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Private Health Insurance Bill 2007

Part 2-3 Lifetime health cover

Division 31 Introduction

31-1   What this Part is about

People are encouraged to take out hospital cover by the time they turn 30. A person who is older than 30 when he or she takes out hospital cover for the first time, or who drops hospital cover for a period after having turned 30, may have to pay higher premiums for hospital cover. This scheme is known as lifetime health cover.

31-5   Private Health Insurance (Lifetime Health Cover) Rules

                   Matters relating to lifetime health cover are also dealt with in the Private Health Insurance (Lifetime Health Cover) 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 (Lifetime Health Cover) Rules are made by the Minister under section 333-20.



 

Division 34 General rules about lifetime health cover

34-1   Increased premiums for person who is late in taking out hospital cover

             (1)  A private health insurer must increase the amount of premiums payable for * hospital cover in respect of an * adult if the adult did not have hospital cover on his or her * lifetime health cover base day.

             (2)  The amount of the increase is worked out as follows:

 

where:

base rate , for * hospital cover, is the amount of premiums that would be payable for the cover if:

                     (a)  the premiums were not increased under this Part; and

                     (b)  there was no discount of the kind allowed under subsection 66-5(2).

lifetime health cover age , in relation to an * adult who takes out * hospital cover after his or her * lifetime health cover base day, means the adult’s age on the 1 July before the day on which the adult took out the hospital cover.

34-5   Increased premiums for person who ceases to have hospital cover after his or her lifetime health cover base day

             (1)  A private health insurer must increase the amount of premiums payable for * hospital cover in respect of an * adult if, after the adult’s * lifetime health cover base day, the adult ceases to have hospital cover.

             (2)  The amount of the increase is worked out as follows:

 

where:

base rate is the * base rate for the * hospital cover.

years without hospital cover is the number obtained by:

                     (a)  dividing by 365 the number of days (other than * permitted days without hospital cover), after the first day on which subsection (1) applied to the * adult, on which he or she did not have * hospital cover; and

                     (b)  rounding up the result to the nearest whole number.

             (3)  Any increase under this section in the amount of premiums payable for * hospital cover is in addition to any increase under section 34-1 in the amount of premiums payable for that hospital cover.

34-10   Increased premiums stop after 10 years’ continuous cover

             (1)  A private health insurer must stop increasing the amount of premiums payable for * hospital cover in respect of an * adult under this Part if the adult has had hospital cover (including under an * applicable benefits arrangement), the premiums for which have been increased under this Part or * old Schedule 2:

                     (a)  for a continuous period of 10 years; or

                     (b)  for a period of 10 years that has been interrupted only by * permitted days without hospital cover or periods during which the adult was taken to have had hospital cover otherwise than because of paragraph 34-15(2)(a) (none of which count towards the 10 years).

             (2)  The amount must stop being increased on the day after the last day of the 10 year period.

             (3)  The amount of premiums payable for * hospital cover in respect of the * adult must start to be increased under this Part again if:

                     (a)  after the end of the 10 year period, the adult ceases to have hospital cover; and

                     (b)  the adult later takes out hospital cover again; and

                     (c)  the days in the period between ceasing to have the cover and taking it out again are not all * permitted days without hospital cover in respect of the adult.

             (4)  Subsection (3) does not prevent this section applying again in respect of any later 10 year period.

             (5)  In subsection (1):

old Schedule 2 means Schedule 2 to the National Health Act 1953 as in force before 1 April 2007.

34-15   Meaning of hospital cover

             (1)  Hospital cover is so much of a * complying health insurance policy as * covers * hospital treatment. An * adult has hospital cover if he or she is insured under a complying health insurance policy that covers hospital treatment.

             (2)  An * adult is taken to have * hospital cover:

                     (a)  at any time during which the adult was covered by an * applicable benefits arrangement; or

                     (b)  at any time during which the adult holds a * gold card; or

                     (c)  at any time during which the adult is in a class of adults specified in the Private Health Insurance (Lifetime Health Cover) Rules for the purposes of this paragraph.

             (3)  In this section:

gold card means a card that evidences a person’s entitlement to be provided with treatment:

                     (a)  in accordance with the Treatment Principles prepared under section 90 of the Veterans’ Entitlements Act 1986 ; or

                     (b)  in accordance with a determination made under section 286 of the Military Rehabilitation and Compensation Act 2004 in respect of the provision of treatment.

34-20   Meaning of permitted days without hospital cover

             (1)  Any of the following days that occur after an * adult ceases, for the first time after his or her * lifetime health cover base day, to have * hospital cover are permitted days without hospital cover in respect of that adult:

                     (a)  days on which the cover was suspended by the private health insurer in accordance with the rules for suspensions set out in the Private Health Insurance (Lifetime Health Cover) Rules;

                     (b)  days (not counting days covered by paragraph (a)) on which the adult is * overseas that form part of a continuous period overseas of more than one year;

                     (c)  the first 1,094 days (not counting days covered by paragraph (a) or (b)) on which the adult did not have hospital cover.

             (2)  The Private Health Insurance (Lifetime Health Cover) Rules may specify days that, despite subsection (1), are taken not to be * permitted days without hospital cover.

34-25   Meaning of lifetime health cover base day

             (1)  A person’s lifetime health cover base day is the day worked out by using this diagram:

 

             (2)  A person is a new arrival if:

                     (a)  the person entered Australia for the first time on or after 1 July 2000; and

                     (b)  the person was not an Australian citizen or permanent resident of Australia at the time of the entry.

             (3)  A person’s medicare eligibility day is the day on which the person is registered by the Medicare Australia CEO as an eligible person within the meaning of section 3 of the Health Insurance Act 1973 .

             (4)  Despite subsection (1), if:

                     (a)  on or before 1 April 2007, a person’s Schedule 2 application day had arrived for the purposes of the National Health Act 1953 ; and

                     (b)  the person had * hospital cover on 1 April 2007; and

                     (c)  the person has had hospital cover continuously since that day;

the person’s lifetime health cover base day is the person’s Schedule 2 application day. For this purpose, a day on which the person has hospital cover does not include a * permitted day without hospital cover or a day on which the person would otherwise be taken to have hospital cover because of subsection 34-15(2).

34-30   When a person is overseas

                   Without limiting when a person is taken to be * overseasfor the purposes of this Part:

                     (a)  a person who lives on Norfolk Island is taken, while the person is living there, to be overseas; and

                     (b)  any period in which a person returns to Australia for less than 90 days counts as part of a continuous period overseas; and

                     (c)  a person is taken to have returned from overseas if the person returns to Australia for a period of at least 90 days.



 

Division 37 Exceptions to the general rules about lifetime health cover

37-1   People born on or before 1 July 1934

             (1)  The amount of premiums payable for * hospital cover in respect of an * adult does not increase under this Part if the adult was born on or before 1 July 1934.

             (2)  However, this section does not prevent section 37-20 applying to the * hospital cover in respect of any * adults who were born after 1 July 1934.

37-5   People over 31 and overseas on 1 July 2000

                   A person:

                     (a)  who turned 31 on or before 1 July 2000; and

                     (b)  who was * overseas on 1 July 2000;

is taken, for the purposes of section 34-1, to have had * hospital cover on the person’s * lifetime health cover base day.

37-10   Hardship cases

                   A person is treated for the purposes of this Part as if he or she had * hospital cover on 1 July 2000 if a determination under clause 10 of Schedule 2 to the National Health Act 1953 (as in force immediately before 1 April 2007) had effect in relation to the person immediately before 1 April 2007.

37-15   Increases cannot exceed 70% of base rates

                   The maximum amount of any increase under this Part in the amount of premiums payable for * hospital cover in respect of an * adult is an amount equal to 70% of the * base rate for the hospital cover.

37-20   Joint hospital cover

             (1)  If:

                     (a)  more than one * adult is covered under the same * hospital cover; and

                     (b)  the amount of premiums payable for the cover in respect of at least one of those adults is increased under this Part;

the amount of the premiums payable for the cover in respect of all of the adults is increased.

             (2)  The amount of the increase in the premiums payable for the cover is worked out by:

                     (a)  dividing the * base rate for the cover by the number of * adults it covers; and

                     (b)  using that rate to work out for each adult what the amount of the increase for that adult (if any) would be; and

                     (c)  adding together the results of paragraph (b).



 

Division 40 Administrative matters relating to lifetime health cover

40-1   Notification to insured people etc.

             (1)  A private health insurer must comply with any requirements specified in the Private Health Insurance (Lifetime Health Cover) Rules relating to providing information to:

                     (a)  * adults in respect of * hospital cover with the private health insurer; and

                     (b)  other adults who apply for, or inquire about, that hospital cover;

about increases under this Part in the amounts of premiums payable for hospital cover in respect of those adults.

             (2)  A private health insurer must comply with any requirements specified in the Private Health Insurance (Lifetime Health Cover) Rules relating to providing information to other private health insurers about increases under this Part in the amounts of premiums payable for * hospital cover with the private health insurer.

             (3)  The Private Health Insurance (Lifetime Health Cover) Rules may require or permit a private health insurer to provide information of a kind referred to in this section in the form of an age notionally attributed, to an * adult or other person, as the age from which the adult or other person will be treated as having had continuous * hospital cover.

             (4)  A private health insurer must keep separate records in relation to each * adult who has * hospital cover.

             (5)  When an * adult ceases to be * covered by * hospital cover under which more than one adult was covered, the private health insurer must notify each other adult that the adult has ceased to be covered by the cover.

40-5   Evidence of having had hospital cover, or of a person’s age

                   A private health insurer must comply with any requirements specified in the Private Health Insurance (Lifetime Health Cover) Rules relating to whether, and in what circumstances, particular kinds of evidence are to be accepted, for the purposes of this Part, as conclusive evidence of:

                     (a)  whether a person had * hospital cover at a particular time, or during a particular period; or

                     (b)  a person’s age.