EXPLANATORY STATEMENT
Issued by the Authority of the Minister for Health and Ageing
Private Health Insurance Act 2007
Private Health Insurance (Levy Administration) Rules 2007
Section 333-20 of the Private Health Insurance Act 2007 (the Act) provides that the Minister may make Private Health Insurance (Levy Administration) Rules (the Rules) providing for matters required or permitted by Part 6-6 of the Act, or necessary or convenient in order to carry out or give effect to Part 6-6 of the Act.
Part 6-6 of the Act and the Rules deal with the collection of private health insurance levies and other matters relating to their administration. A private health insurance levy is imposed under one of the following levy Acts:
• Private Health Insurance (Collapsed Insurer Levy) Act 2003;
• Private Health Insurance (Complaints Levy) Act 1995;
• Private Health Insurance (Council Administration Levy) Act 2003;and
• Private Health Insurance (Risk Equalisation Levy) Act 2003.
The Rules specify the payment day for complaints levy, Council administration levy and risk equalisation levy.
If a private health insurance levy remains wholly or partly unpaid by a private health insurer after it becomes due and payable on the payment day, the insurer is liable to pay a late payment penalty which is calculated at the rate set out in the rules which is 15% per year.
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 (NHA) (and regulations under the NHA) into the new Private Health Insurance Act 2007 (PHI) (and Private Health Insurance Rules made under the PHI).
Provision is made for transitional arrangements in relation to private health insurance levies by item 52 of the Private Health Insurance (Transitional Provisions and Consequential Amendments) Act 2007, which provides that old Part VID of the NHA continues to apply in relation to an amount of levy or an amount of late payment penalty to which that Part applied prior to commencement of the PHI.
Private health insurers were extensively consulted and provided with opportunities to comment upon the new Private Health Insurance legislative package. 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.
A Regulation Impact Statement (RIS) that was prepared for the Private Health Insurance Bill 2006 (PHI Bill) 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 Office of Best Practice Regulation has advised that no additional RIS is required.
Details of the Rules are set out in the Attachment.
The Act does not specify any conditions that need to be met before the power to make the Rules may be exercised.
The 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 (LEVY ADMINISTRATION) RULES 2007
1. Name of Rules
Rule 1 provides that the title of the Rules is the Private Health Insurance (Levy Administration) 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 Act.
4. Council administration levy
Rule 4 provides that the payment day for the Council administration levy is 14 days after an imposition day. An imposition day for the Council administration levy is the 28th day of the second month of each quarter ending on the last day of March, June, September or December in a financial year.
5. Complaints levy
Rule 5 provides that the payment day for the complaints levy is 31 December of each year.
6. Risk equalisation levy
Rule 6 provides that the payment day for the risk equalisation levy is 14 days after an imposition day. An imposition day for the risk equalization levy is the 21st day of the second month of each quarter ending on the last day of March, June, September and December in a financial year.
7. Rate of late payment penalty
Rule 7 specifies, for the purposes of paragraph 307-5(2)(a) of the Act, the rate of late payment penalty as 15% per year.