Private Health Insurance (Complaints Levy) Amendment Rules 2015

EXPLANATORY STATEMENT

Issued by the Authority of the Minister for Health

Private Health Insurance (Complaints Levy) Act 1995

Private Health Insurance (Complaints Levy) Amendment Rules 2015

Section 8 of the Private Health Insurance (Complaints Levy) Act 1995 (the Act) provides that the Minister may make Private Health Insurance (Complaints Levy) Rules (the Rules) providing for matters required or permitted by the Act to be provided, or necessary or convenient to be provided, in order to carry out or give effect to the Act.

The Private Health Insurance (Complaints Levy) Amendment Rules 2015 (the Amending Rules) amend the Private Health Insurance (Complaints Levy) Rules 2007 (the Principal Rules) to alter the days on which the Private Health Insurance Ombudsman Complaints Levy (Complaints Levy) is imposed and the rate of levy payable. 

The Complaints Levy is imposed upon private health insurers for the purpose of supporting the work of the Private Health Insurance Ombudsman (PHIO), which investigates complaints against private health insurers and brokers.  

Section 5 of the Act provides for the Rules to specify a maximum of four levy imposition days per financial year.  Section 6 of the Act provides for the Rules to set a rate of Complaints Levy based on the number of complying health insurance policies on issue by an insurer on a census day. 

The Complaints Levy is collected in accordance with the Private Health Insurance Act 2007 and the Private Health Insurance (Levy Administration) Rules 2015. 

One of the main changes made by the Amending Rules is to specify a single levy imposition day for the remainder of the current financial year, being 30 November 2015, and for the financial year beginning on 1 July 2016 and all future financial years, being the first day of October in the financial year.  This replaces the current regime of quarterly levy imposition days. 

The other is to specify new rates of levy.  The rate of levy for both singles and joint policies has been increased.  However, the reduction in the number of days in the current and future financial years on which Complaints Levy will be imposed is expected to result in an overall reduction in the amount of levy an insurer will pay annually.  The reduction in the overall annual Complaints Levy reflects the efficiencies achieved by the transfer of the PHIO into the Office of the Commonwealth Ombudsman, which took effect on 1 July 2015. 

The current caps on the maximum rate of Complaints Levy (50 cents for singles only policies and $1.00 for any other policies per quarter) are not affected by these amendments.

The Amending Rules also insert a new rule 9 into the Principal Rules which makes clear that the changes made by the Amending Rules do not affect levies imposed before the date the amendments take effect. 

The Amending Rules also make minor technical changes to notes in the Principal Rules to reflect that the Australian Prudential Regulation Authority has assumed the function of the Private Health Insurance Advisory Council on the Council’s abolition, and that the Private Health Insurance (Levy Administration) Rules 2015 have replaced the 2007 version of those Rules. 

Details of the Amending Rules are set out in the Attachment.

The Amending Rules commence on the day following their registration on the Federal Register of Legislative Instruments.

Consultation

Private health insurers are aware that the Complaints Levy amount they are required to pay changes from year to year, according to changes in the number of policies that private health insurers hold and increases/decreases in the amount appropriated to fund the PHIO in the Federal Budget each year.

The Amending Rules simplify the legislation underpinning the collection regime by setting one imposition day per year rather than four.  The only practical change for insurers is that they will see a reduction in the overall amount of Complaints Levy they will pay in respect of the 2015-16 and future financial years. 

Consequently, no consultation occurred in relation to these changes.

ATTACHMENT

DETAILS OF THE PRIVATE HEALTH INSURANCE (COMPLAINTS LEVY) AMENDMENT RULES 2015

1. Name of Rules

Rule 1 provides that the title of the Rules is the Private Health Insurance (Complaints Levy) Amendment Rules 2015 (the Amending Rules).

2. Commencement

Rule 2 provides that the Amending Rules commence on the day after they are registered on the Federal Register of Legislative Instruments.

3. Authority

Rule 3 provides that the Amending Rules are made under the Private Health Insurance (Complaints Levy) Act 1995. 

4. Schedule

Rule 4 provides that any instrument specified in a Schedule to the Amending Rules is amended or repealed as set out in the Schedule, and any other items in the Schedule have effect according to their terms.  The Schedule specifies the Private Health Insurance (Complaints Levy) Rules 2007. 

Schedule – Amendments

Item 1 – Rule 4

Rule 4 of the Principal Rules specifies the Complaints Levy imposition days.  The Principal Rules currently specify four imposition days for each financial year, falling on the first day of each quarter. 

Item 1 substitutes a new rule 4, which provides that the Complaints Levy imposition days are:

(a) 30 November 2015; and

(b) for the financial year commencing 1 July 2016 and financial years thereafter, the first day of October. 

Complaints Levy has already been imposed twice in the current financial year, on 1 July and 1 October 2015.  The amendments made by item 6 of the Amendment Rules provide for the preservation of those levies at the rate of levy that applied under the Principal Rules on those days. 

The next two levy imposition days for the current financial year, scheduled to fall on 1 January 2016 and 1 April 2016, have been replaced by the single imposition day of 30 November 2015. 

Item 2 – Rule 5 (note)

Item 2 amends the note to rule 5 of the Principal Rules to reflect that the calculation of the number of policies on offer by insurers is now based on data held by the Australian Prudential Regulation Agency (APRA), rather than by the Private Health Insurance Administration Council (PHIAC).  On 1 July 2015 PHIAC was abolished and APRA took over its role in the prudential supervision of the private health insurance industry.

Item 3 – Subrule 6(1)

Rule 6 of the Principal Rules specifies the rate of Complaints Levy for policies under which only one person is insured (singles policies).  Item 3 substitutes a new subrule 6(1) to specify new rates of levy applicable to a single policy.  These new rates are:

(a) for the levy imposition day of 30 November 2015, the rate in cents calculated using the formula:

(b) for a levy imposition day that is the first day of October in the 2016-17 financial year and in any subsequent financial year, the rate in cents calculated using the formula:

The current rate of levy for a singles policy is:

The Amending Rules have therefore increased the rate of Complaints Levy applicable to singles policies on a levy imposition day.  However, Complaints Levy is currently imposed on insurers quarterly.  The reduction in the number of imposition days for the remainder of the current financial year and for future financial years will lead to an overall reduction in the amount of Complaints Levy insurers will pay annually in respect of their singles policies.

The higher rate of levy for the 2016-17 and future financial years reflects that two levies have already been imposed in the current financial year under the current Principal Rules. 

Subrule 6(2) of the Principal Rules, which caps the rate of Complaints Levy in respect of singles policies on offer from an insurer at 50 cents per quarter, has not been amended and will continue to apply. 

Item 4 – Subrule 7(1)

Rule 7 of the Principal Rules specifies the rate of levy for policies under which two or more persons are insured (joint policies).  Item 4 substitutes a new subrule 7(1) to specify new rates of Complaints Levy applicable to a joint policy.  These new rates are double the rates applicable for singles policies:

(a) for the levy imposition day of 30 November 2015, the rate in cents calculated using the formula:

(b) for a levy imposition day that is the first day of October in the 2016-17 financial year and in any subsequent financial year, the rate in cents calculated using the formula:

As for singles policies, the rate of levy specified for the levies to be imposed on 30 November 2015 and on 1 October in future financial years is higher than the current rate of levy for a joint policy, which is:

However, the reduction in the number of imposition days is expected to result in an overall reduction in the amount of Complaints Levy insurers will pay annually in respect of their joint policies.

The cap on the rate of Complaints Levy in respect of joint policies on offer from an insurer at $1.00 per quarter found in subrule 7(2) of the Principal Rules has not been amended and will continue to apply. 

Item 5 – Note to rule 8

Item 5 amends the note to rule 8 of the Principal Rules to reflect that the day on which the Complaints Levy is payable is now specified in the Private Health Insurance (Levy Administration) Rules 2015, rather than the Private Health Insurance (Levy Administration) Rules 2007.  Complaints Levy continues to be payable on 31 December of each year. 

Item 6 – After rule 8

Item 6 inserts a new rule 9 in the Principal Rules.  New rule 9 makes clear that the changes made by the Amending Rules do not affect the application of the Principal Rules to complaints levy imposed before the Amending Rules take effect. 

SUSSAN LEY

MINISTER FOR HEALTH

2015

Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

Private Health Insurance (Complaints Levy) Amendment Rules 2015

This Legislative Instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview of the Legislative Instrument

The Private Health Insurance (Complaints Levy) Amendment Rules 2015 (the Amending Rules) amend the Private Health Insurance (Complaints Levy) Rules 2007 (the Principal Rules).  The Principal Rules specify the days on which the Private Health Insurance Ombudsman (PHIO) Complaints Levy is imposed, and the rate at which it is imposed, for the purposes of the Private Health Insurance (Complaints Levy) Act 1995 (the Act).  The PHIO Complaints Levy funds the operation of the PHIO, which investigates complaints against private health insurers and brokers. 

Complaints Levy is currently imposed on insurers quarterly.  One of the main changes made by the Amending Rules is to specify new Complaints Levy imposition days, being 30 November 2015 and, for the financial year beginning on 1 July 2016 and all subsequent financial years, the first day of October.  This move to a single imposition day legislatively reflects the practical situation for insurers, who are only required to pay levy once a year. 

The other main change is to specify new rates of levy.  Rates of levy are required by the Act to be calculated by reference to the number of private health insurance policies an insurer has on offer on a particular census date.  The Amending Rules increase the rates of Complaints Levy for both singles and joint policies.  However, the reduction in the number of days in the current and future financial years on which Complaints Levy will be imposed will result in an overall reduction in the amount of levy an insurer will pay annually. 

No amendment has been made to current caps on the maximum Complaints Levy that may be imposed quarterly.

The Amending Rules also make minor technical changes to notes in the Principal Rules to reflect that:

• information on the number of policies on offer by an insurer is now based on date from the Australian Prudential Regulation Authority (APRA) rather than the Private Health Insurance Advisory Council, following the Council’s abolition on 1 July 2015 and APRA’s assumption of the Council’s functions; and
• the Private Health Insurance (Levy Administration) Rules 2015 have replaced the Private Health Insurance (Levy Administration) Rules 2007. 

Human rights implications

Complaints Levy is imposed on private health insurers who conduct health insurance business, not on individuals.  To that extent, the Amending Rules do not engage any of the individual human rights covered by the Human Rights (Parliamentary Scrutiny) Act 2011. 

However, the Complaints Levy funds the operations of the PHIO, which protects the interests of private health insurance consumers.  The PHIO’s work particularly supports consumers in dealing with complaints they have about access to, or administration of, private health insurance policies.  The continued collection of Complaints Levy at an appropriate level to fund the PHIO is critical to ensure that consumers and health care providers have confidence in the administration of the private health insurance system, particularly through effective complaints management and consumer information services. 

Conclusion

This Legislative Instrument supports the right to health by ensuring the continued funding of the PHIO at appropriate levels.

Sussan Ley

Minister for Health