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 2025
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 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.
Part 4-4 of the Act contains provisions relating to the operation of the private health insurers’ health benefits funds.
The Private Health Insurance (Health Benefits Fund Policy) Rules 2025 (the Rules) will commence on the day following their registration on the Federal Register of Legislation and revoke and replace the Private Health Insurance (Health Benefits Fund Policy) Rules 2015 (the Previous Rules).
The Rules differ from the Previous Rules by removing ‘assets’ from the Definitions at rule 4 as this term is not defined in the Act or used in the Rules. Rule 6 (2) has been updated to specify that, for the purposes of paragraph 131-15 (1)(d) of the Act, the amount of the liability incurred by the insurer for any particular treatment does not exceed the amount of the liability that would be incurred by the insurer for that treatment if it were provided to the person in Australia. The Rules also include minor updates that do not alter the intent of the Rules.
Consultation
Public consultation was undertaken from 13 January 2025 to 31 March 2025 on the drafting of these rules. The consultation was promoted through the department’s weekly communication to industry participants, including all private health insurers and industry peak bodies.
As part of the consultation, it was proposed that the Previous Rules remained fit for purpose and should be replaced substantially in the same form. In the consultation paper the department provided details of proposed minor amendments to the Previous Rules, sought to understand whether the Previous Rules are considered fit for purpose by those who rely on them, and sought feedback on the proposed amendments.
Three submissions were received in response to the consultation, all supportive of the Previous Rules being remade with the proposed minor amendments.
Additional consultation occurred directly with the financial regulator (APRA), the Office of Impact Assessment and the Private Health Insurance Ombudsman. All agencies consulted supported the remaking of the Rules with the proposed minor amendments.
Regulation Impact Statement
The Office of Best Practice Regulation has advised that no Regulatory Impact Statement is required.
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.
Authority: Section 333-20 of the Private Health Insurance Act 2007
ATTACHMENT
DETAILS OF THE PRIVATE HEALTH INSURANCE (HEALTH BENEFITS FUND POLICY) RULES 2025
PART 1 - Preliminary
1. Name
Rule 1 provides that the title of the Rules is the Private Health Insurance (Health Benefits Fund Policy) Rules 2025.
2. Commencement
Rule 2 provides that the Rules commence on the day following their registration on the Federal Register of Legislation.
3. Authority
Rule 3 states that the Private Health Insurance Act 2007 is the authority under which these Rules are made.
4. Definitions
Rule 4 provides that terms used in the Rules have the same meaning as in the Act. In addition, Rule 4 also defines the term ‘Act’ which is used in the Rules.
5. Schedules
Rule 5 notes that instruments specified in a Schedule to the instrument are amended or repealed.
PART 2 – Meaning of Health-related business
6. Overseas Treatment
Subrule 6 (1) provides that the business described in subrule 6 (2) is specified for the purpose of paragraph 131-15 (1) (d) of the Act.
Subrule 6 (2) provides that the business is the undertaking of liability by way of insurance for the provision outside Australia of treatment that is intended to manage a disease, injury or condition, but with some limitations.
Subrule 6 (2) (a) provides that the disease, injury or condition must be chronic and permanent.
Subrule 6 (2) (b) provides that the liability must be confined to treatment that would be required routinely, whether or not the person had remained in Australia.
Subrule 6 (2) (c) provides that the amount of the liability incurred by the insurer for any particular treatment must not exceed the amount of the liability that would be incurred by the insurer for that treatment if it were provided in Australia.
Subrule 6 (2) (d) provides that the liability must not extend to any treatment administered to a person more than 60 days after the person last departed from Australia.
7. Agency Business
Subrule 7 (1) provides that for the purpose of paragraph 131-15 (1) (d) of the Act, the business is the offering of goods, services or benefits by a private health insurer under an agency arrangement is specified.
Subrule 7 (2) defines the term agency arrangement as being a written arrangement between a person (the agent) and another person (the principal) under which:
- the agent is permitted to act on behalf of the principal to create legal relations between the principal and a third person in transactions to provide goods or services or benefits; and
- the principal assumes liability for the transaction to the third person, including for the provision of the goods, services or benefits; and
- the agent assumes no liability in respect of the transaction, other than to perform its obligations under the arrangement for and on behalf of the principal.
The Note to rule 7 provides an example.
PART 3 – Risk equalisation jurisdictions
8. Areas that are risk equalisation jurisdictions
Rule 8 provides that the following areas are each a risk equalization jurisdiction:
(a) the area comprising Australian Capital Territory, Norfolk Island and New South Wales;
(b) the Northern Territory;
(c) Queensland;
(d) South Australia;
(e) Tasmania;
(f) Victoria;
(g) the area comprising Western Australia, the Territory of Christmas Island and the Territory of Cocos (Keeling) Islands.
PART 4 – Operation of health-related businesses through health benefits funds
9. Insurance for overseas students or specified temporary visa holders
Subrule 9 (1) provides that rule 9 applies if a private health insurer has a health benefits fund in respect of its health insurance business and some or all of its health-related businesses.
Subrule 9 (2) provides that requirements are specified in subrule (3) for how private health insurers must conduct their health-related business.
Subrule 9 (3) 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 9 (4) provides that the term improper discrimination relates to a person suffering from a chronic disease, illness or other medical condition, gender, race, sexual orientation or religious belief of a person, a person’s age or where they live, any other characteristic of a person that is likely to result in an increased need for hospital treatment or general treatment, the frequency with which a person needs hospital treatment or general treatment or the amount or extent of the benefits to which a person becomes entitled during a period under an overseas student or specified temporary visa holder health insurance contract.
Subrule 9 (5) 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 made under the Act, as in force from time to time.
SCHEDULE 1 - Repeals
1. The whole of the instrument
Schedule 1 repeals the Private Health Insurance (Health Benefits Fund Policy) Rules 2015.
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Private Health Insurance (Health Benefit Fund Policy) 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.
Overview of the Legislative Instrument
The Private Health Insurance (Health Benefits Fund Policy) Rules 2025 (the Rules) revoke and replace the Private Health Insurance (Health Benefits Fund Policy) Rules 2015 (the Previous Rules).
The Rules differ from the Previous Rules by removing ‘assets’ from the Definitions at rule 4 as this term is not defined in the Act or used in the Rules. Rule 6 (2) has been updated to specify that, for the purposes of paragraph 131-15 (1)(d) of the Act, the amount of the liability incurred by the insurer for any particular treatment does not exceed the amount of the liability that would be incurred by the insurer for that treatment if it were provided to the person in Australia. The Rules also include minor updates that do not alter the intent of the Rules.
Consultation
Public consultation was undertaken from 13 January 2025 to 31 March 2025 on the drafting of these rules. The consultation was promoted through the department’s weekly communication to industry participants, including all private health insurers and industry peak bodies.
As part of the consultation, it was proposed that the Previous Rules remained fit for purpose and should be replaced substantially in the same form. In the consultation paper the department provided details of proposed minor amendments to the Previous Rules, sought to understand whether the Previous Rules are considered fit for purpose by those who rely on them, and sought feedback on the proposed amendments.
Three submissions were received in response to the consultation, all supportive of the Previous Rules being remade with the proposed minor amendments.
Additional consultation occurred directly with the financial regulator (APRA), the Office of Impact Assessment and the Private Health Insurance Ombudsman. All agencies consulted supported the remaking of the Rules with the proposed minor amendments.
Human rights implications
This legislative instrument engages Articles 2 and 12 of the International Covenant on Economic, Social and Cultural Rights by assisting with the progressive realisation by all appropriate means of the right of everyone to the enjoyment of the highest attainable standard of physical and mental health.
Private health insurance regulation assists with the advancement of these human rights by improving the governing framework for private health insurance in the interests of consumers. Private health insurance regulation aims to encourage insurers and providers of private health goods and services to provide better value for money to consumers, to improve information provided to consumers of private health services to allow consumers to make more informed choices when purchasing services and requires insurers not to differentiate the premiums they charge according to individual health characteristics such as poor health.
Conclusion
This legislative instrument is compatible with human rights because it advances the protection of human rights.
Paul McBride
Assistant Secretary
Private Health Strategy Branch
Health Systems Strategy Division
Strategy and First Nations Group
Department of Health, Disability and Ageing