EXPLANATORY STATEMENT
Issued by the Authority of the Minister for Health and Ageing
Private Health Insurance Act 2007
Private Health Insurance (Complying Product) Rules 2009 (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 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 the Act.
The Private Health Insurance (Complying Product) Rules 2009 (No.2) (the Rules) commence on 20 September 2009 or if they are registered after that day, the day after registration. The Rules revoke and remake the Private Health Insurance (Complying Product) Rules 2009 (No.1) (the Previous Rules) as amended by the Private Health Insurance (Complying Product) Amendment Rules 2009 (No. 3).
The Act requires that complying health insurance products must comply with a range of requirements including that products: be community-rated, that is, made available in a way that does not discriminate between people; be in the form of a complying health insurance product; and that private health insurers who make the products available must meet certain obligations to people insured or seeking to be insured under the products.
The Rules differ from the Previous Rules with respect to dependent child non-students (rule 5), patient contributions (rule 8A) and a transitional rule (rule 17 of the Previous Rules).
Dependent child non-student
The Private Health Insurance Legislation Amendment Act 2009 (the Amending Act) commenced on 1 July 2009 and amended the Act. The Amending Act added a category of ‘dependent child’ under the Act by inserting the definition of ‘dependent child non-student’. A ‘dependent child non-student’ is a person aged from 18 to 24 (inclusive), who does not have a partner, is not receiving a full time education at a school, college or university and is defined in a private health insurer’s fund rules.
The Amending Act also amended section 63-5 of the Act so that a premium payable for a policy that covers an insured group of 2 or more people that includes a dependent child non-student may be higher than a premium payable for a policy in the same product that covers an insured group of 2 or more people that includes one or more dependent children but no dependent child non-student.
Prior to the commencement of the Amending Act, there were transitional arrangements for policies that before 31 December 2009 covered dependent child non-students under the Private Health Insurance (Complying Product) Rules. The transitional arrangements are no longer required and have been removed from the Previous Rules so that they no longer appear in the Rules.
Paragraph 5(1)(c) no longer refers to policies before 31 December 2009.
Subrule 5(2) no longer contains the definition of ‘dependent child non-student’ as that definition is now in subsection 63-5(5) of the Act. Also, the definition in subrule 5(2) of ‘non-student policy’ is changed so that it no longer refers to 31 December 2009.
There is no longer a subrule 5(3) as subsection 63-5(4) of the Act now deals with premiums for dependent child non-student policies.
Patient contributions
Rule 8A of the Rules differs from Rule 8A of the Previous Rules. The purpose of Rule 8A is to enforce the patient contribution for privately insured nursing-home type patients (NHTP) by restricting the amount of benefit that private health insurers pay for each day of NHTP hospital treatment at a hospital. The amount of benefit is restricted to the hospital’s charge less the patient contribution amount.
Paragraph 8A(3)(a) of the Rules differs from the Previous Rules by increasing the NHTP patient contribution at public hospitals in New South Wales from $41.00 to $45.50, in Queensland, South Australia, Tasmania and Victoria from $41.35 to $45.50, and in the Northern Territory from $40.80 to $45.50.
Paragraph 8A(3)(b) of the Rules also differs from the Previous Rules by increasing the amounts for the NHTP patient contribution at private hospitals from $41.35 to $45.50.
Obsolete transitional rule
Rule 17 of the Previous Rules is deleted, the Rule was a transitional rule which applied until 7 December 2007, and is no longer applicable.
Consultation
Rule 5 is changed as a consequence of amendments which were made to section 63-5 of the Act as at 1 July 2009. It is machinery in nature and makes the transitional arrangements under the Previous Rules permanent without substantially altering those arrangements. Consultation as to the transitional arrangements occurred in 2007 with the private health insurance industry and the Private Health Insurance Administration Council, and no objections resulted from that consultation.
The Department consulted with private health insurers, the Attorney General’s Department and the Office of Best Practice Regulation with respect to the amendments to section 63-5 of the Act and no objections arose with respect to those amendments. Accordingly, no consultation was required for the change to rule 5.
The NSW Health (NSW), Department of Health and Families (NT), Queensland Health (QLD), Department of Health (SA), Department of Health and Human Services (TAS) and the Department of Health (VIC) provided the information with regard to increasing the NHTP patient contribution for their jurisdictions.
No specific consultation was undertaken in relation to the amendment to paragraph 8A(3)(b of the Rules (as amended) regarding private hospitals because the changes were machinery in nature.
No specific consultation was undertaken in relation to the removal of Rule 17 because the change removes an obsolete provision.
Regulation Impact Statement
The Office of Best Practice Regulation has advised that no Regulatory Impact Statement is required.
PRIVATE HEALTH INSURANCE BRANCH
DEPARTMENT OF HEALTH AND AGEING
SEPTEMBER 2009
ATTACHMENT
DETAILS OF THE PRIVATE HEALTH INSURANCE (COMPLYING PRODUCT) RULES 2009 (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 2009 (No.2) (the Rules).
2. Commencement
Rule 2 provides that the Rules are to commence on 20 September 2009, or if they commence after that day, the day after they are registered on the Federal Register of Legislative Instruments.
3. Revocation
Rule 3 provides the Rules revoke the Private Health Insurance (Complying Product) Rules 2009 (No.1) (as amended).
4. Definitions
Rule 4 defines certain terms for the purposes of the Rules.
PART 2 General
5. Insured Groups
Rule 5 provides for the purposes of paragraph 63-5 (2A) (b) of the Act, insured groups.
Paragraph 5(1)(a) sets out the insured groups for policies other than a non-student policy or a policy referred to in paragraph (c).
Paragraph 5(1)(b) sets out the composition of insured groups for policies that are a non-student policy.
Paragraph 5(1)(c) sets out the composition of insured groups for policies that cover a dependent child non-student but require the dependent child non-student to have his or her own policy with the insurer for general treatment (other than hospital-substitute treatment).
Subrule 5(2) defines the term non-student policy as a complying health insurance policy that covers one or more dependent child non-student.
6. Maximum percentage of discount
Subrule 6(1) provides that the maximum percentage discount allowed for the categories of people listed under subparagraph 66-5 (1) (c)(ii) of the Act is 12% per annum.
Subrule 6(2) provides that the discount for a policy is the difference between the full premium and the net premium.
Subrule 6(3) provides that a full premium 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.
Subrule 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.
Subrule 6(5) excludes from the calculation of net premium in subrule 6(4) a brokerage fee or other commission paid in respect of the policy.
Subrule 6(5) also excludes from the calculation of net premium in subrule 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
Subrule 7(1) provides that specified benefit means a benefit specified in subrule 7(3).
Subrule 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 authorised for the purpose 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 specified benefits.
The previous rule provided for the grandfathering of funeral, birth and disability benefits where the policy provides the same “specified treatment and the same benefits”. The addition of the word “specified” clarifies that where a change is made to the benefits regarding funeral, birth or disability benefits, this will end the grandfathering arrangements.
Subrule 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.
Subrule 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.
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.
Subrule 8(1), made for the purpose of subsection 69-1(2) of the Act, provides in Item 1 of the table to subrule 8(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.
Item 2 of the table to subrule 8(1) provides that if a policy covers hospital treatment, then where hospital treatment includes the provision of a prosthesis listed in the Private Health Insurance (Prostheses) Rules, the policy must cover the prosthesis, provided that:
(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.
Item 3 of the table to subrule 8(1) provides that if a policy covers hospital-substitute treatment, then where hospital treatment includes the provision of a prosthesis listed in the Private Health Insurance (Prostheses) Rules, the policy must cover the prosthesis, provided that a medicare benefit is payable in respect of the professional service associated with the provision of the prosthesis.
Subrule 8(2) provides, for the avoidance of doubt, that a policy of a kind mentioned in the table to subrule 8(1) may also provide cover for other types of treatment, unless excluded by rules made for the purpose of subsection 69-1(3) of the Act.
8A. Benefit Requirements – nursing-home type patients
Subrule 8A(1) provides that for paragraph 72-1(1)(b) of the Act the requirement in subrule 8A(2) is a benefit requirement for a policy that covers hospital treatment.
Subrule 8A(2) is an equivalent requirement to the repealed Schedule 1, paragraph (1)(e) of the National Health Act 1953. It enforces the patient contribution for privately insured nursing-home type patients (NHTP) by restricting the amount of benefit that private health insurers can pay under each policy for each day of NHTP hospital treatment at a hospital to the hospital’s charge less the patient contribution amount.
Subrule 8A(3) provides that a NHTP in these Rules has the same meaning as a NHTP in the Private Health Insurance (Benefit Requirement) Rules, and defines patient contribution for the purpose of subrule 8A.
Paragraph 8A(3)(a) sets the patient contribution amount for privately insured patients in public hospitals in each State or Territory. The current patient contribution for a NHTP at a public hospital in Australian Capital Territory is $41.35, New South Wales is $45.50, Northern Territory is $45.50, Queensland is $45.50, South Australia is $45.50, Tasmania is $45.50, Victoria is $45.50 and Western Australia is $41.35.
Paragraph 8A(3)(b) sets the patient contribution amount for privately insured patients in private hospitals. The patient contribution for a NHTP at a private hospital is $45.50.
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.
Subrule 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 subrule 9(2).
Subrule 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.
Subrule 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
Subrule 13(1) provides that Part 3 of the Rules, and Schedules 1, 2, 3, and 4 set out the permitted form and content of a statement about a product subgroup of a complying health insurance product (complying product).
Subrule 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 subrule 13(2).
Subrule 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 a product subgroup of a complying product made up of 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 a product subgroup of a complying product made up of 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 a product subgroup of a complying product made up of 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.
PRIVATE HEALTH INSURANCE BRANCH
DEPARTMENT OF HEALTH AND AGEING
SEPTEMBER 2009