Private Health Insurance Legislation Amendment (Base Premium) Act 2013

Administered by Department of Health, Disability and Ageing

Legislation au C2013A00106 Not in force Act

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No. 106, 2013

An Act to amend the law relating to private health insurance, and for related purposes

Contents

1 Short title

2 Commencement

3 Schedule(s)

Schedule 1—Amendments

Part 1—Main amendments

Private Health Insurance Act 2007

Part 2—Contingent amendments

Private Health Insurance Act 2007

Part 3—Application

Private Health Insurance Legislation Amendment (Base Premium) Act 2013

No. 106, 2013

An Act to amend the law relating to private health insurance, and for related purposes

[Assented to 29 June 2013]

The Parliament of Australia enacts:

1 Short title

This Act may be cited as the Private Health Insurance Legislation Amendment (Base Premium) Act 2013.

2 Commencement

(1) Each provision of this Act specified in column 1 of the table commences, or is taken to have commenced, in accordance with column 2 of the table. Any other statement in column 2 has effect according to its terms.

Commencement information
Column 1	Column 2	Column 3
Provision(s)	Commencement	Date/Details
1. Sections 1 to 3 and anything in this Act not elsewhere covered by this table	The day this Act receives the Royal Assent.	29 June 2013
2. Schedule 1, items 1 to 3	1 April 2014.	1 April 2014
3. Schedule 1, items 4 and 5	The day this Act receives the Royal Assent.	29 June 2013
4. Schedule 1, item 6	1 April 2014.	1 April 2014
5. Schedule 1, items 7 to 12	The day this Act receives the Royal Assent.	29 June 2013
6. Schedule 1, Part 2	Immediately after the commencement of the provision(s) covered by table item 2. However, if item 2 of Schedule 1 to the Private Health Insurance Amendment (Lifetime Health Cover Loading and Other Measures) Act 2013 does not commence before 1 April 2014, the provision(s) do not commence at all.	1 April 2014
7. Schedule 1, Part 3	The day this Act receives the Royal Assent.	29 June 2013

Note: This table relates only to the provisions of this Act as originally enacted. It will not be amended to deal with any later amendments of this Act.

(2) Any information in column 3 of the table is not part of this Act. Information may be inserted in this column, or information in it may be edited, in any published version of this Act.

3 Schedule(s)

Each Act that is specified in a Schedule to this Act is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this Act has effect according to its terms.

Schedule 1—Amendments

Part 1—Main amendments

Private Health Insurance Act 2007

1 Paragraphs 22‑15(1)(a), (b) and (c)

Omit “amount of the premium, or of the amount in respect of a premium, paid or payable in respect of days”, substitute “*base premium amount for each day”.

2 After section 22‑15

Insert:

22‑17 Meaning of base premium amount

(1) In applying section 22‑15 in relation to a particular amount of premium, or a particular amount in respect of premium, that is paid or payable in respect of a premium period, the base premium amount for a day in the premium period is the *base premium for the *product subgroup to which the policy belongs that applies when the amount is paid.

Note: The base premium for a product subgroup is determined in accordance with Subdivision 22‑C.

(2) However, if the amount is only a proportion of the total premium in respect of the premium period, the base premium amount is only that proportion of the *base premium referred to in subsection (1).

(3) In working out the total premium in respect of a premium period for the purposes of subsection (2):

(a) take into account any change resulting from:

(i) the application of Part 2‑3 (lifetime health cover); and

(ii) any discounts allowed under subsection 66‑5(2); and

(b) disregard any change resulting from the application of Division 23 (premiums reduction scheme).

(4) For the purposes of the premiums reduction scheme in Division 23, the amount of the reduction of a premium that is payable may initially be calculated by reference to the *base premium on an anticipated future day of payment. But if the base premium that applies (the correct base premium) on the actual day of payment is different, the amount of the actual reduction of the premium is to be calculated by reference to the correct base premium.

3 Paragraph 22‑20(b)

Repeal the paragraph, substitute:

(b) assume that the *base premium is the base premium divided by the number of persons who are PHIIBs in respect of the premium or amount.

4 At the end of Division 22

Add:

Subdivision 22‑C—Base premium

22‑50 Meaning of base premium

Product subgroups available on or before 1 April 2013

(1) The base premium for a *product subgroup that was first made available on or before 1 April 2013 is the premium (expressed as an amount per day) charged under policies belonging to the product subgroup on that day (taking into account any change in the premium under section 66‑10 that took effect on that day).

(2) A *base premium referred to in subsection (1) is indexed on 1 April 2014, and 1 April in each later year.

Note: Section 22‑55 shows how to index a base premium.

Product subgroups that become available after 1 April 2013

(3) The base premium for a *product subgroup that is first made available after 1 April 2013 is the premium (expressed as an amount per day) charged under a policy belonging to the subgroup when the subgroup is first made available, multiplied by the *weighted average ratio for the subgroup.

(4) A *base premium for a *product subgroup referred to in subsection (3) is indexed on each 1 April after the subgroup is first made available.

Note: Section 22‑55 shows how to index a base premium.

Weighted average ratio

(5) The weighted average ratio for a *product subgroup is to be determined in accordance with the Private Health Insurance (Incentives) Rules.

(6) Without limiting subsection (5), the Private Health Insurance (Incentives) Rules may:

(a) provide for the *weighted average ratio for different classes of *product subgroups to be determined in different ways; and

(b) provide for the Council to have a role in determining the weighted average ratio for a product subgroup; and

(c) require a private health insurer to give the Council information relevant to determining the weighted average ratio for a product subgroup.

Disregard certain changes in premiums

(7) For the purposes of subsections (1) and (3), disregard any change in a premium resulting from:

(a) the application of Division 23 (premiums reduction scheme); or

(b) the application of Part 2‑3 (lifetime health cover); or

22‑55 Indexation

(1) This section sets out how a *base premium for a *product subgroup is to be indexed on a 1 April, as required by subsection 22‑50(2) or (4).

Indexing base premiums

(2) Index the *base premium by:

(a) firstly, multiplying the base premium by its *base premium indexation factor; and

(b) next, rounding the result in paragraph (a) down to the nearest cent.

(3) To avoid doubt, the *base premium is indexed even if its *base premium indexation factor is less than 1.

Base premium indexation factor

(4) The base premium indexation factor for the *base premium on 1 April in a particular year is the lesser of the following numbers:

(a) the *premium indexation factor for the *product subgroup for that 1 April;

(b) the *CPI indexation factor for that 1 April.

22‑60 Premium indexation factor

(1) The premium indexation factor for a *product subgroup for 1 April in a particular year is the number worked out by dividing the premium charged under policies belonging to the subgroup on that 1 April (taking into account any change in the premium under section 66‑10 that took effect on that day) by the *reference premium for the subgroup in relation to that year.

(2) The reference premium for a *product subgroup in relation to a year is:

(a) if the subgroup was first made available on or before 1 April in the immediately preceding year—the premium charged under policies belonging to the subgroup on 1 April in that preceding year (taking into account any change in the premium under section 66‑10 that took effect on that day); or

(b) otherwise—the premium charged under policies belonging to the subgroup when the subgroup was first made available.

(3) Work out a *premium indexation factor to 3 decimal places (rounding up if the fourth decimal place is 5 or more).

Disregard certain changes in premiums

(4) For the purposes of subsections (1) and (2), disregard any change in a premium resulting from:

(a) the application of Division 23 (premiums reduction scheme); or

(b) the application of Part 2‑3 (lifetime health cover); or

22‑65 CPI indexation factor

(1) The CPI indexation factor for 1 April in a particular year is the number worked out by dividing the *CPI index number for the December quarter immediately preceding that year by the CPI index number for the December quarter preceding the first‑mentioned December quarter.

(2) The CPI index number for a quarter is the All Groups Consumer Price Index number, being the weighted average of the 8 capital cities, published by the Australian Statistician in respect of that quarter.

(3) Work out a *CPI indexation factor to 3 decimal places (rounding up if the fourth decimal place is 5 or more).

(4) In working out the *CPI indexation factor for 1 April in a particular year:

(a) use only the *CPI index numbers published in terms of the most recently published reference base for the Consumer Price Index; and

(b) disregard CPI index numbers published in substitution for previously published CPI index numbers (except where the substituted numbers are published to take account of changes in the reference base).

5 Clause 1 of Schedule 1

Insert:

base premium for a *product subgroup has the meaning given by section 22‑50.

6 Clause 1 of Schedule 1

Insert:

base premium amount has the meaning given by section 22‑17.

7 Clause 1 of Schedule 1

Insert:

base premium indexation factor for a *product subgroup has the meaning given by section 22‑55.

8 Clause 1 of Schedule 1

Insert:

CPI indexation factor has the meaning given by section 22‑65.

9 Clause 1 of Schedule 1

Insert:

CPI index number has the meaning given by section 22‑65.

10 Clause 1 of Schedule 1

Insert:

premium indexation factor for a *product subgroup has the meaning given by section 22‑60.

11 Clause 1 of Schedule 1

Insert:

reference premium for a *product subgroup has the meaning given by section 22‑60.

12 Clause 1 of Schedule 1

Insert:

weighted average ratio for a *product subgroup has the meaning given by section 22‑50.

Part 2—Contingent amendments

Private Health Insurance Act 2007

13 Subsection 22‑15(6)

Repeal the subsection.

Part 3—Application

14 Application of amendments

The amendments made by items 1 and 13 apply in relation to a premium or amount that is paid after the commencement of item 1 in respect of a period before, on or after that commencement.

[Minister’s second reading speech made in—

House of Representatives on 15 May 2013

Senate on 17 June 2013]

(102/13)

Overview

The Private Health Insurance Legislation Amendment (Base Premium) Act 2013 was enacted by the Parliament of Australia to amend the law relating to private health insurance. This Act specifically addresses the problem of ensuring a fair and consistent method for calculating premium amounts under private health insurance policies, particularly in relation to the base premium. The policy objective of this Act is to provide a more transparent and equitable approach to calculating premiums by introducing a defined base premium, which will be indexed annually. This change aims to address inconsistencies in premium calculations and provide greater clarity and predictability for consumers. The Act received Royal Assent on 29 June 2013 and most of its provisions commenced on 1 April 2014, with some provisions taking effect immediately upon Royal Assent. The Act makes significant amendments to the Private Health Insurance Act 2007 by introducing the concept of a base premium, which is a defined daily premium for each product subgroup of health insurance policies. This base premium is used as a reference point for calculating the actual premium amounts paid by policyholders. The base premium is determined based on the premiums charged on 1 April 2013 for existing product subgroups and on the first day the subgroup becomes available for new product subgroups. The base premium is subject to annual indexation, ensuring it keeps pace with inflation and other economic factors. This structured approach to defining and adjusting the base premium aims to simplify the premium calculation process and reduce discrepancies in the amounts charged to policyholders.

Scope and Application

The Private Health Insurance Legislation Amendment (Base Premium) Act 2013 amends the Private Health Insurance Act 2007 to introduce the concept of a 'base premium' for calculating certain rebates and adjustments related to private health insurance premiums. This Act applies to all private health insurers operating in Australia, as well as to individuals who hold private health insurance policies. The legislative amendments are designed to ensure consistency and clarity in the calculation of base premiums, which are used for determining rebates and adjustments under the private health insurance system. The amendments commenced on various dates, with most provisions taking effect on 1 April 2014. The Act's amendments are contingent upon other specified provisions, such as the commencement of certain items in the Private Health Insurance Amendment (Lifetime Health Cover Loading and Other Measures) Act 2013. The Act does not contain any explicit exclusions or thresholds, but it does specify that certain changes in premiums should be disregarded when calculating base premiums. The Act allows for further clarification and detail to be provided through subordinate legislation, such as the determination of weighted average ratios for different classes of product subgroups, which is to be governed by the Private Health Insurance (Incentives) Rules.

Key Provisions

The Private Health Insurance Legislation Amendment (Base Premium) Act 2013 amends the Private Health Insurance Act 2007 by introducing the concept of a "base premium" (section 22-15) and defining it as the base premium for the product subgroup to which a policy belongs, applied when the amount is paid or payable (section 22-17). This base premium is crucial for determining certain premiums and amounts, and it is indexed annually from 1 April (section 22-50). The Act further details how the base premium is calculated for product subgroups available before and after 1 April 2013 (sections 22-50(1) and (3)), including the calculation of the weighted average ratio for new product subgroups (section 22-50(5)). The indexation of base premiums is governed by section 22-55, which involves multiplying the base premium by its base premium indexation factor and rounding the result to the nearest cent. The base premium indexation factor is determined by the lesser of the premium indexation factor or the CPI indexation factor (section 22-60 and 22-65). The Act imposes specific obligations on private health insurers and other entities involved in the private health insurance industry. Insurers must calculate the base premium amount for each day in the premium period based on the policy's product subgroup (section 22-17). For the purposes of the premiums reduction scheme, the amount of the reduction of a premium that is payable may initially be calculated by reference to the base premium on an anticipated future day of payment, but the actual reduction must be calculated by reference to the correct base premium on the actual day of payment (section 22-17(4)). The Council is also involved in determining the weighted average ratio for a product subgroup, which may require private health insurers to provide relevant information (section 22-50(6)). Breaches of this Act may lead to various consequences, although specific offences and penalties are not detailed in the provided text. Generally, breaches of provisions related to private health insurance can result in penalties under the Private Health Insurance Act 2007, which may include fines and other civil or administrative penalties. The exact penalties would depend on the specific nature and severity of the breach.

Area of Law: Health Law
Instrument: Act
Concepts: Definitions & Interpretation; Commencement Provisions; Reporting & Disclosure Obligations; Regulatory Standards

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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.

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