Private Health Insurance (Health Benefits Fund Enforcement) Rules 2025

EXPLANATORY STATEMENT

Prepared by the Australian Prudential Regulation Authority (APRA)

Private Health Insurance (Prudential Supervision) Act 2015, subsection 174(1)

On 11 September 2025, APRA made the Private Health Insurance (Health Benefits Fund Enforcement) Rules 2025 (the Rules). The Rules are made under subsection 174(1) of the Private Health Insurance (Prudential Supervision) Act 2015 (the Act) and must be complied with by private health insurers.

The instrument commences on 30 September 2025.

1.             Background

APRA’s role is to protect the financial interests of Australians by maintaining the safety and soundness of financial institutions. To do this, APRA sets legal requirements and guidance for the entities it regulates (the prudential framework).

The prudential framework comprises:

• legally binding prudential standards and rules;
• legally binding reporting standards; and
• supporting guidance (such as prudential practice guides).

Private Health Insurance (Health Benefits Fund Enforcement) Rules 2025 are a legally binding Rule.

Private Health Insurance (Health Benefits Fund Enforcement) Rules 2025 remakes the previous version of the Rules with minor amendments.

2.             Purpose and Operation

The purpose of the instrument is to revoke Private Health Insurance (Health Benefits Fund Enforcement) Rules 2015 and replace it with a new version. The new version makes minor amendments to the previous Rules by updating dates, references and titles of related legislation. There will be no change in outcomes following the minor updates.

These Rules set out various matters in relation to various enforcement matters. Details of the Rules are set out in Attachment A to this Explanatory Statement. These Rules provide for procedural matters relating to voluntary deeds of arrangement, external manager recommendations that can be made in reports to APRA, and the actions that APRA may take in response. These Rules also apply certain provisions of Part 5.3A and Division 7A of Part 5.6 of the Corporations Act 2001 to health benefit funds that are under external management, subject to certain modifications set out in these Rules. 

3.             Consultation

On 14 July 2025, APRA undertook public consultation on remaking the Rules with minor amendments. No submissions were received.

4.             Scope of administrative powers

Exercise of discretion by APRA

The Rules provide for APRA to exercise a discretion. APRA may approve the execution of a voluntary deed of arrangement that is recommended to it by the external manager following a resolution by creditors, if APRA is satisfied it is in the interests if the policyholders of the fund. If APRA is not satisfied, the external manager can recommend a further voluntary deed of arrangement or examine other possible courses of actions.

While this is not subject to merits review under the Act, if APRA is still not satisfied following a further recommendation, APRA may apply to the Federal Court for orders for the fund implementing a scheme of arrangement and to appoint a terminating manager.

5.             Incorporation by reference

Under paragraph 14(1)(a) of the Legislation Act 2003, the Rules may incorporate by reference as in force from time to time:

• Acts of Parliament and associated delegated legislation;
• Prudential Standards determined by APRA under subsection 92(1) of the Act; and
• Reporting Standards determined by APRA under subsection 13(1) of the Financial Sector (Collection of Data) Act 2001.

These documents may be freely obtained on the Federal Register of Legislation at www.legislation.gov.au.

6.             Impact Analysis (IA)

The Office of Impact Analysis has confirmed that an IA is not required as the remaking of these Rules are unlikely to have more than a minor regulatory impact.

7.             Statement of compatibility prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

A statement of compatibility prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 is provided at Attachment B to this Explanatory Statement. 

ATTACHMENT A

Details of the Rules

Part 1

Part 1 of the Rules provides for the title, commencement date and notes the definitions.

Part 2

Part 2 of the Rules:

• clarify that policy holders are considered creditors of a health benefits fund;
• provides that the external manager may convene a creditors’ meeting to consider a deed of arrangement proposed by the external manager, following strict notification and publication procedures;
• provides that meetings can be attended in person or via phone, with specific requirements for remote participation; and
• provides that the external manager presides over the meeting, including the process for the adjournment of any meeting, ensures quorum, facilitates voting on whether to accept or modify the deed proposed by the external manager or accept a different deed. If approved, the external manager may recommend APRA’s approval—unless the deed compromises creditor rights (but the external manager can still recommend APRA’s approval if it is of the opinion that the fund is insolvent or likely to become insolvent) or fails to protect policy holders. If satisfied, APRA will approve the deed or if not satisfied, request further action.

Part 3

Part 3 provides for how certain terms from the Corporations Act 2001 are modified when applied to private health insurers under the Private Health Insurance (Prudential Supervision) Act 2015.

Part 4 and Part 5

Part 4 and Part 5 modify certain sections of the Corporations Act 2001 when applying the Private Health Insurance (Prudential Supervision) Act 2015. Several sections and subsections are omitted, substituted, or clarified to ensure consistency with the private health insurance regulatory framework. The modifications apply certain provisions of the Corporations Act 2001 to health benefit funds that are under external management, subject to certain modifications set out in these Rules.
ATTACHMENT B

Statement of Compatibility with Human Rights

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

Private Health Insurance (Health Benefits Fund Enforcement) Rules 2025

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 (HRPS Act).

Overview of the Legislative Instrument

The purpose of the Legislative Instrument is to revoke Private Health Insurance (Health Benefits Fund Enforcement) Rules 2015 and replace it with Private Health Insurance (Health Benefits Fund Enforcement) Rules 2025.

Private Health Insurance (Health Benefits Fund Enforcement) Rules 2025 provide for procedural matters relating to voluntary deeds of arrangement, external manager recommendations that can be made in reports to APRA, and the actions that APRA may take in response.

Human rights implications

APRA has assessed the Legislative Instrument and is of the view that it does not engage any of the applicable rights or freedoms recognised or declared in the international instruments listed in section 3 of the HRPS Act.

Conclusion

This Legislative Instrument is compatible with human rights as it does not raise any human rights issues.