EXPLANATORY STATEMENT
Select Legislative Instrument 2005 No. 113
Issued by the Authority of the Minister for Health and Ageing
Private Health Insurance (ACAC Review Levy) Act 2003
Private Health Insurance (ACAC Review Levy) Amendment Regulations 2005 (No. 1)
Subsection 10(1) of the Private Health Insurance (ACAC Review Levy) Act 2003 (the Act) provides that the Governor-General may make regulations prescribing matters required or permitted by the Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the Act.
The purpose of the Acute Care Advisory Committee (ACAC) review levy (the levy) is to meet the administrative costs of reviews conducted by the ACAC under section 3B of the Health Insurance Act 1973. The Private Health Insurance (ACAC Review Levy) Regulations 2004 (the Principal Regulations) currently implement the levy scheme established by the Act.
Item 1 of the table in subsection 7(1) of the Act provides that the rate of levy imposed on the levy day is the rate that is specified in the regulations and applies on that day. Subsection 7(2) sets out requirements which must be met in determining the rate of levy. The levy paid by each organization is based on the numbers of contributors to the health fund with a different rate for each contributor type. The different rates for a single contributor and those who contribute in relation to more than one person are determined by a formula which has regard to the total number of contributors to health benefits funds conducted by registered health benefits organizations. The formula has been structured to ensure that the rate set for the levy will collect the total amount required despite potential variations in the number and types of contributors.
The purpose of the Regulations is to amend the formula which is used to calculate the levy, as the total amount that is required to be collected for a financial year has reduced from $24,443 to $5,000.
Paragraph 7(2)(c) of the Act provides that the rate of levy must not exceed 50 cents for a single contributor and $1 for those who contribute in respect of more than one person for a financial year. The rate of the levy which would be prescribed by the Regulations would continue to comply with the limits prescribed by paragraph 7(2)(c) of the Act.
Subsection 10(2) of the Act provides that, before the Governor-General makes regulations under subsection 10(1) of the Act, the Minister must take into consideration any relevant recommendations made to the Minister by the Private Health Insurance Administration Council (the Council). The Minister has received advice from the Council recommending that the total amount collect by the levy be reduced to $5,000. The changes are consistent with the Council’s recommendation.
Details of the Regulations are set out in the Attachment.
The Regulations are a legislative instrument for the purposes of the Legislative Instruments Act 2003.
The Regulations commence on 1 July 2005.
Consultation
The decrease in the levy rate is minor and machinery in nature and is reflective of the number of certificates lodged over recent years and the consequent decrease in related administrative costs. Consultation with the private health industry and the department of Health and Ageing was considered to be unnecessary.
The Office of Regulation Review was consulted, and advised that a Regulation Impact Statement was not required. The total amount to be collected for a financial year was calculated by the Private Health Insurance Administration Council in consultation with the Department of Finance and Administration.
ATTACHMENT
DETAILS OF THE PRIVATE HEALTH INSURANCE (ACAC REVIEW LEVY) AMENDMENT REGULATIONS 2005 (No. 1).
Regulation 1 provides for the Regulations to be referred to as the Private Health Insurance (ACAC Review Levy) Amendment Regulations 2005 (No. 1).
Regulation 2 provides for the Regulations to commence on 1 July 2005.
Regulation 3 provides for Schedule 1 to amend the Private Health Insurance (ACAC Review Levy) Regulations 2004 (the Principal Regulations).
Schedule 1 – Amendments
Items [1] and [2]
Item [1] amends the rate of the Acute Care Advisory Committee (ACAC) review levy (the levy) for single contributors. Item [2] amends the rate of the levy for family contributors (where there are contributions in relation to more than one person).
The rates have been formulated having regard to the total number of contributors in the industry. The rates have been established so that the total amount for a financial year, $5,000, is collected despite variations in the number of contributors to each health fund. This amount was calculated by the Private Health Insurance Administration Council in consultation with the Department of Finance and Administration.
Overview
The Private Health Insurance (ACAC Review Levy) Amendment Regulations 2005 (No. 1) were introduced to amend the formula used to calculate the Acute Care Advisory Committee (ACAC) review levy, as established by the Private Health Insurance (ACAC Review Levy) Act 2003. This Act was enacted to meet the administrative costs of reviews conducted by the ACAC under section 3B of the Health Insurance Act 1973. The regulations were made under the authority of the Minister for Health and Ageing and are consistent with a recommendation from the Private Health Insurance Administration Council to reduce the total amount collected by the levy from $24,443 to $5,000 for a financial year. The changes reflect the decrease in administrative costs due to the number of certificates lodged over recent years. The policy objective of the regulations is to ensure the levy remains within the prescribed limits and collects the necessary amount for the ACAC’s administrative costs despite variations in the number of contributors.
Scope and Application
The Private Health Insurance (ACAC Review Levy) Amendment Regulations 2005 (No. 1) amends the Private Health Insurance (ACAC Review Levy) Regulations 2004, which were established under the Private Health Insurance (ACAC Review Levy) Act 2003. The Act applies to registered health benefits organisations and the levy imposed on these entities is designed to cover the administrative costs associated with the reviews conducted by the Acute Care Advisory Committee (ACAC). The Act has a Commonwealth reach, applying across Australia. The regulations were formulated following recommendations from the Private Health Insurance Administration Council and consultation with the Department of Finance and Administration. The regulations reduce the total amount required to be collected by the levy for a financial year from $24,443 to $5,000, and modify the rates of the levy for single and family contributors to reflect this decrease. These changes are consistent with the recommendations from the Council and the total amount collected will not exceed the limits prescribed in the Act, which set a maximum of 50 cents for a single contributor and $1 for family contributors per financial year. The regulations commenced on 1 July 2005 and do not include any exclusions or exemptions beyond what is specified in the Act.
Key Provisions
The main operative sections of the Private Health Insurance (ACAC Review Levy) Amendment Regulations 2005 (No. 1) are those which amend the rates of the Acute Care Advisory Committee (ACAC) review levy (the levy) as specified in Schedule 1. Regulation 1 names the regulations as the Private Health Insurance (ACAC Review Levy) Amendment Regulations 2005 (No. 1), and Regulation 2 sets the commencement date of 1 July 2005. Regulation 3 then refers to Schedule 1, which details the amendments to the rates of the ACAC review levy. Specifically, Item 1 of Schedule 1 amends the rate for single contributors, while Item 2 adjusts the rate for family contributors. These amendments are designed to ensure that the total amount of $5,000 required for a financial year is collected, regardless of variations in the number of contributors across different health funds. This approach ensures the levy remains effective in meeting its administrative cost objectives despite changes in industry conditions.
The obligations imposed by these regulations on the parties governed by the Private Health Insurance (ACAC Review Levy) Act 2003 (the Act) primarily revolve around the payment of the adjusted ACAC review levy rates. Registered health benefits organisations must calculate and remit the levy based on the new rates specified in the amended regulations. These rates are determined by a formula that considers the total number of contributors to health funds, ensuring that the total levy collected aligns with the administrative costs required for ACAC reviews. The organisations must ensure their calculations and payments comply with the amended rates to avoid non-compliance with the Act and its regulations.
There are no specific offences or penalties mentioned in the explanatory statement for breaching the provisions of the Private Health Insurance (ACAC Review Levy) Amendment Regulations 2005 (No. 1). However, non-compliance with the Act or its regulations can result in civil or criminal consequences, depending on the nature and severity of the breach. Under the Act, failure to remit the levy or provide accurate information can lead to financial penalties. The specific penalties are not detailed in the explanatory statement but would typically be found in the main body of the Act. It is important for regulated entities to ensure strict adherence to the levy requirements to avoid potential legal ramifications.