Private Health Insurance (Complying Product) Rules 2007 (No. 2)

Administered by Department of Health, Disability and Ageing

Legislation au F2007L03540 Rules Not in force Legislative Instrument

Legislation content

EXPLANATORY STATEMENT

 

 

Issued by the Authority of the Minister for Health and Ageing

 

Private Health Insurance Act 2007

 

Private Health Insurance (Complying Product) Rules 2007 (No.2)

 

Section 333-20 of the Private Health Insurance Act 2007 (the Act) provides that the Minister may make Private Health Insurance (Complying Product) Rules (the Rules) providing for matters required or permitted by Chapter 3 of the Act, or necessary or convenient in order to carry out or give effect to Chapter 3 of the Act.

 

The Private Health Insurance (Complying Product) Rules 2007 (No.2) (the Rules) commence on 1 September 2007.

 

The Rules revoke and replace the Private Health Insurance (Complying Product) Rules 2007. The rule which relates to discounting has been changed.

 

Section 66-5 of the Act relates to permitted discounts on premiums, and in particular paragraph 66-5(1)(c)(ii) of the Act provides for the Private Health Insurance (Complying Product) Rules to specify the total percentage discount permitted on premiums.

 

Rule 6 of the Private Health Insurance (Complying Product) Rules 2007 (No.2) continues to specify that the maximum percentage discount allowed on premiums is 12% per annum.

 

Rule 6 no longer includes brokerage fees or commissions. Brokerage fees or commissions are better characterised as recruitment and marketing costs.

 

Rule 6 also no longer includes one-off promotional offers, provided the cost of the one-off promotional offer does not exceed 12% of the full premium for the year.

 

The Department conducted consultation with the private health insurance industry as part of a review of corporate products, and also through a broad consultation during the rewrite of private health insurance legislation in 2006/2007.

The Act does not specify any conditions which need to be met before the power to make the Rules may be exercised.

 

Details of the Rules are set out in the Attachment. The Rules are a legislative instrument for the purposes of the Legislative Instruments Act 2003. 

 

The Rules commence on 1 September 2007.

 

Authority: Section 333-20 of the Private Health Insurance Act 2007


ATTACHMENT

 

DETAILS OF THE PRIVATE HEALTH INSURANCE (COMPLYING PRODUCT) RULES 2007 (No.2)

 

PART 1 - Preliminary

 

1. Name of Rules

 

Rule 1 provides that the title of the Rules is the Private Health Insurance (Complying Product) Rules 2007(No.2)

 

2. Commencement

 

Rule 2 provides for the Rules to commence on 1 September 2007.

 

3.  Revocation

 

Rule 3 provides for the Private Health Insurance (Complying Product) Rules to be revoked.

 

4.              Definitions

 

Rule 4 provides that terms used in the Rules have the same meaning as in the Act.  Rule 4 also defines specific terms used in the Rules.

 

PART 2 - General

 

5.              Insured Groups

 

Rule 5 provides for the purposes of paragraph 63-5 (2A) (b) of the Act, the insured groups which are referred to by the number of people in each group.

 

6.              Maximum percentage of discount

 

Rule 6 (1) provides that the maximum percentage discount allowed under section 66-5 (1) (c)(ii) of the Act is 12% per annum.

 

Rule 6 (2) provides that the discount for a policy is the difference between the full premium and the net premium.

 

Rule 6 (3) provides that a full premium for a policy is the premium that would be received by the private health insurer for a policy in the same product subgroup without any reduction due to the circumstances set out in paragraphs 66-5(3)(a) to (e) of the Act.  For example, people who pay a premium at least 3 months in advance, or who pay a premium by payroll deduction or automatic transfer. 

 

Rule 6 (4) provides that the net premium is the full premium less any cost listed in the Rules such as incentive payment, promotional payment or any other inducement.

 

Rule 6(5) excludes from the calculation of net premium in Rule 6(4) a brokerage fee or other commission paid in respect of the policy.

Rule 6(5) also excludes from the calculation of net premium in Rule 6(4) a one-off promotional offer provided the cost of the one-off promotional offer does not exceed 12% of the full premium, for a year, of the policy purchased. The promotion must be offered to a person at the time the person first purchases a policy from the insurer, and the promotion must be provided in the first year after the person purchases the policy.

 

7.              Benefits authorised to be provided under a policy

 

Rule 7 (1) provides that specified benefit means a benefit specified in subrule 7 (3).

 

Rule 7 (2) provides that if a person was entitled to a specified benefit as listed in subrule 7 (3), under an applicable benefits arrangement or a table of ancillary health benefits as in force at the commencement of the Act, the provision of the same specified benefit under the person’s policy continues to be authorized for the purposes of paragraph 69-1(1)(b) of the Act as long as the policy continues to cover the same specified treatments and to provide the same benefits.  

 

Rule 7 (3) provides that specified benefits for Rule 7 are benefits paid in connection with the birth of a baby, funeral benefits, and disability benefits.

 

Rule 7 (4) provide that ancillary health benefit has the same meaning as under section 67 of the National Health Act 1953 as in force immediately before the commencement of the Act.

 

8.              Complying products – coverage requirements

 

Section 69-1 of the Act provides that the only treatments a complying health insurance policy can cover are:

 

  • specified treatments that are hospital treatment; or
  • specified treatments that are hospital treatment and specified treatments that are general treatment; or
  • specified treatments that are general treatment but none that are hospital-substitute treatment.

 

An insurance policy meets the coverage requirements if the policy provides a benefit for anything else and the provision of that benefit is authorized by the Private Health Insurance (Complying Product) Rules.

 

Subsection 69-1(2) of the Act provides that the policy must also cover any treatment that a policy of its kind is required by the Rules to cover.

 

Rule 8 (1), made for the purpose of subsection 69-1(2) of the Act, provides in Item 1 that a policy that includes cover for hospital-substitute treatment, must also cover hospital treatment for the same types of treatment covered by the policy for hospital-substitute treatment.  

 

Rule 8 (1) also provides that a policy that covers hospital treatment either partly or wholly must cover Item 2 the provision of the prosthesis where it includes a prosthesis listed in the Private Health Insurance (Prostheses) Rules and either:

(a)   a medicare benefit is payable for the professional service associated with the provision of the prosthesis; or

(b)   the provision of the prosthesis is associated with podiatric treatment by an accredited podiatrist.

 

Under Item 3 a policy that wholly or partly covers hospital-substitute treatment where the treatment includes a prosthesis listed in the Private Health Insurance (Prostheses) Rules and a medicare benefit is payable in respect of the professional services associated with the prosthesis, must also cover provision of the prosthesis.

 

Rule 8 (2) provides, for the avoidance of doubt, that a policy that includes cover for hospital-substitute treatment, though required by Rule 5(1) to also provide cover for the same types of hospital treatment, may also cover other types of hospital or general treatment.

 

9.              Waiting periods – former gold card holders

 

Rule 9 provides that no waiting period or benefit limitation period applies to former gold card holders, or persons entitled to treatment under a Department of Veterans’ Affairs gold card, when obtaining private health insurance.

 

Rule 9 (1) provides that the waiting period requirements in section 75-1 of the Act are, as permitted by subsection 72-1(2) of the Act, modified by Rule 7.

 

Rule 9 (2) provides that if the person applies for insurance no longer than 2 months after the person ceases to hold, or have entitlements under the gold card, waiting periods or benefit limitation periods will not apply for any hospital treatment or general treatment covered by the policy. 

 

Rule 9 (3) provides that gold card has the same meaning as in section 34-15 of the Act. Section 34-15 of the Act provides that a gold card is a card that evidences a person’s entitlement to be provided with treatment in accordance with the Treatment Principles prepared under section 90 of the Veterans’ Entitlements Act 1986, or, in accordance with a determination made under section 286 of the Military Rehabilitation and Compensation Act 2004. 

 

Benefit limitation period is defined as the period starting at the time the person becomes insured under the policy and ending at the time specified in the policy, during which the amount of benefit in relation to the period is less than the amount for which the person would be eligible during any other period.

 

10.              Transfer certificates

 

Rule 10 sets out the time periods within which an old insurer must provide a transfer certificate to a former insured person, a new insurer must request a transfer certificate from an old insurer, and an old insurer must provide a transfer certificate to a new insurer.

 

11.              Performance indicators

 

Rule 11 provides for the performance indicators to be used by the Minister in monitoring private health insurers’ compliance with the principle of community rating.  The performance indicators listed in the Rules include, for example, the number and kind of complaints made to the Private Health Insurance Ombudsman about private health insurers, and changes in the number of episodes of hospital treatment and hospital-substitute treatment (and the average number of episodes of each) for particular age groups.

 

PART 3 - Standard Information Statements

 

12. Definitions

 

Rule 12 defines specific terms used for the purpose of this Part.

 

13. Information and form

 

Rule 13 (1) provides that Part 4 of the Rules, and Schedules 1, 2, 3, and 4 set out the permitted form and content of a statement about a complying health insurance product. 

 

Rule 13 (2) requires that no additions, deletions, rearrangement or modification can be made to the form or content of the statements in Schedules 1, 2 and 3, except as specified in the relevant Schedules, or to omit, when inapplicable, the grey text, or to omit text for which the grey text is the appropriate alternative.

 

Rule 13 (3) requires that a statement must not exceed one A4 page, except in the case of a policy covering both hospital and general treatment where the statement must not exceed two A4 pages.

 

14. Policies covering hospital treatment only

 

Rule 14 provides that for policies covering hospital treatment only, the statement must be in the form set out in Schedule 1 and must contain the permitted content specified in Parts 1 and 2 of Schedule 4 as is relevant to the particular product.

 

15. Policies covering general treatment only

 

Rule 15 provides that for policies covering general treatment only, the statement must be in the form set out in Schedule 2 and must contain the permitted content specified in Parts 1 and 3 of Schedule 4 as is relevant to the particular product.

 

16. Policies covering hospital and general treatment

 

Rule 16 provides that for policies covering both hospital and general treatment, the statement must be in the form of the statement set out in Schedule 3, must contain the permitted content specified in Parts 1, 2 and 3 of Schedule 4 as is relevant to the particular product, and must not exceed two A4 pages.

 

Schedule 1 – Standard information statements: hospital treatment

 

This schedule provides for the form of statements for hospital treatment as set out in Part 3 Standard information statements of these Rules.

 

Schedule 2 – Standard information statements: general treatment

 

This schedule provides for the form of statements for general treatment as set out in Part 3 Standard information statements of these Rules.

 

Schedule 3 – Standard information statements: combined products

 

This schedule provides for the form of statements for combined products as set out in Part 3 Standard information statements of these Rules.

 

Schedule 4 – Standard information statements: permitted content

 

This schedule provides for the permitted content for all statements as set out in Part 3 Standard information statements of these Rules.

 

Overview

The Private Health Insurance Act 2007 was enacted by the Australian Parliament to regulate the private health insurance industry, aiming to ensure that health insurance products are affordable, accessible, and equitable for consumers. This legislation introduced the Private Health Insurance (Complying Product) Rules 2007, which were designed to provide detailed specifications regarding the types of benefits that can be covered under health insurance policies, as well as the conditions that must be met for these policies to be considered compliant. The rules also address issues such as permitted discounts on premiums, waiting periods for former gold card holders, and the provision of standard information statements to consumers. These rules aim to maintain the integrity and stability of the private health insurance market while ensuring consumers have clear and consistent information about their coverage options.

Scope and Application

The Private Health Insurance (Complying Product) Rules 2007 (No.2) applies to private health insurers and their policies under the Private Health Insurance Act 2007, governing the terms and conditions of private health insurance policies in Australia. These Rules are applicable to all private health insurers operating within the Commonwealth of Australia, irrespective of state or territory boundaries. The Rules specifically address the maximum percentage discount allowed on premiums, the definition of full and net premiums, the exclusion of brokerage fees and commissions, and the allowance for certain one-off promotional offers up to 12% of the full annual premium. Additionally, the Rules clarify the coverage requirements for hospital and general treatment policies, modify waiting periods and benefit limitation periods for former gold card holders, and detail the procedure for transfer certificates. The Rules also establish performance indicators for monitoring compliance with community rating principles and prescribe the permitted form and content of standard information statements for health insurance products, ensuring consistency and transparency for consumers.

Key Provisions

The Private Health Insurance (Complying Product) Rules 2007 (No.2) set out specific requirements and limitations for private health insurance policies in Australia. Under Rule 6, the maximum allowable discount on premiums is 12% per annum. This discount is calculated based on the difference between the full premium and the net premium, with the full premium being the amount that would be charged without any reductions. Rule 6 also clarifies that brokerage fees or commissions, as well as one-off promotional offers, are not to be included in the calculation of the net premium. However, one-off promotional offers are permitted if their cost does not exceed 12% of the full premium for the year and are offered at the time of policy purchase. The Rules further specify the types of benefits that can be provided under a policy, such as benefits related to the birth of a baby, funeral benefits, and disability benefits, under Rule 7. The Act imposes various obligations on private health insurers and insured parties. Insurers must ensure that their policies comply with the coverage requirements outlined in Rule 8, which mandates specific treatments and conditions for hospital and general treatments. Insurers must also adhere to the discount limitations specified in Rule 6. Insured parties, particularly former gold card holders, benefit from Rule 9, which exempts them from waiting periods or benefit limitation periods when transitioning to private health insurance. Additionally, insurers are required to provide transfer certificates within specified timeframes, as outlined in Rule 10, to facilitate the transfer of coverage between insurers. The Minister is mandated to monitor compliance with community rating principles using performance indicators listed in Rule 11. The Rules establish potential consequences for non-compliance. While specific offences, penalties, or civil/criminal consequences are not detailed in the explanatory statement, any breach of the requirements set forth in the Rules could result in regulatory action by the relevant authorities. Insurers found to be in violation of the discount limitations, coverage requirements, or other provisions may face penalties, which could include fines or other administrative sanctions. Non-compliance with the transfer certificate requirements could also lead to enforcement actions. Although the maximum penalties are not explicitly stated in the explanatory statement, it is implied that significant penalties could be imposed for serious or repeated breaches of the Rules.

Legal classification tags

Area of Law
Consumer Law
Insurance Law
Instrument
Rules
Concepts
Definitions & Interpretation
Regulatory Standards
Reporting & Disclosure Obligations

Interactions

Authorises

All Versions

Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.