Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document

 Download WordDownload Word  Download PDFDownload PDF 


Bill home page
Table Of Contents
Previous Fragment    Next Fragment
Private Health Insurance Bill 2007

Part 3-3 Requirements for complying health insurance products

Division 60 Introduction

60-1   What this Part is about

Complying health insurance products (which are made up of complying health insurance policies) are the only kind of insurance that private health insurers are allowed to make available as part of their health insurance business (see section 63-1 and Division 84). This Part sets out the requirements that an insurance policy must meet in order to be a complying health insurance policy.



 

Division 63 Basic rules about complying health insurance products

63-1   Obligation to ensure products are complying products

                   A private health insurer must ensure that the only kind of insurance that it makes available as part of its * health insurance business is insurance in the form of * complying health insurance products.

63-5   Meaning of complying health insurance product

             (1)  A complying health insurance product is a * product made up of * complying health insurance policies.

             (2)  A product is all the insurance policies issued by a private health insurer:

                     (a)  that * cover the same treatments; and

                     (b)  that provide benefits that are worked out in the same way; and

                     (c)  whose other terms and conditions are the same as each other.

             (3)  Different premiums may be payable under policies in the same * product.

63-10   Meaning of complying health insurance policy

                   A complying health insurance policy is an insurance policy that meets:

                     (a)  the community rating requirements in Division 66; and

                     (b)  the coverage requirements in Division 69; and

                     (c)  if the policy * covers * hospital treatment—the benefit requirements in Division 72; and

                     (d)  the waiting period requirements in Division 75; and

                     (e)  the portability requirements in Division 78; and

                      (f)  the quality assurance requirements in Division 81; and

                     (g)  any requirements set out in the Private Health Insurance (Complying Product) Rules for the purposes of this paragraph.



 

Division 66 Community rating requirements

66-1   Community rating requirements

             (1)  An insurance policy meets the community rating requirements in this Division if:

                     (a)  the policy prohibits the private health insurer that issued the policy from breaching the principle of community rating in section 55-5 in relation to a person insured under the policy; and

                     (b)  the policy has no terms or conditions that would allow the insurer to * improperly discriminate against a person insured under the policy; and

                     (c)  the only discounts (if any) available under the policy are discounts allowed under subsection 66-5(2); and

                     (d)  unless the policy is issued under a new * product (see subsection (2))—the premiums payable under the policy meet the premium requirement in section 66-5.

             (2)  For the purposes of paragraph (1)(d), an insurance policy is issued under a new * product if the amount of premiums charged under policies in the product has not changed since the first policy in the product was issued.

66-5   Premium requirement

             (1)  For the purposes of paragraph 66-1(d), the premiums payable under an insurance policy for a period meet the premium requirement in this section if the amount of premiums payable under the policy for the period:

                     (a)  is the amount specified in the most recent approval under section 66-10 as the * relevant amount for that kind of policy; or

                     (b)  is the proportion, for the period, of that amount; or

                     (c)  would be the amount mentioned in paragraph (a) or (b) except that a different amount is payable:

                              (i)  because of the application of Part 2-3 (lifetime health cover); or

                             (ii)  because of a discount allowed under subsection (2); or

                            (iii)  because of a combination of subparagraphs (i) and (ii).

             (2)  A discount is allowed if it is available for people:

                     (a)  who pay a premium at least 3 months in advance; or

                     (b)  who pay a premium by payroll deduction; or

                     (c)  who pay a premium by pre-arranged automatic transfer from an account at a bank or other financial institution; or

                     (d)  who are, under the * rules of the private health insurer, treated as belonging to a contribution group; or

                     (e)  in relation to whom the insurer is not required to pay a levy under a law of a State or Territory;

as long as:

                      (f)  the same discount is available for the same reason under every policy in the * product; and

                     (g)  the percentage discount does not exceed the percentage specified in the Private Health Insurance (Complying Product) Rules as the maximum percentage discount allowed.

66-10   Minister’s approval of premiums

             (1)  A private health insurer that proposes to change the premiums charged under a * complying health insurance product must apply to the Minister for approval of the change:

                     (a)  in the * approved form; and

                     (b)  at least 60 days before the day on which the insurer proposes the change to take effect.

             (2)  The application may propose different changes for policies in the * product, but the proposed changed amount must be the same for each policy in the product:

                     (a)  issued to people living in a particular * risk equalisation jurisdiction; and

                     (b)  under which:

                              (i)  only one person is insured; or

                             (ii)  2 * adults are insured (and no-one else); or

                            (iii)  2 or more people are insured, none of whom is an adult; or

                            (iv)  2 or more people are insured, only one of whom is an adult; or

                             (v)  3 or more people are insured, only 2 of whom are adults; or

                            (vi)  3 or more people are insured, at least 3 of whom are adults.

             (3)  The Minister must, by written instrument, approve the proposed changed amount or amounts, unless the Minister is satisfied that a change that would increase the amount or amounts would be contrary to the public interest.

             (4)  If the Minister approves the proposed changed amount or amounts, the approval has effect:

                     (a)  from the day specified in the approval as the day the change takes effect; and

                     (b)  until replaced by another approval for the * product under this section.

             (5)  For the purposes of subsection 66-5(1), the amount approved for each kind of policy described in subsection (2) is the relevant amount for that kind of policy.

             (6)  If the Minister refuses to approve the proposed changed amount or amounts, the Minister must table the Minister’s reasons for refusal in each House of the Parliament no later than 15 sitting days of that House after the refusal.

             (7)  An instrument made under subsection (3) is not a legislative instrument.

66-15   Entitlement to benefits for general treatment

                   Neither:

                     (a)  the community rating principle in section 55-5; nor

                     (b)  the community rating requirement in paragraph 66-1(b);

prevents a private health insurer from determining a person’s entitlement under a * complying health insurance policy to a benefit for * general treatment (other than * hospital-substitute treatment) in respect of a period by having regard to the amount of benefits for that kind of treatment already claimed for the person in respect of the period.

66-20   Different amount of benefits depending on where people live

                   Neither:

                     (a)  the community rating principle in section 55-5; nor

                     (b)  the community rating requirements in section 66-1;

prevents the amount of a benefit for a treatment under a * complying health insurance policy from being different from the amount of a benefit for the same treatment under another policy that is in the same * product, if the difference is only because the persons insured under the policies live in different * risk equalisation jurisdictions.



 

Division 69 Coverage requirements

69-1   Coverage requirements

             (1)  An insurance policy meets the coverage requirements in this Division if the only things the policy * covers are:

                     (a)  specified treatments that are * hospital treatment; or

                     (b)  specified treatments that are hospital treatment and specified treatments that are * general treatment; or

                     (c)  specified treatments that are general treatment but none that are * hospital-substitute treatment.

             (2)  Despite subsection (1), the policy must also * cover any treatment that a policy of its kind is required by the Private Health Insurance (Complying Product) Rules to cover.

             (3)  Despite subsection (1), the policy must not * cover any treatment that a policy of its kind is not allowed under the Private Health Insurance (Complying Product) Rules to cover.

69-5   Meaning of cover

             (1)  An insurance policy covers a treatment if, under the policy, the insurer undertakes liability in respect of some or all loss arising out of a liability to pay fees or charges relating to the provision of goods or a service that is or includes that treatment.

             (2)  An insurance policy also covers a treatment if the insurer provides an insured person, or arranges for an insured person to be provided with, goods or a service that is or includes that treatment.

             (3)  If an insurance policy * covers a treatment in the way described in subsection (2), this Part applies as if the provision of the goods or service were a benefit provided under the policy.



 

Division 72 Benefit requirements for policies that cover hospital treatment

72-1   Benefit requirements

             (1)  An insurance policy that * covers * hospital treatment meets the benefit requirements in this Division if:

                     (a)  the policy meets the requirements in the table in subsection (2); and

                     (b)  the policy meets any requirements specified in the Private Health Insurance (Complying Product) Rules to be benefit requirements; and

                     (c)  the policy does not provide benefits for:

                              (i)  the cost of care and accommodation in an aged care service (within the meaning of the Aged Care Act 1997 ); or

                             (ii)  a charge for a pharmaceutical benefit supplied under Part VII of the National Health Act 1953 , unless the circumstances of the charge are covered by section 92B of that Act; or

                            (iii)  any other treatment specified in the Private Health Insurance (Complying Product) Rules as a treatment for which benefits must not be provided; and

                     (d)  the * rules of the private health insurer that issues the policy meet the rules requirement in section 72-5.

             (2)  These are the requirements that a policy must meet for the purposes of paragraph (1)(a):

 

Requirements that a policy that * covers * hospital treatment must meet

Item

There must be a benefit for ...

The amount of the benefit must be ...

1

any part of * hospital treatment that is one or more of the following:

(a) psychiatric care;

(b) rehabilitation;

(c) palliative care;

if the treatment is provided in a * hospital and no * medicare benefit is payable for that part of the treatment.

at least the amount set out in the Private Health Insurance (Complying Product) Rules as the minimum benefit for that treatment.

2

* hospital treatment * covered under the policy for which a * medicare benefit is payable.

(a) if the charge for the treatment is less than the * schedule fee for the treatment—so much of the charge (if any) as exceeds 75% of the schedule fee; and

(b) otherwise—at least 25% of the schedule fee for the treatment.

3

if the policy * covers * hospital-substitute treatment—hospital-substitute treatment covered under the policy for which a * medicare benefit is payable.

(a) if the charge for the treatment is less than the * schedule fee for the treatment—so much of the charge (if any) as exceeds 75% of the schedule fee; and

(b) otherwise—at least 25% of the schedule fee for the treatment;

but the benefit must not be provided if a medicare benefit of an amount that is at least 85% of the schedule fee is claimed for the treatment.

4

(a) * hospital treatment * covered under the policy; and

(b) if the policy covers * hospital-substitute treatment—hospital-substitute treatment covered under the policy;

that is the provision of a prosthesis of a kind listed in the Private Health Insurance (Prostheses) Rules in circumstances:

(c) in which a * medicare benefit is payable; or

(d) set out in the Private Health Insurance (Prostheses) Rules for the purposes of this table item.

(a) at least the amount set out in the Private Health Insurance (Prostheses) Rules as the minimum benefit for the prosthesis; and

(b) no more than the amount (if any) set out in the Private Health Insurance (Prostheses) Rules as the maximum benefit for the prosthesis.

5

any treatment for which the Private Health Insurance (Complying Product) Rules specify there must be a benefit.

at least the amount set out in the Private Health Insurance (Complying Product) Rules as the minimum benefit for that treatment.

Note:          If a private health insurer provides a policy holder with, or arranges for a policy holder to be provided with, treatment, it is treated as a benefit for the purposes of this Division (see subsection 69-5(3)).

72-5   Rules requirement in relation to provision of benefits

             (1)  For the purposes of paragraph 72-1(1)(d), the * rules of the private health insurer that issues the policy meet the rules requirement in this section if the rules have the effect required by subsection (2).

             (2)  The effect required is that if, under an agreement or arrangement with a private health insurer, a particular * health care provider (other than a * medical practitioner) provides particular * hospital treatment or * hospital-substitute treatment to people insured under the same * complying health insurance product of the insurer, any charge for the treatment:

                     (a)  that is payable by an insured person; and

                     (b)  which is not recoverable by a benefit under the product;

must be the same for all of the people insured under the product, irrespective of:

                     (c)  the frequency with which that provider provides that particular treatment to people insured under that product; or

                     (d)  any other matter.

             (3)  The Private Health Insurance (Complying Product) Rules may modify the effect required by subsection (2) in relation to all or particular kinds of * complying health insurance products, benefits, treatments or * health care providers. To the extent the Rules do so, the rules requirement is taken to be met if the conditions in the Rules are met.

72-10   Minimum benefits for prostheses

             (1)  Private Health Insurance (Prostheses) Rules made for the purposes of item 4 of the table in subsection 72-1(2)must only list a kind of prosthesis if:

                     (a)  an application has been made under subsection (2) in relation to that kind of prosthesis; and

                     (b)  the Minister has granted the application.

             (2)  A person may apply to the Minister to have the Private Health Insurance (Prostheses) Rules list a prosthesis of the kind to which the application relates.

             (3)  The application must be:

                     (a)  in the * approved form; and

                     (b)  accompanied by any application fee imposed under the Private Health Insurance (Prostheses Application and Listing Fees) Act 2006 .

             (4)  The Minister must inform the applicant in writing of the Minister’s decision whether or not to grant the application. If the Minister decides not to grant the application, the Minister must also inform the applicant of the reason for that decision.

             (5)  If:

                     (a)  the Minister grants the application; and

                     (b)  the applicant pays to the Commonwealth any initial listing fee imposed under the Private Health Insurance (Prostheses Application and Listing Fees) Act 2006 within 14 days of being informed of the Minister’s decision to grant the application;

the Minister must, on the next occasion when the Minister makes or varies the Private Health Insurance (Prostheses) Rules:

                     (c)  list the kind of prosthesis to which the application relates in those Rules; and

                     (d)  set out in those Rules a minimum benefit for the prosthesis; and

                     (e)  if the Minister considers it appropriate—set out in those Rules a maximum benefit for the prosthesis.

72-15   Ongoing listing fee for prostheses

             (1)  This section applies if the Minister lists a kind of prosthesis in the Private Health Insurance (Prostheses) Rules as a result of an application under subsection 72-10(2).

             (2)  The applicant must pay to the Commonwealth the ongoing listing fee for which the applicant is liable under the Private Health Insurance (Prostheses Application and Listing Fees) Act 2006 , within 14 days of each day specified under that Act as an ongoing listing fee imposition day.

             (3)  If the applicant fails to pay an ongoing listing fee in accordance with subsection (2), the Minister may remove the kind of prosthesis from the list in the Private Health Insurance (Prostheses) Rules.



 

Division 75 Waiting period requirements

75-1   Waiting period requirements

             (1)  An insurance policy meets the waiting period requirements in this Division if the * waiting period that applies to a person who did not * transfer to the policy is no longer than:

                     (a)  for a benefit for * hospital treatment or * hospital-substitute treatment that is obstetric treatment or treatment for a * pre-existing condition (other than treatment covered by paragraph (b))—12 months; and

                     (b)  for a benefit for hospital treatment or hospital-substitute treatment that is psychiatric care, rehabilitation or palliative care (whether or not for a pre-existing condition)—2 months; and

                     (c)  for any other benefit for hospital treatment or hospital-substitute treatment—2 months.

             (2)  The Private Health Insurance (Complying Product) Rules may modify the requirements in subsection (1) in relation to all or particular kinds of private health insurers, benefits or insured persons. To the extent the Rules do so, the waiting period requirements in this Division are taken to be met if the conditions in the Rules are met.

Note:          If a private health insurer provides a policy holder with, or arranges for a policy holder to be provided with, treatment, it is treated as a benefit for the purposes of this Division (see subsection 69-5(3)).

75-5   Meaning of waiting period

                   The waiting period that applies to a person for a benefit under an insurance policy is the period:

                     (a)  starting at the time the person becomes insured under the policy; and

                     (b)  ending at the time specified in the policy;

during which the person is not entitled to the benefit.

75-10   Meaning of transfers

                   A person transfers to a policy (the new policy ) from another policy (the old policy ) if:

                     (a)  either:

                              (i)  the person is insured under the old policy at the time the person becomes insured under the new policy; or

                             (ii)  the person ceased to be insured under the old policy no more than 7 days, or a longer number of days allowed by the new policy’s insurer for this purpose, before becoming insured under the new policy; and

                     (b)  the old policy is a * complying health insurance policy; and

                     (c)  the person’s premium payments under the old policy were up to date at the time the person became insured under the new policy.

Note:          See section 99-1 about transfer certificates.

75-15   Meaning of pre-existing condition

             (1)  A person insured under an insurance policy has a pre-existing condition if:

                     (a)  the person has an ailment, illness or condition; and

                     (b)  in the opinion of a * medical practitioner appointed by the insurer that issued the policy, the signs or symptoms of that ailment, illness or condition existed at any time in the period of 6 months ending on the day on which the person became insured under the policy.

             (2)  In forming an opinion for the purposes of paragraph (1)(b), the * medical practitioner must have regard to any information in relation to the ailment, illness or condition that the medical practitioner who treated the ailment, illness or condition gives him or her.

             (3)  If:

                     (a)  a private health insurer replaces a * complying health insurance product with another complying health insurance product; and

                     (b)  a person who was insured under a policy that was in the replaced * product is * transferred by the insurer to a policy that is in the replacement product;

the reference in paragraph (1)(b) to the day on which the person became insured under the policy is taken to be a reference to the day on which the person became insured under the replaced policy.



 

Division 78 Portability requirements

78-1   Portability requirements

             (1)  An insurance policy meets the portability requirements in this Division if the policy meets the requirements in subsections (2), (3) and (4).

             (2)  An insurance policy meets the requirement in this subsection if the * waiting period that applies to a person who * transferred to the policy (the new policy ) from another policy (the old policy ) is no longer than:

                     (a)  for a benefit for * hospital treatment or * hospital-substitute treatment that was not * covered under the old policy—the period allowed under section 75-1; and

                     (b)  for a benefit for hospital treatment or hospital-substitute treatment that was covered under the old policy—the balance of any unexpired waiting period for that benefit that applied to the person under the old policy.

             (3)  An insurance policy meets the requirement in this subsection if the policy does not impose on a person who * transferred to the policy any period (other than a * waiting period allowed under subsection (2)) during which the amount of a benefit in relation to any particular * hospital treatment or * hospital-substitute treatment is less than the amount the person would be eligible for during any other period.

             (4)  An insurance policy meets the requirement in this subsection if, in relation to a benefit for * hospital treatment or * hospital-substitute treatment:

                     (a)  that was * covered under the old policy; and

                     (b)  in respect of which a higher excess or higher co-payment applied under the old policy than is the case under the new policy;

any period during which the higher excess or higher co-payment continues to apply under the new policy to a person who * transferred to the policy is no longer than the * waiting period allowed under section 75-1 for a benefit for that treatment.

             (5)  In working out:

                     (a)  for the purposes of subsection (2) or (4), whether a treatment was * covered under an old policy; or

                     (b)  for the purposes of subsection (3), whether the amount of a benefit under a new policy during a period is less than the amount it would be during another period;

disregard the existence or otherwise of contracts between the insurer in relation to either of the policies and particular * health care providers or groups of health care providers.

             (6)  The Private Health Insurance (Complying Product) Rules may modify the requirements in this section in relation to all or particular kinds of private health insurers, benefits or insured persons. To the extent the Rules do so, the portability requirements in this Division are taken to be met if the conditions in the Rules are met.

Note:          If a private health insurer provides a policy holder with, or arranges for a policy holder to be provided with, treatment, it is treated as a benefit for the purposes of this Division (see subsection 69-5(3)).



 

Division 81 Quality assurance requirements

81-1   Quality assurance requirements

                   An insurance policy meets the quality assurance requirements in this Division if the policy prohibits the payment of benefits for a treatment that does not meet the standards in the Private Health Insurance (Accreditation) Rules.

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



 

Division 84 Enforcement of this Part

84-1   Offence: advertising, offering or insuring under non-complying policies

             (1)  A person commits an offence if:

                     (a)  the person:

                              (i)  advertises a * product; or

                             (ii)  offers a person insurance under a policy; or

                            (iii)  insures a person under a policy; or

                            (iv)  arranges for another person to do a thing mentioned in subparagraph (i), (ii) or (iii); and

                     (b)  the policy, or a policy in the product, * covers * hospital treatment or * general treatment or both (whether or not it covers any other treatment); and

                     (c)  the policy is not a * complying health insurance policy.

Penalty:  1,000 penalty units or imprisonment for 5 years, or both.

             (2)  In imposing a penalty on a private health insurer for an offence under subsection (1), the court:

                     (a)  must have regard to the possible impact of a penalty on the insurer’s capital adequacy, solvency and the level of premiums for its * complying health insurance products; and

                     (b)  must not impose a penalty if satisfied that doing so would adversely affect the insurer’s capital adequacy or solvency, or be likely to lead to an increase in premiums for its products.

84-5   Offence: directors and chief executive officers liable if systems not in place to prevent breaches

                   A person commits an offence if:

                     (a)  the person is a * director or * chief executive officer of a private health insurer; and

                     (b)  the insurer commits an offence under section 84-1; and

                     (c)  the person failed to exercise due diligence to ensure that adequate systems were in place to prevent the insurer from committing the offence.

Penalty:  1,000 penalty units or imprisonment for 5 years, or both.

84-10   Injunction in relation to non-complying policies

             (1)  If a private health insurer has engaged, is engaging, or is proposing to engage, in conduct:

                     (a)  that contravenes or would contravene section 63-1; or

                     (b)  that is or that would be an offence against section 84-1;

the Federal Court may, on application by a person mentioned in subsection (3), grant an injunction restraining the insurer from engaging in the conduct.

             (2)  If:

                     (a)  a private health insurer has refused or failed, is refusing or failing, or is proposing to refuse or fail, to do a thing; and

                     (b)  the refusal or failure:

                              (i)  contravenes or would contravene section 63-1; or

                             (ii)  is or would be an offence against section 84-1;

the Federal Court may, on application by a person mentioned in subsection (3), grant an injunction requiring the insurer to do the thing.

             (3)  For the purposes of subsections (1) and (2), an application may be made by:

                     (a)  the Minister; or

                     (b)  the Council; or

                     (c)  any other person.

             (4)  The court may grant an interim injunction pending the determination of an application under subsection (1) or (2).

             (5)  The court must not require an applicant for an injunction to give an undertaking as to damages as a condition of granting an interim injunction.

             (6)  The court may discharge or vary an injunction granted under this section.

             (7)  The power of the court to grant an injunction restraining a private health insurer from engaging in conduct may be exercised:

                     (a)  whether or not it appears to the court that the insurer intends to engage again, or to continue to engage, in conduct of that kind; and

                     (b)  whether or not the insurer has previously engaged in conduct of that kind.

             (8)  The power of the court to grant an injunction requiring a private health insurer to do a thing may be exercised:

                     (a)  whether or not it appears to the court that the insurer intends to refuse or fail again, or to continue to refuse or fail, to do that thing; and

                     (b)  whether or not the insurer has previously refused or failed to do that thing.

84-15   Remedies for people affected by non-complying policies

                   On application by the Minister, if the Federal Court is satisfied that:

                     (a)  a private health insurer has engaged in conduct that contravenes section 63-1 or is an offence against section 84-1; or

                     (b)  both:

                              (i)  a private health insurer has refused or failed to do a thing; and

                             (ii)  that refusal or failure contravenes section 63-1 or is an offence against section 84-1;

the court may order the insurer to do either or both of the following:

                     (c)  take specified action to ensure that an insurance policy becomes a * complying health insurance policy;

                     (d)  take specified action to ensure that a person insured under an insurance policy is put in the position the person would have been in, had the policy always been a complying health insurance policy.