recovered

Recovery of payments

6.2 Under the scheme the following amounts may be recoverable as debts owing to the Commonwealth:

•

a payment made under the incentive payments scheme to which an individual was not entitled - this could include an amount that was wrongly claimed by an individual under the scheme or an amount incorrectly paid;

•

so much of a payment made under the incentive payments scheme that has been made to an individual that relates to a refunded premium - eg. where a policy is cancelled after the 30% benefit has been paid;

•

a reimbursement made to a health fund by the HIC and the reimbursement relates to a policy that covers a person who was not eligible to participate in premiums reduction scheme for the financial year in question;

•

150% of a reimbursement made by the HIC to a health fund in respect of a policy under which the health fund did not give a premium reduction;

•

150% of a reimbursement made by the HIC to a health fund in respect of a person whose application for registration under new section 11-15 in respect of a financial year has not been retained by the fund as required by new section 11-50 ;

•

150% of a reimbursement made by the HIC to a health fund in respect of a person whose application for registration has been retained by the fund but has not been produced as required by the HIC under new section 16-10 ;

•

so much of a reimbursement that was paid by the HIC to a health fund under new section 15-5 that was not payable; and

•

interest imposed under new subsection 18-10(2) on outstanding amounts. [New subsection 18-5(1)]

6.3 Where an amount is recoverable in relation to an incentives payment, including interest, the amount is recoverable from an individual or the individual's estate. Where an amount is recoverable in relation to a reduction in premiums, including interest, the amount is recoverable from the health fund. [New subsection 18-5(2)]

6.4 The above amounts are recoverable debts even though a person has been convicted of an offence relating to the payment. [New subsection 18-5(3)]

Interest on amounts recoverable

6.5 If the Managing Director of the HIC has issued a notice to a health fund, an individual or a deceased person's legal personal representative in regard to a debt owed under the scheme and:

•

an arrangement has been entered into with the Managing Director for the repayment of the outstanding amount and there has been a default of a payment owed under the arrangement; or

•

at the end of the period for entering into such an arrangement there are still amounts outstanding;

then interest becomes payable on the unpaid amount from and including the day after the relevant period. [New subsection 18-10(1)]

6.6 Interest is payable at a rate specified in the regulations or if no rate is specified at a rate of 15% per annum. [New subsection 18-10(2)]

6.7 The period for entering into an arrangement referred to in paragraph 6.5 above is a period of 3 months after the Managing Director has served a notice. The Managing Director may extend the period for entering into an arrangement. [New subsection 18-10(3)]

6.8 Even though the Managing Director is authorised to impose interest, a court may order that interest is taken to be payable from a date later than the date specified in paragraph 6.7 above. [New subsection 18-10(4)]

Write off, waiver and payment by instalments

6.9 The Managing Director may, on behalf of the Commonwealth, make a written determination:

•

writing off of an amount that an individual owes to the Commonwealth under the scheme;

•

waiving the right of the Commonwealth to recover from an individual the whole or part of an amount that the person owes to the Commonwealth under the scheme; or

•

allowing an individual to pay an amount owed to the Commonwealth under the scheme by instalments. [New subsection 18-15(1)]

6.10 The determination is to take effect:

•

on the day specified in the determination, being the day on which it is made or on any earlier or later day; or

•

if no day is specified - on the day the determination is made. [New subsection 8-15(2)]

6.11 If a determination referred to above is made in relation to the individual, the Managing Director must cause notice of the determination to be served on the person. [New subsection 18-15(3)]

6.12 A decision by the Managing Director not to make a determination is reviewable by the Administrative Appeals Tribunal.

Use of information relating to another person

6.13 A person who:

•

uses, makes a record of or discloses or communicates to any person any information that relates to the affairs of another person that was acquired under or for the purpose of this legislation; and

•

the use, making of the record, disclosure or communication was not carried out in the performance of a function or obligation, or the exercise of a power under this legislation;

is guilty of an offence. The maximum penalty is 2 years imprisonment. [New section 19-5]

Review by Administrative Appeals Tribunal

6.14 An individual may make an application to the Administrative Appeals Tribunal for a review of:

•

a decision by the HIC under new section 6-20 to refuse a claim under the incentive payments scheme;

•

a decision by the HIC refusing to register a person under new section 11-25 in respect of an appropriate private health insurance policy for a financial year;

•

a decision by the HIC under new subsection 11-40(1) to revoke a person's registration in respect of an appropriate private health insurance policyother than where a person merely wishes to have their registration cancelled;

•

a decision by the Minister to reject an application under new section 14-5 by a health fund to become a participating fund;

•

a decision by the HIC under new subsection 15-25(3) on reconsideration of a decision that an amount is not payable in respect of an appropriate private health insurance policy included in a claim under new section 15-10 ; or

•

a decision by the Managing Director of the HIC not to make a determination under new section 18-15 to write off, waive, or allow a person to pay by instalments any recoverable amounts. [New section 19-10]

Information to be provided to the Commissioner of Taxation

6.15 The HIC must, within 90 days of the end of each financial year, give the following information to the Commissioner of Taxation:

•

the name, date of birth and residential address of each person who:

-

paid a premium under an appropriate private health insurance policy for that financial year;

-

received a payment under the incentive payments scheme in respect of the premium; and

-

was a participant in the premiums reduction scheme in respect of an appropriate private health insurance policy for that financial year;

•

the name of the health fund that issued the policy;

•

the type of cover provided by the policy;

•

the total amount of payments made to the health fund in respect of the policy;

•

the period in respect of which those payments were made;

•

the name and date of birth of all other persons covered by the policy for which payments were made; and

•

whether, at any time during the financial year, any person covered by the policy was a dependent child. [New section 19-15]

Exclusion of certain State insurance

6.16 To avoid any possible doubt it is made clear that the PHII Bill does not apply in respect to State insurance that is confined to the State concerned. State insurance means insurance activities carried on by a State, ie. as insurer, as part of its governmental activities. This provision is included because under section 51(xiv) of the Constitution the Commonwealth cannot legislate with respect to State insurance. [New section 19-20]

False or misleading information

6.17 A person is guilty of an offence if the person gives any information to the HIC or to a health fund that the person knows is false or misleading in a material particular. [New section 19-25] The maximum penalty for such an offence is imprisonment for 12 months.

Application of the Criminal Code

6.18 Chapter 2 of the Criminal Code which sets out the general principles of criminal responsibility applies to all offences under the PHII Bill. [New section 19-30]

Appropriation

6.19 The Consolidated Revenue Fund is appropriated for the purpose of making payments under the new scheme. [New section 19-35]

Regulations

6.20 The Governor-General may make regulations prescribing matters which are required or permitted by the PHII Bill to be prescribed or are necessary or convenient to be prescribed for carrying out or giving effect to the PHII Bill. [New section 19-40]

Other definitions not previously dealt with

What is a business day?

6.21 A business day means a day other than a Saturday, a Sunday or a public holiday in the place concerned.

What does court refer to?

6.22 The reference to court includes any tribunal, authority or person having power to require the production of documents or the answering of questions.

Who is a dependant child?

6.23 A child is a dependent child if:

•

the child is under the age of 18 years, or a full-time student under the age of 25 years;

•

the child is covered by an appropriate private health insurance policy and the health fund that issued the policy accepts the child as a dependent child for the purposes of the policy;

•

the child is not a partner of another person (see definition of partner below).

What is a fringe benefit?

6.24 Fringe benefit means:

•

a fringe benefit as defined in subsection 136(1) of the FBTAA 1986;

•

a benefit that would be a fringe benefit if paragraphs (d) and (e) of the definition of employer in subsection 136(1) were omitted.

Who is the Managing Director?

6.25 The Managing Director means the Managing Director of the HIC.

Who is a partner?

6.26 A partner , in relation to another person, means:

•

a person who is legally married to the other person and is not living separately or apart from the other person on a permanent basis;

•

a person who, although not legally married to the other person, lives with the other person on a bona fide domestic basis as the husband or wife of the other person.

What does tax file number mean?

6.27 It means tax file number as defined in section 202A of the ITAA 1936.

What is the meaning of you?

6.28 The word you is used in the PHII Bill. It means an individual but does not include an individual in the capacity of a trustee or in the capacity of an employer.