Private Health Insurance (Council Administration Levy) Amendment Rules 2009 (No. 1)

Administered by Department of Health, Disability and Ageing

Legislation au F2009L02514 Rules Not in force Legislative Instrument

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EXPLANATORY STATEMENT

 

Issued by the authority of the Minister for Health and Ageing

 

Private Health Insurance (Council Administration Levy) Act 2003

 

Private Health Insurance (Council Administration Levy) Amendment Rules 2009 (No. 1)

 

Section 9A of the Private Health Insurance (Council Administration Levy) Act 2003 (the Act) provides that the Minister may, by legislative instrument, make Private Health Insurance (Council Administration Levy) Rules (the Rules) providing for matters required or permitted by the Act, or necessary or convenient in order to carry out or give effect to the Act. The Act provides for the Rules to specify the rate of Council administration levy, and also specify Council administration levy days, and the census day.  

 

The purpose of the Council administration levy is to finance the administrative costs of the Private Health Insurance Administration Council (PHIAC).  The levy is imposed on registered private health insurers conducting health insurance business.  An increase in the Council administration levy will support PHIAC’s role under the Private Health Insurance Act 2007, and any other additional activities required to be undertaken by PHIAC as a result of the global financial crisis.

 

Rules 6 and 7 of the Private Health Insurance (Council Administration Levy) Rules 2007 (the Principal Rules) contain a formula specifying the rate of the Council administration levy. 

 

The Private Health Insurance (Council Administration Levy) Amendment Rules 2009 (No.1) (the Amending Rules) amends the formula in subrules 6(1) and 7(1) of the Principal Rules by:

  • amending the numerator of the formula from 110,875,000 to 127,125,000 from 1 July 2009; and
  • further amending the numerator of the formula from 127,125,000 to 130,875,000 from 1 July 2010.

 

Amendments to the Principal Rules will result in an increase in the Council administration levy of $650,000 in the 2009/2010 financial year and a further $150,000 in the 2010/2011 financial year, totalling an ongoing increase in the levy of $800,000 over two years. The amount of increase to PHIAC’s annual budget was determined by reviewing the nature and scope of PHIAC’s future activities.

 

The rate of levy may be different for complying health insurance policies under which different numbers of people are insured, and may be set at zero, and must not exceed $2 for a financial year where only one person is insured, or $4 for complying health insurance policies under which more than one person is insured.

 

Details of the Amending Rules to effect this formula adjustment are set out in the Attachment.

 

Rules 1 to 3 and Schedule 1 of the Amending Rules commence on 1 July 2009.  Schedule 2 of the Amending Rules commences on 1 July 2010. 

 

The Amending Rules are a legislative instrument for the purposes of the Legislative Instruments Act 2003.

 

Consultation

 

Industry and consumers have not been consulted in relation to the proposed increase in the Council administration levy.  This is a decision of Government having regard to the needs of PHIAC and in particular the importance of appropriately resourcing prudential regulators during the current financial crisis. 

 

Advice received from the Office of Best Practice Regulation (OBPR) has confirmed that the amendments to the Principal Rules is considered minor and machinery in nature and therefore exempt from the Regulation Impact Statement requirements - RIS ID No: 9991.  Nevertheless, a Cost Recovery Impact Statement (CRIS) has been produced for the Amending Rules, and is available on PHIAC’s website (www.phiac.gov.au). 

 

Authority: Section 9A of the Private Health Insurance (Council Administration Levy) Act 2003
ATTACHMENT

 

DETAILS OF THE Private Health Insurance (Council Administration Levy) Amendment Rules 2009 (No. 1)

 

1. Name of Rules

 

Rule 1 provides that the Rule is the Private Health Insurance (Council Administration Levy) Amendment Rules 2009 (No. 1).

 

2. Commencement

 

Rule 2 provides that rules 1 to 3 and Schedule 1 of the Amending Rules commence on 1 July 2009 and  Schedule 2 commences on 1 July 2010.

 

3. Amendment of Private Health Insurance (Council Administration Levy) Rules 2007

 

Rule 3 provides that Schedule 1 and Schedule 2 of the Amending Rules amends the Private Health Insurance (Council Administration Levy) Rules 2007 (the Rules).

 

Schedule 1 - Amendment commencing on 1 July 2009

 

Item [1]  - Subrules 6(1) and 7(1), formula

 

Subrule 6(1) of the Rules provides that the rate for a single policy is the amount in cents calculated using the formula: 

 

110,875,000

single coverage policies + (2 × joint coverage policies)

 

where:

single coverage policies is the aggregate number of single policies on issue from all private health insurers on the census day; and

 

joint coverage policies is the aggregate number of all joint policies on issue from all private health insurers on the census day.

 

Subrule 7(1) of the Rules provides that the rate for a joint policy is the amount in cents calculated using the formula:

 

2 x

110,875,000

single coverage policies + (2 × joint coverage policies)

 

Item [1] of Schedule 1 amends subrules 6(1) and 7(1) of the Rules  by changing the numerator of the formula for calculating single coverage policies and joint coverage policies from 110,875,000 to 127,125,000 on 1 July 2009.

 

Schedule 2 - Amendment commencing on 1 July 2010

 

Item [1] - Subrules 6(1) and 7(1), formula 

 

Item [1] of Schedule 1 further amends subrules 6 (1) and 7 (1) of the Rules by changing the numerator of the formula for calculating single coverage policies and joint coverage policies from 127,125,000 to 130,875,000 on 1 July 2010.

 

 

 

Overview

The Private Health Insurance (Council Administration Levy) Amendment Rules 2009 (No. 1) were enacted to address the need for increased funding to support the administrative costs of the Private Health Insurance Administration Council (PHIAC) due to the global financial crisis. These rules were introduced by the Minister for Health and Ageing and are amendments to the Private Health Insurance (Council Administration Levy) Rules 2007. The policy objective behind these amendments is to ensure that PHIAC can continue to effectively carry out its regulatory functions amidst financial constraints. The rules modify the formula used to calculate the Council administration levy, resulting in an increased levy of $650,000 in the 2009/2010 financial year and a further $150,000 in the 2010/2011 financial year, totaling an ongoing increase of $800,000 over two years. This increase was determined based on the anticipated needs of PHIAC's future activities. The rules provide for a tiered levy rate, which may vary depending on the number of people insured under a policy, and ensures that the levy does not exceed specified limits.

Scope and Application

The Private Health Insurance (Council Administration Levy) Amendment Rules 2009 (No. 1) apply to registered private health insurers conducting health insurance business in Australia, as they pertain to the imposition of a Council administration levy to finance the administrative costs of the Private Health Insurance Administration Council (PHIAC). This amendment to the Private Health Insurance (Council Administration Levy) Rules 2007 adjusts the formula used to calculate the levy rate, resulting in an increase of $650,000 in the 2009/2010 financial year and a further $150,000 in the 2010/2011 financial year, totalling an ongoing increase of $800,000 over two years. The rate of the levy, which may differ for complying health insurance policies depending on the number of people insured, must not exceed $2 for a single person or $4 for policies covering more than one person. The Amending Rules, which are legislative instruments under the Legislative Instruments Act 2003, provide detailed adjustments to the levy formula, with specific commencement dates for different parts of the rules. While industry and consumers were not consulted, the amendments were deemed minor and machinery in nature, exempt from Regulation Impact Statement requirements, and a Cost Recovery Impact Statement is available on PHIAC's website.

Key Provisions

The Private Health Insurance (Council Administration Levy) Amendment Rules 2009 (No. 1) amend the Private Health Insurance (Council Administration Levy) Rules 2007 (Principal Rules) to adjust the rate of the Council administration levy (sections 1-3). These amendments are designed to support the Private Health Insurance Administration Council (PHIAC) by increasing its budget in response to the global financial crisis and its expanding role. Specifically, the numerator in the formula for calculating the levy rate is increased from 110,875,000 to 127,125,000 from 1 July 2009, and then further increased to 130,875,000 from 1 July 2010 (Schedule 1 and 2). These adjustments will increase the levy by $650,000 in the 2009/2010 financial year and by an additional $150,000 in the 2010/2011 financial year, totalling an increase of $800,000 over two years. The Private Health Insurance (Council Administration Levy) Amendment Rules 2009 (No. 1) impose specific obligations on registered private health insurers. They must comply with the amended levy rate, which affects how much they contribute to PHIAC’s administrative costs. These insurers need to ensure that their financial records and calculations align with the new levy formula, which is based on the number of single and joint coverage policies they have on issue from all private health insurers on the census day (subrules 6(1) and 7(1)). Failure to correctly apply the new levy rate could result in under or over-contribution to PHIAC’s budget, potentially impacting the Council’s ability to perform its regulatory functions effectively. The Act does not explicitly state penalties for non-compliance with the levy requirements. However, as the levy is integral to funding PHIAC’s activities, failure to remit the correct amount could lead to regulatory scrutiny and potential enforcement actions by the Australian government or PHIAC. While specific penalties are not mentioned in the explanatory statement, it is likely that non-compliance could result in financial penalties or other corrective measures to ensure that PHIAC receives the necessary funding to carry out its regulatory responsibilities. The precise nature of these consequences would depend on the context of non-compliance and the discretion of the relevant authorities.

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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.