Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon. Josh Frydenberg MP)Chapter 7: Safety net thresholds
Outline of chapter
7.1 There are two PBS Safety Net thresholds - concessional and general. The general patient safety net threshold is currently $1,542.10, which equates to approximately 36 general patient co-payments. The concessional safety set threshold is currently $326.40 which is the equivalent to 48 concessional patient co-payments.
7.2 The purpose of Schedule 7 of the main Bill is to amend the National Health Act 1953 to reduce the safety net thresholds for concessional to 36 scripts (from 48) and general to $1457.10 (from $1542.10) on 1 July 2022.
7.3 References in this Chapter of the Explanatory Memorandum to 'Concessional' refer to Concessional beneficiary patient.
7.4 References in this Chapter of the Explanatory Memorandum to 'General' refer to General beneficial patient.
Context of amendments
7.5 The Australian Government is committed to ensuring that all Australians are able to access high quality health care. The PBS provides significant direct assistance to make medicines affordable.
7.6 Medicines dispensed through the PBS are subject to a patient contribution, for general (non-concessional) patients, this is known as a general patient charge. The general patient charge is the amount the patient pays towards the cost of their PBS subsidised medicine. The Government pays the remaining cost.
7.7 Currently concessional patients pay $6.80 for a script. Once a concessional patient reaches the safety net threshold any scripts for the remainder of the year are cost free to the patient.
7.8 The concessional safety net is based on a multiple of the concessional beneficiary charge which is indexed annually on 1 January each year.
7.9 General patients currently pay up to $42.50 per script and once the safety net threshold is met a general patient pays $6.80 per script for the remainder of the calendar year.
7.10 The general patient safety net is indexed annually.
7.11 Without a reduction to the safety net thresholds, over time it may become more difficult for patients to afford the out-of-pocket costs if they require a lot of medicines.
7.12 Schedule 7 to the main Bill will reduce the concessional safety net by 12 concessional patient co-payments to 36 and the general patient safety net by $85 (equivalent to 2 general patient co-payments) to $1457.10.
Comparison of key features of new law and current law
Table 7.1 Comparison of new law and current law
| New law | Current law |
| On 1 July 2022 the new concessional beneficiary safety net will be reduced to 36 concessional patient co-payments. | Current concessional beneficiary safety net is 48 scripts. |
| On 1 May 2022 the general patient safety net threshold will reduce by $85.00 to $1457.10. | Current general patient safety net threshold is $1542.10. |
Detailed explanation of new law
7.13 Schedule 7 of the main Bill commences on 1 July 2022 which means the amendments will apply in relation to the supply of a pharmaceutical benefit on or after 1 July 2022.
7.14 Section 99F of the National Health Act 1953 defines the concessional beneficiary safety net as "the amount worked out by multiplying the concessional beneficiary charge by 48", and the general patient safety net as "the amount of $1486.80". However indexation has increased the general patient Safety Net threshold, to the current $1,542.10, as at 1 January 2022.
7.15 Item 1 of schedule 7 amends the definition of concessional beneficiary safety net at section 99F of the National Health Act 1953 by lowering the number of concessional patient co-payments to 36.
7.16 Item 2 of schedule 7 amends the definition of general patient safety net at section 99F of the National Health Act 1953 by lowering the dollar value to $1457.10.
7.17 After 1 July 2022, the indexation arrangements defined in section 99G of the National Health Act 1953 will resume, with no change to their current operation. That is, on 1 January 2023, normal indexation of the general patient safety net amount (Year to September Quarter) will resume. The concessional beneficiary safety net will continue to be determined as a multiple of concessional patient co-payments, which are indexed, resulting in the overall increase of the concessional beneficiary safety net threshold.
7.18 This change is reducing the baseline. Indexation is based on the CPI and will not be affected by the reset of the baseline.
7.19 The reduction to the concessional beneficiary safety net and the general patient safety net will have an impact on the number of scripts a patient has filled before reaching the safety net threshold.