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Private Health Insurance Bill 2007

Part 2-2 Premiums reduction and incentive payments schemes

Division 20 Introduction

20-1   What this Part is about

To encourage people to take out, and continue to hold, private health insurance, this Part provides that people may either:

               (a)     reduce the premiums payable for their complying health insurance policies by participating in the premiums reduction scheme in Division 23; or

              (b)     receive a payment from the Commonwealth under Division 26 in partial reimbursement for a payment of premiums under a complying health insurance policy.

Note:          The premiums reduction scheme and the incentive payments scheme are complemented by the private health insurance offset provided for by Subdivision 61-H of the Income Tax Assessment Act 1997 .

20-5   Private Health Insurance (Incentives) Rules

                   Matters relating to the * premiums reduction scheme and the * incentive payments scheme are also dealt with in the Private Health Insurance (Incentives) Rules. The provisions of this Part indicate when a particular matter is or might be dealt with in these Rules.

Note:          The Private Health Insurance (Incentives) Rules are made by the Minister under section 333-20.



 

Division 23 Premiums reduction scheme

Subdivision 23-A Amount of reduction

23-1   Reduction in premiums

             (1)  The amount of premiums payable under a * complying health insurance policy in respect of a financial year is reduced in accordance with this section if a person is a * participant in the * premiums reduction scheme in respect of the policy.

             (2)  The amount of the reduction is the sum of:

                     (a)  30% of the amount of premiums payable under the policy in respect of days in the financial year on which no person covered by the policy was aged 65 years or over; and

                     (b)  35% of the amount of premiums payable under the policy in respect of days in the financial year on which:

                              (i)  at least one person covered by the policy was aged 65 years or over; and

                             (ii)  no person covered by the policy was aged 70 years or over; and

                     (c)  40% of the amount of premiums payable under the policy in respect of days in the financial year on which at least one person covered by the policy was aged 70 years or over.

             (3)  However, if, before 1 January 1999, a person was registered or eligible to be registered under the Private Health Insurance Incentives Act 1997 in respect of the policy, the amount of the reduction is the greater of:

                     (a)  the amount worked out under subsection (2); and

                     (b)  the * incentive amount for the policy for the financial year.

             (4)  If the amount of premiums is payable in respect of only part of a financial year, the amount of the reduction is worked out using this formula:

                   where:

part of year means the number of days in the part of the financial year.

whole year reduction means the amount that would have been the reduction if the premium had been payable in respect of the whole financial year.

23-5   Meaning of incentive amount

             (1)  The incentive amount for a * complying health insurance policy for a financial year is the amount worked out under this table:

 

Incentive amount

Item

Number and kinds of people covered by the policy

Policy covers * hospital treatment but not * general treatment

Policy covers * general treatment but not * hospital treatment

Policy covers * hospital treatment and * general treatment

1

3 or more people

$350

$100

$450

2

One * dependent child and one other person

$350

$100

$450

3

2 people neither of whom is a * dependent child

$200

$50

$250

4

One person

$100

$25

$125

 

             (2)  If the amount of premiums is payable in respect of only part of a financial year, the incentive amount is worked out using this formula:

23-10   Reduction after a person 65 years or over ceases to be covered by policy

             (1)  If:

                     (a)  at any time, premiums under an insurance policy (the original policy ) were reduced by 35% or 40% because a person aged 65 years or over (the entitling person ) was insured under the original policy; and

                     (b)  at that time, another person (other than a * dependent child) was also insured under the original policy; and

                     (c)  the entitling person subsequently ceases to be insured under the original policy;

subsections 23-1(2) and (3) apply in relation to a * complying health insurance policy (whether or not the original policy) under which the other person is insured (other than for the purposes of working out the * incentive amount) as if:

                     (d)  the entitling person were also insured under that policy; and

                     (e)  the entitling person were the same age as the age at which he or she ceased to be insured under the original policy.

             (2)  Subsection (1) ceases to apply if a person (other than a * dependent child) who was not insured under the original policy at the time the entitling person ceased to be insured under it becomes insured under the policy to which subsection (1) applied.

             (3)  Subsection (1) does not apply if its application would result in the amount payable under subsection 23-1(2) or (3) being less than it would otherwise have been.

             (4)  Paragraph (1)(a) applies in relation to premiums reduced by 35% or 40% whether the reduction was under this Part or under Chapter 3 of the Private Health Insurance Incentives Act 1998 .

Subdivision 23-B Participation in the premiums reduction scheme

23-15   Registration as a participant in the premiums reduction scheme

             (1)  A person may apply to a private health insurer, in the * approved form, to become a * participant in the * premiums reduction scheme in respect of a * complying health insurance policy issued by the insurer if:

                     (a)  the insurer is a * participating insurer; and

                     (b)  either or both of the following apply:

                              (i)  the person has paid, or the person’s employer has paid as a * fringe benefit on the person’s behalf, a premium under the policy in respect of a financial year;

                             (ii)  the person is insured under the policy (and is not a * dependent child); and

                     (c)  the person meets any requirements specified in the Private Health Insurance (Incentives) Rules for the purposes of this paragraph.

             (2)  A private health insurer that receives an application under subsection (1) must notify the Medicare Australia CEO of the application, in the * approved form, no more than 14 days (or any other period determined by the Medicare Australia CEO) after receiving the application.

             (3)  If notified of an application and satisfied that paragraphs (1)(a), (b) and (c) apply, the Medicare Australia CEO must register the applicant as a * participant in respect of the policy.

             (4)  The Medicare Australia CEO must notify the private health insurer that issued the policy if the Medicare Australia CEO registers a person as a * participant in the * premiums reduction scheme in respect of the policy.

23-20   Refusal to register

             (1)  If the Medicare Australia CEO refuses to register the applicant in respect of a policy, the Medicare Australia CEO must give the applicant, and the private health insurer that issued the policy, notice of the refusal together with reasons for the refusal.

Note:          Refusals to register are reviewable under Part 6-9.

             (2)  The applicant is taken to be registered as a * participant in respect of the policy if the Medicare Australia CEO does not give notice of refusal within 14 days after receiving the notice under subsection 23-15(2) from the private health insurer to which the applicant applied for registration.

23-25   Pre-1999 participants must keep information up to date

             (1)  If, before 1 January 1999, a person was registered or eligible to be registered under the Private Health Insurance Incentives Act 1997 in respect of the policy, a * participant in respect of the policy must notify the private health insurer that issued the policy if there is a change in a detail:

                     (a)  stated in an application under subsection 23-15(1); or

                     (b)  relating to the number of people insured under the policy, or to whether any of those people are * dependent children;

that the participant should reasonably expect will affect the * incentive amount for the policy for a financial year. The participant must give the notice no more than 30 days after the change occurs.

             (2)  A person commits an offence if:

                     (a)  the person is required by subsection (1) to give a notice to a private health insurer if a detail mentioned in that subsection changes as mentioned in that subsection; and

                     (b)  the person fails to comply with the requirement.

Penalty:  60 penalty units.

             (3)  Subsection 4K(2) of the Crimes Act 1914 does not apply to the obligation to provide information under subsection (1).

             (4)  A private health insurer must notify the Medicare Australia CEO of each notice the insurer receives under subsection (1), in the * approved form and no more than 14 days (or any other period determined by the Medicare Australia CEO) after receiving the notice.

23-30   Participants who want to withdraw from scheme

             (1)  A * participant must notify the private health insurer that issued the policy in respect of which a person is a participant if the person no longer wishes to be registered in respect of the policy.

             (2)  A private health insurer must notify the Medicare Australia CEO of each notice the insurer receives under subsection (1), in the * approved form and no more than 14 days (or any other period determined by the Medicare Australia CEO) after receiving the notice.

             (3)  If notified under subsection (2), the Medicare Australia CEO must revoke the person’s registration in respect of the policy.

23-35   Revocation of registration

             (1)  The Medicare Australia CEO must revoke a person’s registration in respect of a * complying health insurance policy if the Medicare Australia CEO is satisfied that the person is not eligible to participate in the * premiums reduction scheme in respect of the policy.

Note:          Revocations of registration are reviewable under section Part 6-9.

             (2)  Revocation of registration under subsection (1) does not affect a person’s right to make another application for registration under section 23-15.

             (3)  The Medicare Australia CEO must give notice of the revocation of a person’s registration in respect of a * complying health insurance policy to the person, and to the private health insurer that issued the policy, within 28 days after the day on which the revocation occurs.

23-40   Variation of registration

             (1)  A private health insurer must notify the Medicare Australia CEO if the treatments * covered by a * complying health insurance policy, issued by the private health insurer and in respect of which a person is a * participant, are varied.

             (2)  On receiving such a notice, the Medicare Australia CEO must vary the details of the registration accordingly and give notice of the variation to the private health insurer.

23-45   Retention of applications by private health insurers

             (1)  A private health insurer must retain an application made to it under subsection 23-15(1) for the period of 5 years beginning on the day on which the application was made.

             (2)  The private health insurer may retain the application in any form approved in writing by the Medicare Australia CEO.

             (3)  An application retained in such a form must be received in all courts or tribunals as evidence as if it were the original.



 

Division 26 The incentive payments scheme

Subdivision 26-A Amount of incentive payment

26-1   Payment in relation to premiums

             (1)  A person is entitled to a payment under this Division if:

                     (a)  the person has paid, or a person’s employer has paid as a * fringe benefit for the person, premiums under a * complying health insurance policy for the whole or a part of a financial year; and

                     (b)  the amount of premiums was not reduced under Division 23; and

                     (c)  the person meets any requirements specified in the Private Health Insurance (Incentives) Rules for the purposes of this paragraph.

             (2)  The amount of the payment is the sum of:

                     (a)  30% of the amount of the premium paid by a person, or by a person’s employer as a * fringe benefit for the person, under the policy in respect of days in the financial year on which no person covered by the policy was aged 65 years or over;

                     (b)  35% of the amount of the premium paid by a person, or by a person’s employer as a fringe benefit for the person, under the policy in respect of days in the financial year on which:

                              (i)  at least one person covered by the policy was aged 65 years or over; and

                             (ii)  no person covered by the policy was aged 70 years or over;

                     (c)  40% of the amount of the premium paid by a person, or by a person’s employer as a fringe benefit for the person, under the policy in respect of days in the financial year on which at least one person covered by the policy was aged 70 years or over.

             (3)  However, if, before 1 January 1999, a person was registered, or eligible to be registered, under the Private Health Insurance Incentives Act 1997 in respect of the policy, the amount of the payment is the greater of:

                     (a)  the amount worked out under subsection (2); and

                     (b)  the * incentive amount for the policy for the financial year.

             (4)  The total amount payable under this Division for a policy for a financial year is reduced by the amount of any tax offset received under Subdivision 61-H of the Income Tax Assessment Act 1997 for the total amount of the premium paid by a person, or by a person’s employer as a * fringe benefit for the person, under the policy for that financial year.

             (5)  A private health insurer must give a person a receipt, in the * approved form, for a payment of an amount of premiums (other than an amount that has been reduced under Division 23) if the person requests it.

26-5   Payment after a person 65 years or over ceases to be covered by policy

             (1)  If:

                     (a)  at any time, a payment of an amount of 35% or 40% of the premiums payable under an insurance policy (the original policy ) was made to a person because a person aged 65 years or over (the entitling person ) was insured under the original policy; and

                     (b)  at that time, another person (other than a * dependent child) was insured under the original policy; and

                     (c)  the entitling person subsequently ceases to be insured under the original policy;

subsections 26-1(2) and (3) apply in relation to a * complying health insurance policy (whether or not the original policy) under which the other person is insured (other than for the purposes of working out the * incentive amount) as if:

                     (d)  the entitling person were also insured under that policy; and

                     (e)  the entitling person were the same age as the age at which he or she ceased to be insured under the original policy.

             (2)  Subsection (1) ceases to apply if a person (other than a * dependent child) who was not insured under the original policy at the time the entitling person ceased to be insured under it becomes insured under the policy to which subsection (1) applied.

             (3)  Subsection (1) does not apply if its application would result in the amount payable under subsection 26-1(2) or (3) being less than it would otherwise have been.

             (4)  Paragraph (1)(a) applies in relation to a payment of an amount of 35% or 40% of the premiums payable under an insurance policy whether the payment was made under this Part or under Chapter 2 of the Private Health Insurance Incentives Act 1998 .

  Subdivision 26-B Claiming payments under the incentive payments scheme

26-10   Claim for payment under incentive payments scheme

             (1)  To be paid an amount to which a person is entitled under section 26-1, the person must make a claim in the * approved form.

             (2)  The claim must be sent to or lodged at an office of Medicare Australia, or a place approved by the Medicare Australia CEO, in:

                     (a)  the financial year in which the payment of premiums to which the claim relates was made; or

                     (b)  the next financial year.

26-15   Withdrawal of claim

                   A claimant may at any time, by writing sent to or lodged at an office of Medicare Australia, or a place approved by the Medicare Australia CEO, withdraw a claim.

26-20   Determination of claim and payment of amount

             (1)  The Medicare Australia CEO must make a decision granting or refusing the claim within 14 days after the day on which the claim is made.

             (2)  If the claim is granted, the Medicare Australia CEO must pay to the claimant the amount to which the claimant is entitled.

             (3)  If the claim is refused, the Medicare Australia CEO must give the claimant a notice stating that the claim has been refused and setting out the reasons for the refusal.

26-25   Reconsideration of decision refusing a claim

             (1)  If a claim is refused, the claimant may apply to the Medicare Australia CEO for the Medicare Australia CEO to reconsider the decision.

             (2)  The application must:

                     (a)  be in writing; and

                     (b)  set out the reasons for the application.

             (3)  The application must be made within:

                     (a)  28 days after the day on which the claimant was notified of the decision; or

                     (b)  if, either before or after the end of that period of 28 days, the Medicare Australia CEO extends the period within which the application may be made—the extended period for making the application.

             (4)  The Medicare Australia CEO must:

                     (a)  reconsider the decision; and

                     (b)  either affirm or revoke the decision;

within 28 days after receiving the application for reconsideration.

Note:          Decisions affirming original decisions are reviewable under Part 6-9.

             (5)  If the Medicare Australia CEO revokes the decision, the revocation is taken to be a decision granting the claim.

             (6)  The Medicare Australia CEO must give the claimant a notice stating his or her decision on the reconsideration together with a statement of his or her reasons for the decision.

             (7)  The Medicare Australia CEO is taken, for the purposes of this Subdivision, to have made a decision affirming the original decision if the Medicare Australia CEO has not told the claimant of the decision on the reconsideration before the end of the period of 28 days.

26-30   Claimants to keep information up to date

             (1)  If, after a claimant has made a claim under section 26-10 for a payment of an amount:

                     (a)  a matter, event or circumstance occurs that affects the claimant’s entitlement to the payment; or

                     (b)  a change occurs in the premium, or in the amounts or frequency of the payments in respect of the premium, under the policy;

the claimant must, within 30 days after the occurrence of the matter, event, circumstance or change, notify the Medicare Australia CEO of the details of the matter, event, circumstance or change.

             (2)  A person commits an offence if:

                     (a)  the person is required by subsection (1) to notify the Medicare Australia CEO of the details of a matter, event, circumstance or change mentioned in that subsection; and

                     (b)  the person fails to comply with the requirement.

Penalty:  60 penalty units.

             (3)  Subsection 4K(2) of the Crimes Act 1914 does not apply to the obligation to provide information under subsection (1).