Private Health Insurance (Incentives) Amendment Rules 2014 (No. 1)

Administered by Department of Health, Disability and Ageing

Legislation au F2014L00397 Rules Not in force Legislative Instrument

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EXPLANATORY STATEMENT

 

 

Issued by the Authority of the Minister for Health

 

Private Health Insurance Act 2007

 

Private Health Insurance (Incentives) Amendment Rules 2014 (No. 1)

 

Authority

Section 333-20 of the Private Health Insurance Act 2007 (the Act) provides that the Minister may make Private Health Insurance (Incentives) Rules providing for matters required or permitted by Part 2-2, section 206-1, and Part 6-4 of the Act, or necessary or convenient to be provided in order to carry out or give effect to these provisions.

 

The Private Health Insurance (Incentives) Amendment Rules 2014 (No. 1) (the Amendment Rules) amend the Private Health Insurance (Incentives) Rules 2012 (No. 2) (the Principal Rules), which commenced on 4 July 2012.

 

Purpose

The purpose of the amendments is to determine the adjustment factor under section 22-15(5E) of the Act.  

 

The Amendment Rules amend the Principal Rules to insert a new section 5A.  Section 5A determines the adjustment factor, defined for the purposes of the Principal Rules as ‘the rebate adjustment factor’, for the purposes of subsection 22-15(5A) of the Act.  The rebate adjustment factor is used to uniformly adjust all rebate percentages from the commencement of the Private Health Insurance Legislation Amendment Act 2014 (“the Amending Act”).  

 

Background

The Act has been amended by the Amending Act.  The effect of the Amending Act is to remove the amendments inserted into the Act by the Private Health Insurance Legislation Amendment (Base Premium) Act 2013 and to insert a new provision, subsection 22-15(5A). 

 

Consultation

The private health insurance industry was consulted on this amendment and its intent.  It was discussed during meetings and conversations between insurers and the Department of Health and during a Department lead industry workshop on the implementation of the policy.

 

The Amendment Rules commence immediately after the commencement of the Amending Act.

 

The Amendment 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 (Incentives) Amendment Rules 2014 (No. 1)

 

Section 1 Name of Rules

Section 1 provides that the title of the Rules is the Private Health Insurance (Incentives) Amendment Rules 2014 (No. 1).

 

Section 2 Commencement

Section 2 provides that the Rules commence immediately after the commencement of the Private Health Insurance Legislation Amendment Act 2014 (the Amending Act).

 

Section 3 Amendment of the Private Health Insurance (Incentives) Rules 2012 (No. 2)

Section 3 provides that the Schedule to the Rules amends the Private Health Insurance (Incentives) Rules 2012 (No. 2) as amended (the Principal Rules).

 

Schedule – Amendments

 

Item 1 – Rule 4 Definition

Item 1 amends the notes to the definitions to delete the reference to the ‘weighted average ratio.’ and insert a reference to ‘adjustment factor’ and to ‘adjustment year’.

 

Item 2 – Rule 4 Definition, after definition of private health insurance tax offset

Item 2 amends the definition to insert the definition of ‘rebate adjustment factor’ taking the meaning of ‘adjustment factor’ for the purposes of the Principal Rules.

 

Item 3 – Rule 5A

Item 3 amends the Principal Rules to delete section 5A and insert a new section 5A.

 

Subsection 5A determines the rebate adjustment factor as a formula for the purposes of subsection 22-15(5A) of the Private Health Insurance Act 2007 (the Act) as amended by the Amending Act.

 

The rebate adjustment factor is calculated as a proportional rebate adjustment so that the rebate levels are reduced by the difference between the growth in premiums and the change in the Consumer Price Index (CPI).

 

The rebate adjustment factor is calculated to three decimal places. The rebate adjustment factor is expressed as a factor, rounding up where the fourth decimal place is five or more.

 

The average premium increase for the relevant incentive year is the industry average premium increase (including rate protection), which is published by the Department in a private health insurance circular each incentive year. The Department publishes the average premium increase each year expressed as a percentage. For the purposes of the rebate adjustment factor, the average premium increase will be expressed as a factor to 4 decimal places equivalent to the percentage figure published by the Department.

 

The rebate adjustment factor will apply so that the applicable rebate percentage is the same for all insurance policies, subject to income testing reductions.

 


 

Overview

The Private Health Insurance (Incentives) Amendment Rules 2014 (No. 1) were enacted to address a gap arising from the Private Health Insurance Legislation Amendment Act 2014, which removed previous adjustments and introduced a new subsection 22-15(5A) into the Private Health Insurance Act 2007. These rules were introduced by the Minister for Health under the authority granted by section 333-20 of the Act, aiming to implement the necessary adjustments for the rebate percentages as per the new legislative changes. The policy objective is to ensure a uniform adjustment of all rebate percentages, taking into account the difference between the growth in premiums and the change in the Consumer Price Index (CPI). This is achieved through the introduction of a rebate adjustment factor, which is calculated using a formula and applied uniformly across all insurance policies, subject to income testing reductions. Consultation with the private health insurance industry was conducted to discuss the amendment and its intent, including during meetings and a workshop led by the Department of Health. The rules commenced immediately after the commencement of the Amending Act, ensuring timely implementation of the rebate adjustments. These amendment rules are a legislative instrument under the Legislative Instruments Act 2003.

Scope and Application

The Private Health Insurance (Incentives) Amendment Rules 2014 (No. 1) applies to entities and individuals involved in private health insurance within Australia, specifically focusing on the adjustment factor for rebates as stipulated in the Private Health Insurance Act 2007. This legislation pertains to all private health insurers operating within the Australian jurisdiction, impacting how rebates are calculated and adjusted in accordance with changes in premiums and the Consumer Price Index (CPI). The rules are designed to ensure a uniform adjustment of rebate percentages across all insurance policies, subject to income testing reductions. These Amendment Rules are a direct response to the Private Health Insurance Legislation Amendment Act 2014, which necessitated changes to the original Private Health Insurance (Incentives) Rules 2012. The rules were developed in consultation with the private health insurance industry and the Department of Health, ensuring that the amendments are both practical and aligned with policy objectives. The implementation of these rules follows the commencement of the Amending Act, indicating that they are intended to take immediate effect once the legislative changes are in place.

Key Provisions

The Private Health Insurance (Incentives) Amendment Rules 2014 (No. 1) amend the Private Health Insurance (Incentives) Rules 2012 (No. 2) to determine the adjustment factor as per section 22-15(5E) of the Private Health Insurance Act 2007 (the Act) (Section 3). This is done by inserting a new section 5A into the Principal Rules, which specifies the rebate adjustment factor (Section 3, Schedule, Item 3). The rebate adjustment factor is intended to uniformly adjust all rebate percentages following the commencement of the Private Health Insurance Legislation Amendment Act 2014 (Section 3, Schedule, Item 3). The Amendment Rules impose specific obligations on the entities governed by the Act. They must calculate the rebate adjustment factor as a proportional rebate adjustment, reducing the rebate levels by the difference between the growth in premiums and the change in the Consumer Price Index (CPI) (Section 3, Schedule, Item 3). The factor is to be calculated to three decimal places and expressed as a factor, rounding up if the fourth decimal place is five or more (Section 3, Schedule, Item 3). The average premium increase for the relevant incentive year is to be used, which is the industry average premium increase published by the Department of Health each year (Section 3, Schedule, Item 3). Failure to comply with the provisions of these Amendment Rules may result in civil or criminal consequences, although specific penalties are not detailed in the Amendment Rules themselves. Generally, under the Private Health Insurance Act 2007, breaches may incur penalties as stipulated by the Act, which could include fines and other civil penalties. It is essential for insurers to adhere to these rules to avoid any potential legal repercussions and to ensure the proper application of rebate adjustments as intended by the Act.

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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.