Explanatory Memorandum(Circulated by authority of the Treasurer, the Hon Peter Costello, MP and the Minister for Health and Aged Care, the Hon Dr Michael Wooldridge, MP))
General outline and financial impact
The Private Health Insurance Incentives Bill 1998 will provide for a financial incentive for people who take out or maintain private health insurance. The incentive is in the form of a direct payment or premiums reduction and is equal to 30% of the cost of private health insurance cover. The measure is complemented by amendments made to the ITAA 1997 by the Taxation Laws Amendment (Private Health Insurance) Bill 1998 which provides the incentive in the form of a tax offset (also known as a rebate).
The Private Health Insurance Incentives Amendment Bill 1998 closes off the current private health insurance incentive scheme (PHIIS).
Date of effect: 1 January 1999.
Proposal announced: 13 August 1998 as part of the Government's tax reform policy document, Tax Reform: not a new tax, a new tax system .
Financial and compliance cost impact: See Regulation Impact Statement.
- The measure will mainly impact on existing members of private health funds and persons who take up membership because of the reduced cost of private health insurance.
- Compliance costs for individuals participating in the scheme will generally be the same as under PHIIS.
- Administrative costs will increase slightly from those incurred under PHIIS. This is because of the inclusion of the direct payment option and the broader range of persons to whom the new scheme will apply.
Policy objective: To increase the proportion of the population covered by private health insurance.