Explanatory Memorandum
(Circulated by authority of the Minister for Health, the Hon. Tanya Plibersek, MP)Schedule 2 - Incentive payments scheme
Part 1 - Main amendments
Private Health Insurance Act 2007
Item 1 - Paragraph 3-5(b)
Item 1, Part 1, Schedule 2 removes reference to payments by the Commonwealth in relation to premiums paid for complying health insurance policies in the overview of the PHI Act.
Item 2 - Section 15-1
Item 2, Part 1, Schedule 2 amends the introduction to Chapter 2 (Incentives) of the PHI Act to remove reference to the Incentives Payment Scheme (IPS) as a payment made in return for payments of premiums under complying health insurance policies as an incentive to encourage people to have private health insurance.
Item 3 - Part 2-2 (heading)
Item 3, Part 1, Schedule 2 of the Bill amends the heading of Part 2-2 of the PHI Act to remove reference to the IPS.
Item 4 - Section 20-1
Item 4, Part 1, Schedule 2 of the Bill amends the introduction to Part 2-2 of the PHI Act (Premiums reduction scheme) to remove the IPS as a mechanism to encourage people to take out, and continue to hold, private health insurance.
Item 5 - Section 20-5
Item 5, Part 1, Schedule 2 of the Bill removes the IPS as matter that is or might be dealt with in the Private Health Insurance (Incentives) Rules made under section 333-20 of the PHI Act.
Item 6 - Division 26
Item 6, Part 1, Schedule 2 of the Bill removes Division 26 of the PHI Act (the IPS) in its entirety. The deletion of Division 26 from the PHI Act removes the entitlement, receipt, withdrawal and reconsideration for a payment, paid in respect to a premium paid under a complying health insurance policy, when the claim is lodged at a DHS Service Centre.
Item 7 - Paragraph 206-1(1)(a)
Item 7, Part 1, Schedule 2 of the Bill amends the options available in order to revoke the status of an insurer participating in the premium reduction scheme to remove the repeated failure by the insurer to issue a receipt for a payment received which has been reduced under the IPS. This option will no longer be required due to the removal of the IPS in Item 6 in Schedule 2 of the Bill.
Item 8 - Section 230-1
Item 8, Part 1, Schedule 2 of the Bill amends the introduction to Chapter 6 of the PHI Act (Administration) to remove reference to general administrative matter relating to the IPS.
Item 9 - Part 6-4 (heading)
Item 9, Part 1, Schedule 2 of the Bill amends the heading of Part 6-4 of the PHI Act to remove reference to the IPS.
Item 10 - Section 276-1
Item 10, Part 1, Schedule 2 of the Bill amends the introduction to Part 6-4 of the PHI Act to remove reference to administration of the IPS.
Item 11 - Section 276-1
Item 11, Part 1, Schedule 2 of the Bill provides a typographical amendment to support the amendment in Item 10 in Schedule 2 of this Bill.
Item 12 - Division 279 (heading)
Item 12, Part 1, Schedule 2 of the Bill substitutes the heading of Division 279 of the PHI Act to remove reference to the IPS.
Item 13 - Division 282 (heading)
Item 13, Part 1, Schedule 2 of the Bill amends the heading of Division 282 of the PHI Act to remove reference to the IPS in relation to the recovery of payments.
Item 14 - Paragraph 282-1(1)(a), (b) and (c)
Item 14, Part 1, Schedule 2 of the Bill removes the criteria for a payment made under the IPS to be recovered as a debt from the Commonwealth to insurers participating in the Premium Reduction Scheme if the payment was made to a person who was not entitled to the payment, was afterwards refunded or was paid in respect to a claim that has been withdrawn.
Item 15 - Paragraph 282-1(2)(a)
Item 15, Part 1, Schedule 2 of the Bill removes the criteria for a payment made under the IPS to be recovered as a debt from the person referred to in respect of the payment that was made to the person who was not entitled to the payment, was afterwards refunded or was paid in respect to a claim that has been withdrawn.
Item 16 - Paragraph 282-15(1)(a)
Item 16, Part 1, Schedule 2 of the Bill amends the eligibility for a person to apply to the Chief Executive Medicare to reconsider whether an amount is recoverable as a debt due to the Commonwealth to refer only to the interest on payments made to an individual. The interest payable is determined by section 282-5(2) of the PHI Act.
Item 17 - Subsection 282-18(1)
Item 17, Part 1, Schedule 2 of the Bill removes the liability for excess private health insurance premium reduction or refunds to be made to the Commissioner of Taxation for payments made, in respect of the IPS, to a person in relation to a premium paid during a financial year.
Item 18 - Subsection 282-18(2)
Item 18, Part 1, Schedule 2 of the Bill removes reference to a payment (made under the IPS) in order to work out the liability for excess private health insurance premium reductions to be made to the Commissioner of Taxation by determining the reduction to the premium between the persons who are PHIIB's in respect to the premium.
Item 19 - Section 328-5 (table item 3)
Item 19, Part 1, Schedule 2 of the Bill removes the ability for the Administrative Appeals Tribunal to affirm an original decision by the Chief Executive Medicare to reject a claim to be paid under the IPS.
Item 20 - Section 328-5 (table item 40)
Item 20, Part 1, Schedule 2 of the Bill removes the ability for the Administrative Appeals Tribunal to affirm an original decision by the Chief Executive Medicare to recover a payment made under the IPS to a person who was not entitled to that payment or the premium was afterwards refunded.
Item 21 - Clause 1 of Schedule 1 (definition of incentive payments scheme )
Item 21, Part 1, Schedule 2 of the Bill amends Clause 1 of Schedule 1 of the PHI Act to remove the definition of incentive payments scheme in its entirety. This primarily supports the amendment made in item 6 in Schedule 2 of this Bill.
Part 2 - Consequential amendments
Income Tax Assessment Act 1997
Item 22 - Section 11-15 (table item headed "social security or like payments"
Item 22, Part 2, Schedule 2 of the Bill removes the exemption of private health insurance payments paid under the IPS for the purpose of income tax.
Item 23 - Subdivision 52-D
Item 23, Part 2, Schedule 2 of the Bill removes subdivision 52-D (Exempt payments made by the Commonwealth to reimburse certain expenditure) as a consequence of the amendment made in Item 22 in Schedule 2 of the Bill.
Item 24 - Section 61-200
Item 24, Part 2, Schedule 2 of the Bill amends the introduction to section 61-200 to remove a payment made under the IPS, or payment received under the IPS as an option of how to claim a private health insurance tax offset.
Item 25 - Subsection 61-210(2)
Item 25, Part 2, Schedule 2 of the Bill amends the amount of a private health insurance tax offset, because a PHII benefit was received in another form, to remove a payment which was made to a person under the IPS in relation to the premium.
Item 26 - Subsection 61-210(3)
Item 26, Part 2, Schedule 2 of the Bill amends the calculation of the amount of a private health insurance tax offset to remove a payment which was made to a person under the IPS in relation to the premium, as a consequence of the amendment made in Item 25 of the Bill.
Taxation Administration Act 1953
Item 27 - Subsection 355-65(2) in Schedule 1 (table item 8)
Item 27, Part 2, Schedule 2 of the Bill amends the exceptions, relating to the disclosure of information for other government purposes relating to tax, to remove the administration of the IPS from the exceptions regarding records or disclosures relating to social welfare, health or safety. This is a consequence of the amendments made in Item 22 in Schedule 2 to the Income Tax Assessment Act 1997 .
Part 3 - Saving provisions
Item 28 - Saving provisions
Item 28, Part 3, Schedule 2 of the Bill continues the operation of administrative provisions for the IPS in relation to claims lodged under the IPS before commencement of the Bill and IPS payments made on or after commencement. This will allow all outstanding claims under the IPS made before commencement to be settled. All payments made under the IPS will continue to be subject to the same administrative provisions in effect before commencement of this Bill.