Private Health Insurance (Health Benefits Fund Policy) Rules 2007

Administered by Department of Health, Disability and Ageing

Legislation au F2007L00902 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 (Health Benefits Fund Policy) Rules 2007

 

Section 333-20 of the Private Health Insurance Act 2007 (the Act) provides that the Minister may make Private Health Insurance (Health Benefits Fund Policy) Rules (the Rules) providing for matters required or permitted by Part 4-4 of the Act, or necessary or convenient in order to carry out or give effect to Part 4-4 of the Act.

 

As part of reforms to private health insurance announced by the Australian Government on 26 April 2006, regulation of private health insurance was moved from the National Health Act 1953 (the NHA) (and regulations under the NHA) into the new Private Health Insurance Act 2007 (the PHI) (and Private Health Insurance Rules made under the PHI).

 

Part 4-4 of the Act deals with health benefits funds operated by private health insurers.

 

These Rules provide, consistent with current provisions, limitations on the amount of brokerage and commission that can be paid in respect of health insurance premiums.  The Rules also impose community rating requirements on overseas student health cover and specified temporary visa health cover.

 

Private health insurers were extensively consulted and provided with opportunities to comment upon the new Private Health Insurance legislative package.  Draft Rules were published on the Departmental website for comment, and information sessions were held to provide industry stakeholders with the opportunity to be consulted on the making of the Rules.

 

Consultations were attended by representatives from individual private health insurers and peak industry bodies (the Australian Health Insurance Association and Health Insurance Restricted Membership Association members funds), private hospitals and their industry representatives (Australian Private Hospitals Association and Catholic Health Australia), the Australian Medical Association, the Private Health Insurance Administration Council, the Private Health Insurance Ombudsman, Consumers’ Health Forum of Australia and central agencies.  All of the industry representatives have expressed strong support for the proposed legislative framework including the Private Health Insurance Rules.

 

The Office of Best Practice Regulation has advised that no additional Regulation Impact Statement (RIS) is required.  A RIS that was prepared for the Private Health Insurance Bill 2006 (PHI Bill) which analysed the options associated with the Australian Government’s recent initiatives to improve the attractiveness of and participation in private health insurance for consumers.  The measures include those under the Private Health Insurance Act 2007 and associated legislative instruments.

 

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

 

Details of the Rules are set out in the Attachment.

 

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

 

The Rules commence at the same time as the Act commences if they are registered before the Act commences; or, if the Rules are registered on or after the Act commences the Rules commence on the day they are registered.

 

 

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

 

 

 

 


ATTACHMENT

 

DETAILS OF THE PRIVATE HEALTH INSURANCE (HEALTH BENEFITS FUND POLICY) RULES 2007
 

 

1. Name of Rules

 

Rule 1 provides that the title of the Rules is the Private Health Insurance (Health Benefits Fund Policy) Rules 2007.

 

2. Commencement

 

Rule 2 provides for the Rules to commence at the same time as the Act commences if they are registered before the Act commences; or, if the Rules are registered on or after the Act commences, the Rules commence on the day they are registered.

 

3.                    Definitions

 

Rule 3 notes that the terms used in these rules have the same meaning as in the Legislative Instruments Act 2003.  The Act means the Private Health Insurance Act 2007.

 

Part 2  Expenditure and application of health benefit funds

 

4.      Expenditure and application of health benefits funds

 

Subrule 4 (1) provides that the assets of a health benefit fund not must not be applied to pay to a policy holder any incentive payment, promotional payment, rebate or any other inducement whatsoever if the amount exceeds 12 % of the full premium for a year.  This also applies to any brokerage fee, commission, inducement or other sum in relation to the payment of the premium.  Discounts, and waiver of a co-payment or an excess must also be taken into account.

 

Subrule 4 (2) provides the definition of a full premium which is the premium for a year that would be received by the private health insurer for a policy without any reduction.

 

Part 3 Operation of health-related businesses through health benefits funds

 

5. Insurance for overseas students or specified temporary visa holders

 

Subrule 5 (1) provides that requirements are specified in subrule 5(2) for private health insurers who conduct business in respect of overseas students or specified temporary visa holders.

 

Subrule 5 (2) provides that a private health insurer must not take or fail to take any action, or in making a decision have regard to or fail to have regard to any matter, that would result in the insurer discriminating between people who are, or wish to be insured, under an overseas student health insurance contract or a specified temporary visa holder health insurance contract.

 

Subrule 5 (3) provides that the term discriminating relates to, for example, a person suffering from a chronic disease, illness or other medical condition, gender, race, sexual orientation or religious belief of a person and the frequency with which a person needs hospital treatment or general treatment.

 

Subrule 5 (4) provides that the terms overseas student, overseas student health insurance contract, specified temporary visa holder and specified temporary visa holder health insurance contract have the same meaning as in the Private Health Insurance (Health Insurance Business) Rules 2007.

 

Overview

The Private Health Insurance Act 2007 was enacted to reform the regulation of private health insurance in Australia, moving it from the National Health Act 1953 to a new legislative framework designed to better support the private health insurance sector. This Act was introduced to address the need for updated and comprehensive regulation that could respond to contemporary challenges in the health insurance industry, including ensuring fair practices and adequate consumer protection. The Parliament of Australia enacted this legislation as part of broader health reforms aimed at enhancing the attractiveness and participation in private health insurance for consumers. The accompanying Private Health Insurance (Health Benefits Fund Policy) Rules 2007 were made to provide further detail on specific matters required or permitted by the Act, ensuring that private health insurers adhere to fair practices, particularly in relation to brokerage and commission limits on health insurance premiums and community rating requirements for certain types of cover. Extensive consultations with industry stakeholders, including private health insurers, hospitals, medical associations, and consumer groups, were conducted to garner support for the legislative framework, which received broad backing from all participants.

Scope and Application

The Private Health Insurance (Health Benefits Fund Policy) Rules 2007 applies to private health insurers who operate health benefit funds in Australia, particularly those who offer insurance to overseas students and specified temporary visa holders. These rules serve as an extension of the Private Health Insurance Act 2007, which governs the regulation of private health insurance in Australia. They aim to regulate the amount of brokerage and commission that can be paid in respect of health insurance premiums and enforce community rating requirements on certain types of health insurance, such as overseas student health cover and specified temporary visa health cover. The Act does not specify any conditions that need to be met before the power to make the Rules may be exercised. The rules provide limitations on the amount of brokerage and commission that can be paid in respect of health insurance premiums and also impose community rating requirements on overseas student health cover and specified temporary visa health cover. The rules are applicable across Australia, with no stated exclusions or exemptions, and they extend or restrict application through subordinate instruments, such as the Private Health Insurance (Health Insurance Business) Rules 2007.

Key Provisions

The Private Health Insurance (Health Benefits Fund Policy) Rules 2007, which are subordinate legislation made under section 333-20 of the Private Health Insurance Act 2007, establish key provisions governing the operation of health benefits funds by private health insurers. Primarily, the Rules are designed to limit the amount of brokerage and commission that can be paid in respect of health insurance premiums, and to impose community rating requirements on overseas student health cover and specified temporary visa health cover. Rule 4 (1) specifies that the assets of a health benefit fund cannot be used to pay any incentive, promotional payment, rebate, or any other inducement that exceeds 12% of the full annual premium for a year, including brokerage fees, commissions, and other sums related to premium payments. Discounts, co-payment waivers, or excesses must also be factored into this limit. Rule 4 (2) further defines a 'full premium' as the annual premium that would be received by a private health insurer for a policy without any reductions. The Rules impose several obligations on private health insurers. Firstly, under Rule 4, insurers must ensure that any payments made to policyholders as incentives or inducements do not exceed the specified limits. This includes careful accounting of all forms of inducements, such as rebates, commissions, and other forms of financial encouragement that might influence the premium payment. Secondly, Rule 5 mandates that insurers must not discriminate against individuals when providing health insurance for overseas students or specified temporary visa holders. This includes prohibiting insurers from considering factors such as the applicant's chronic disease, gender, race, sexual orientation, or religious belief when making decisions about insurance coverage or premiums. Breaches of these Rules can lead to civil and criminal consequences. While the specific penalties for non-compliance are not detailed within the explanatory statement, general provisions under the Private Health Insurance Act 2007 suggest that violations could result in significant fines and other penalties. For instance, under the Act, breaches of certain provisions can lead to civil penalties that may include substantial monetary fines, and in severe cases, criminal penalties might apply. The specific maximum penalties would be determined by the courts, taking into account the severity and intent behind the breach.

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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.