Medicare Levy Amendment (Excess Levels for Private Health Insurance Policies) Act 2018

Overview

The Medicare Levy Amendment (Excess Levels for Private Health Insurance Policies) Act 2018 was enacted to address the issue of high private health insurance premiums, particularly the "excess" fees imposed by health insurers. The Act amends the Medicare Levy Act 1986, primarily by introducing a cap on the amount of excess that can be charged by private health insurers to policyholders. The policy objective of this Act is to ensure that the cost of private health insurance remains affordable and accessible for Australians, thereby supporting the broader goals of the Medicare system. The Act was passed by the Parliament of Australia and received Royal Assent on 21 September 2018, with the key amendments taking effect from 1 April 2019.

Scope and Application

The Medicare Levy Amendment (Excess Levels for Private Health Insurance Policies) Act 2018 amends the Medicare Levy Act 1986, and applies to individuals and entities subject to the Medicare Levy provisions, particularly those holding private health insurance policies. The Act modifies the conditions under which a person may be exempt from the Medicare Levy by altering the criteria for excess levels payable in respect of benefits under a private health insurance policy. Specifically, the amendments focus on limiting the amount of excess that can be payable over a 12-month period, thereby impacting the eligibility for the Medicare Levy exemption based on income and private health insurance coverage. The Act commenced on 21 September 2018, with the substantive amendments taking effect from 1 April 2019. The jurisdictional reach of this Act is national, as it amends a Commonwealth statute, and applies to all individuals and entities within Australia subject to the Medicare Levy Act. The Act does not explicitly state exclusions or exemptions, but the changes are confined to the specified conditions related to private health insurance policy excesses. The Act may be further extended or restricted by subordinate instruments, although such provisions are not detailed in the primary legislation.

Key Provisions

The Medicare Levy Amendment (Excess Levels for Private Health Insurance Policies) Act 2018 (Act) amends the Medicare Levy Act 1986 (MLA) to modify the conditions under which individuals may be exempt from the Medicare Levy surcharge if they have private health insurance. Section 1 of the Act specifies that it will be referred to as the Medicare Levy Amendment (Excess Levels for Private Health Insurance Policies) Act 2018. The Act commences on the date it receives Royal Assent, which is 21 September 2018, and the amendments to the MLA will take effect from 1 April 2019. Under the amended MLA, an individual may be exempt from the Medicare Levy surcharge if they have private health insurance and any excess payable in respect of benefits under the policy is no more than the applicable amount set out in section 45-1 of the MLA in any 12-month period (section 3(5)(b) of the MLA). This change is made by repealing paragraph 3(5)(b) and substituting it with the new condition (Schedule 1, item 1 of the Act). Additionally, the Act repeals subsections 3(5A), (6), and (7) of the MLA (Schedule 1, item 2 of the Act), which previously provided for different conditions for the exemption from the Medicare Levy surcharge. The amendments made by the Act apply in relation to the 2018-19 income year and later income years (Schedule 1, item 3 of the Act). This means that the new conditions for exemption from the Medicare Levy surcharge will apply from the commencement of the 2018-19 income year on 1 July 2018. The Act imposes obligations on individuals who hold private health insurance policies to ensure that any excess payable in respect of benefits under the policy does not exceed the applicable amount set out in section 45-1 of the MLA in any 12-month period. Failure to comply with these obligations may result in the individual being liable for the Medicare Levy surcharge. The Act also imposes obligations on the Australian Taxation Office (ATO) to administer the new conditions for exemption from the Medicare Levy surcharge, including determining whether an individual is eligible for an exemption and collecting the surcharge from those who are not eligible. The Act does not create any new offences, penalties, or civil or criminal consequences for breach. However, failure to comply with the obligations imposed by the Act may result in the individual being liable for the Medicare Levy surcharge, which is an additional 1.25% to 1.5% of their taxable income. The surcharge is not a penalty, but rather a means of encouraging individuals to maintain private health insurance and reduce the burden on the public health system. The maximum penalty for failure to lodge a tax return or statement, which may be relevant in the context of the Medicare Levy surcharge, is currently $1,875 or 50% of the tax owed, whichever is greater (section 285-5 of the Taxation Administration Act 1953). However, this penalty is not specific to the Medicare Levy surcharge and may not be applicable in all cases.