PRIVATE HEALTH INSURANCE INCENTIVES ACT 1997

***** Repealed 1 July 2000 *****

PART 1 - PRELIMINARY

Division 1 - Preliminary

SECTION 1-1   SHORT TITLE  

1-1    This Act may be cited as the Private Health Insurance Incentives Act 1997.

SECTION 1-2   COMMENCEMENT  

1-2    This Act commences on the day on which it receives the Royal Assent.

SECTION 1-3   DEFINITIONS  

1-3    Expressions used in this Act (or in a particular provision of this Act) that are defined in the Dictionary in Schedule 1 have the meanings given to them in the Dictionary.

PART 2 - THE INCENTIVES SCHEME

Division 2 - Introduction

SECTION 2-1   WHAT THIS PART IS ABOUT  

This Part is about how people who are covered by private health insurance policies providing hospital cover, ancillary cover or combined cover can participate in a scheme under which the premiums payable under those policies are reduced.

Note:

The incentives scheme is complemented by the private health insurance tax offset, provided for by Subdivision 61-G of the Income Tax Assessment Act 1997. People can choose to claim the tax offset instead of having their premiums reduced.

Division 3 - Who is eligible to participate in the scheme?

SECTION 3-1   ELIGIBILITY TO PARTICIPATE IN THE SCHEME  

3-1    A person is eligible, in respect of a financial year, to participate in the incentives scheme in respect of a private health insurance policy if:

(a)  the health fund that issued the policy is, for the year, a participating fund (see Division 7); and

(b)  the person is eligible to apply under Division 4 for registration in respect of the policy for that year (see section 4-2); and

(c)  the policy provides appropriate private health insurance cover (see section 3-2); and

(d)  the income test under section 3-3 or 3-4 (whichever is applicable) is satisfied in respect of that year; and

(e)  the person is, at any time during that year, an eligible person within the meaning of section 3 of the Health Insurance Act 1973, or is treated as such a person because of section 6 of that Act.

SECTION 3-2   APPROPRIATE PRIVATE HEALTH INSURANCE COVER  

3-2(1)  [When cover considered appropriate]  

The policy provides appropriate private health insurance cover if:

(a)  it provides hospital cover (see subsection (2)); or

(b)  it provides ancillary cover (see subsection (3)); or

(c)  it provides combined cover (see subsection (6)).

3-2(2)  [Payable premium amounts]  

The policy provides hospital cover if:

(a)  it is an applicable benefits arrangement, within the meaning of section 5A of the National Health Act 1953, to which paragraph 5A(1)(a) of that Act applies; and

(b)  the annual premium payable for the policy is not less than:

(i) if the policy covers only one person - $250, or such other amount as the Minister determines in writing; or

(ii) if the policy covers more than one person - $500, or such other amount as the Minister determines in writing.

3-2(3)  [Ancillary cover]  

The policy provides ancillary cover if:

(a)  persons covered by the policy are covered (wholly or partly) for liability to pay fees and charges in respect of ancillary health benefits within the meaning of section 67 of the National Health Act 1953; and

(b)  the annual premium payable for the policy is not less than:

(i) if the policy covers only one person - $125, or such other amount as the Minister determines in writing; or

(ii) if the policy covers more than one person - $250, or such other amount as the Minister determines in writing.

3-2(4)   [Interpretation]  

In subsections (2) and (3):

annual premium means the amount of premium payable if the policy were to apply for one year, whether or not the policy applies, in the particular case in question, for that period.

3-2(5)  [Disallowable instruments]  

Determinations made for the purposes of subparagraph (2)(b)(i) or (ii) or (3)(b)(i) or (ii) are disallowable instruments for the purposes of section 46A of the Acts Interpretation Act 1901.

3-2(6)  [Combined cover]  

The policy provides combined cover if it provides both hospital cover and ancillary cover.

SECTION 3-3   INCOME TEST - POLICIES COVERING ONLY ONE PERSON  

3-3(1)  [Criteria for income test]  

If the policy covers only one person, the income test is satisfied in respect of the financial year in question if the sum of the taxable incomes of all of the persons whose incomes are required by subsection (2) to be taken into account is less than the maximum amount under subsection (4).

Note:

For taxable income , see section 3-5.

3-3(2)  [Persons whose incomes are taken into account]  

The persons whose incomes are to be taken into account are:

(a)  if the person covered by the policy is not a dependent child during the financial year - that person and the partner (if any) of that person; or

(b)  if the person covered by the policy is a dependent child at any time during that year - any parent of that person, and the partner (if any) of the parent, but only if, in respect of that year:

(i) the parent, or his or her partner, made one or more payments of premiums in respect of the policy; or

(ii) a person (other than a parent of the dependent child or the partner (if any) of that parent) made one or more such payments, under an arrangement entered into with the parent or partner.

3-3(3)  [Partners]  

For the purposes of subsection (2), a person is the partner of another person only if, on the last day of the financial year, the person is the partner of that person.

3-3(4)  [Maximum amount]  

The maximum amount is:

(a)  if at all times during the financial year the person covered by the policy is not a dependent child and is not the partner of another person - $35,000; or

(b)  if at any time during the financial year the person covered by the policy is not a dependent child and is the partner of another person - $70,000; or

(c)  if at any time during the financial year the person covered by the policy is a dependent child - $70,000.

Note:

For dependent child , parent and partner , see the Dictionary.

SECTION 3-4   INCOME TEST - POLICIES COVERING MORE THAN ONE PERSON  

3-4(1)  [Criteria for income test]  

If the policy covers more than one person, the income test is satisfied in respect of the financial year in question if the sum of the taxable incomes of all of the persons whose incomes are required by subsection (2) to be taken into account is less than the maximum amount under subsection (4).

Note:

For taxable income , see section 3-5.

3-4(2)  [Persons whose incomes are to be taken into account]  

The persons whose incomes are to be taken into account are:

(a)  each person covered by the policy who is not a dependent child during the financial year; and

(b)  the partner (if any) of each such person; and

(c)  if all of the persons covered by the policy are dependent children at any time during that year - any parent of any of the persons covered,and the partner (if any) of the parent, but only if, in respect of that year:

(i) the parent, or his or her partner, made one or more payments of premiums in respect of the policy; or

(ii) a person (other than a parent of the dependent child or the partner (if any) of that parent) made one or more such payments, under an arrangement entered into with the parent or partner.

3-4(3)  [Partners]  

For the purposes of subsection (2), a person is the partner of another person only if, on the last day of the financial year, the person is the partner of that person.

3-4(4)  [Maximum amount]  

The maximum amount is:

(a)  if the persons covered by the policy do not include 2 or more dependent children at any time during the financial year concerned - $70,000; or

(b)  if, at any time during the financial year, 2 or more dependent children are covered by the policy - the amount worked out as follows:

$70,000 + ($3,000 x (Number of dependent children - 1)).

      

Example:

EXPARAIf the policy covers the members of a family that has 3 dependent children, the maximum amount under subsection (4) is:

$70,000 + ($3,000 x (3 - 1)) = $76,000.

      

Note:

For dependent child , parent and partner , see the Dictionary.

SECTION 3-5   MEANING OF TAXABLE INCOME  

3-5    In section 3-3 or 3-4:

taxable income , in relation to a person, means the person's taxable income, within the meaning of the Income Tax Assessment Act 1936, for the financial year in question, and includes any share in the net income of a trust estate:

(a)  to which the person is presently entitled as a beneficiary; and

(b)  in respect of which the trustee of the trust estate in that capacity is liable to be assessed under section 98 of that Act; and

(c)  that is attributable to that financial year. NODIV

Division 4 - (not reproduced)

Division 5 - What effect does the scheme have on insurance premiums?

SECTION 5-1   REDUCTION IN PREMIUMS  

5-1(1)  [Reduction amounts]  

Subject to subsection (1A), the amount of premium that, apart from this section, would be payable under a private health insurance policy in respect of which a person is a participant in the incentives scheme for a financial year (see section 5-2) is to be reduced by the amount (the reduction amount ) worked out under whichever of the following paragraphs is applicable:

(a)  if the premium is paid in respect of the whole of the financial year - the annual incentive amount for the policy under section 5-3; or

(b)  if the premium is paid in respect of a part of the financial year - the amount worked out using the formula:

                              Number of days in that part 
                                 of the financial year 
Annual incentive amount   x   ---------------------------
  under section 5-3           Number of days in the whole 
                                 of the financial year 
      

5-1(1A)  [Where tax offset received]  

If the person has received a tax offset under Subdivision 61-G of the Income Tax Assessment Act 1997 in respect of the amount of premium:

(a)  where the amount of the offset is less than the reduction amount - the reduction amount is to be reduced by the amount of the offset; or

(b)  otherwise - the amount of the premium is not to be reduced under subsection (1).

5-1(2)  [Limitations]  

Subsection (1) does not apply to:

(a)  the payment of a premium that is made after the policy has ceased, during the financial year in question, to be a dependent child policy (see section 5-4); or

(b)  the payment of a premium that is made in respect of a period that ends before 1 July 1997; or

(c)  if the payment of a premium is made in respect of a period that starts before 1 July 1997 and ends on or after that day but on or before 31 July 1997 - the part of the payment that relates to the part of the period before 1 July 1997; or

(d)  the payment of a premium that is made in respect of a period that starts on or before 1 July 1997 and ends after 31 July 1997; or

(e)  the payment on or before 31 December 1998 of a part of a premium that relates to a period after 30 June 1999; or

(f)  the payment of a premium that is made after 31 December 1998.

SECTION 5-2   PARTICIPANT IN THE INCENTIVES SCHEME  

5-2(1)  [Registration]  

A person is a participant in the incentives scheme for a financial year in respect of a private health insurance policy if:

(a)  the person is registered under Division 4 in respect of the policy for the year; or

(b)  the person has applied to be registered in respect of the policy for the year and the registration has not been refused.

5-2(2)  [Payment of premiums]  

For the purposes of this Act, a person is taken, in respect of a payment of premium during July in a financial year, to be a participant in the incentives scheme if:

(a)  the person has not, at the time the payment is made, applied to be registered in respect of the private health insurance policy in question; and

(b)  on 30 June in the previous financial year, the person was registered under Division 4 in respect of the policy for that year.

SECTION 5-3   ANNUAL INCENTIVE AMOUNTS  

5-3(1)  [Components of incentive amounts]  

The annual incentive amount for a private health insurance policy is:

(a)  the amount set out in the following table; or

(b)  such other amount as is determined in writing by the Minister.

---------------------------------------------------------------------
Annual Incentive Amounts 
---------------------------------------------------------------------
                                       Policy           Policy       
                                       provides         provides     
       Number and           Policy     hospital         ancillary    
       kind of persons      provides   cover but not    cover but not
       covered by the       combined   ancillary        hospital     
Item   policy               cover      cover            cover        
---------------------------------------------------------------------
1      Policy covers 3      $450       $350             $100         
       or more people                                                
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
2      Policy covers one    $450       $350             $100         
       dependent child                                               
       and one other                                                 
       person                                                        
- - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - -
3      Policy covers 2      $250       $200             $50          
       people neither                                                
       of whom are                                                   
       dependent                                                     
       children                                                      
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
4      Policy covers one    $125       $100             $25          
       person                                                        
---------------------------------------------------------------------
      

Note:

For combined cover , hospital cover and ancillary cover , see section 3-2.

5-3(2)  [Disallowable instruments]  

Determinations under paragraph (1)(b) are disallowable instruments for the purposes of section 46A of the Acts Interpretation Act 1901.

SECTION 5-4   POLICIES THAT CEASE TO BE DEPENDENT CHILD POLICIES  

5-4    For the purposes of paragraph 5-1(2)(a), if:

(a)  at the time an application was made under section 4-3 for registration of a private health insurance policy for a financial year, the policy did not cover any person who was not a dependent child; and

(b)  on any day during that year, the person, or one or more of the persons, who was at that time covered by the policy ceases to be a dependent child but remains covered by the policy;

the policy ceases to be a dependent child policy on that day.

Note:

For dependent child , see the Dictionary.

SECTION 5-5   PERSONS WHO ARE NOT ELIGIBLE PERSONS FOR PART OF A FINANCIAL YEAR  

5-5    If, on one or more days during a financial year, a person:

(a)  is not an eligible person within the meaning of section 3 of the Health Insurance Act 1973; or

(b)  is not treated as an eligible person under section 6 of that Act;

for the purposes of section 5-1, any premium payable under a private health insurance policy that has been paid (or would, apart from this section, be taken to have been paid) in respect of the whole or part of the financial year by the person is taken not to have been paid in respect of those days.

SECTION 5-6   PREMIUMS PAID IN RESPECT OF CERTAIN PERIODS AROUND 1 JULY 1997  

5-6(1)  [Action required on or before 31 August 1997]  

If:

(a)  a person has applied before 1 July 1997 to a health fund for registration under Division 4 in respect of a private health insurance policy for the financial year commencing on that day; and

(b)  the person has paid an amount of premium payable under the policy in respect of a period starting on or before 1 July 1997 and ending on a day (the expiry day ) after 31 July 1997;

the health fund must, on or before 31 August 1997, either:

(c)  pay to the person an amount equal to the amount that is payable to the health fund under Division 8 in respect of the policy during the current policy period; or

(d)  offset that amount against amounts of premium that the person would be liable to pay to the health fund after the expiry day if the policy were to continue in force after that day.

5-6(2)  [Interpretation]  

In this section:

current policy period means the period starting on 1 July 1997 and ending on the expiry day.

PART 3 - REIMBURSEMENT OF HEALTH FUNDS

Division 8 - How are participating funds reimbursed?

SECTION 8-3   AMOUNTS PAYABLE TO THE HEALTH FUND  

8-3(1)  [Amounts payable for month]  

Subject to subsection (2), the amount payable to the health fund in respect of the month is 1/12 of the sum of the annual incentive amount (see section 5-3) for each private health insurance policy that:

(a)  was issued by the health fund; and

(b)  on the first day of that month, covers a person who is, on that day, a participant in the incentives scheme in respect of that policy (see section 5-2).

8-3(2)  [Annual incentive amounts]  

Subject to subsection (3), the annual incentive amount for a private health insurance policy in respect of which a person is a participant in the incentives scheme is taken, for the purposes of subsection (1), to be the amount that would be the annual incentive amount if:

(a)  the number of persons covered by the policy; and

(b)  the number of such persons who are dependent children;

were as stated in the most recent application under section 4-3 made by the person in respect of the policy.

8-3(3)  [Subsec (2) amount must be less than sec 5-3 amount]  

Subsection (2) only applies if the amount worked out under that subsection is less than the annual incentive amount under section 5-3.

8-3(4)  [Time for payment]  

The amount must be paid to the health fund on or before the 15th day of the month (or, if that day is not a business day, the first business day after that day).

8-3(5)  [Managing Director to determine method of payment]  

The amount must be paid in the way determined, in writing, by the Managing Director.

SCHEDULES

SCHEDULE 1

Dictionary

1 

Definitions

In this Act, unless the contrary intention appears:

ancillary cover , in relation to a private health insurance policy, has the meaning given in subsection 3-2(3).

business day means a day other than a Saturday, a Sunday or a public holiday in the place concerned.

combined cover , in relation to a private health insurance policy, has the meaning given in subsection 3-2(6).

Commission means the Health Insurance Commission.

dependent child , in relation to a private health insurance policy, means a person:

(a)  who is covered by the policy; and

(b)  whom the health fund that issued the policy accepts as a dependent child for the purposes of the policy;

but does not include:

(c)  a person who is the partner of another person; or

(d)  a person (other than a full-time student) who is 18 years of age or older; or

(e)  a full-time student who is 25 years of age or older.

financial year means the financial year that began on 1 July 1997 or the financial year that began on 1 July 1998.

health fund means a registered organization within the meaning of Part VI of the National Health Act 1953.

hospital cover , in relation to a private health insurance policy, has the meaning given in subsection 3-2(2).

incentives scheme means the scheme provided for under this Act for the reduction of premiums paid in respect of certain private health insurance policies.

Managing Director means the Managing Director of the Health Insurance Commission within the meaning of the Health Insurance Act 1973.

notification period , in relation to a month, means the period starting on the first day of the month and finishing on the seventh day of the month.

parent , in relation to a dependent child, means:

(a)  unless the dependent child is a full-time student who is 18 years of age or older - a person who has the right (whether alone or jointly with another person):

(i) to have the daily care and control of the child; and

(ii) to make decisions about the daily care and control of the child; or

(b)  if the dependent child is a full-time student who is 18 years of age or older - a person who is primarily responsible (whether alone or jointly with another person) for the maintenance and support of the student.

participant in the incentives scheme has the meaning given by section 5-2.

participating fund , in relation to a financial year, means a health fund referred to in subsection 7-1(2) in respect of that year.

partner , in relation to another person, means:

(a)  a person who is legally married to the other person and is not living separately and apart from the other person on a permanent basis; or

(b)  a person who, although not legally married to the other person, lives with the other person on a bona fide domestic basis as the husband or wife of the other person.

private health insurance policy means a contract of insurance that was entered into by a health fund in the course of carrying on a health insurance business within the meaning of section 67 of the National Health Act 1953.

tax file number means a tax file number as defined in section 202A of the Income Tax Assessment Act 1936.

type of cover , in relation to a private health insurance policy, means:

(a)  combined cover; or

(b)  hospital cover; or

(c)  ancillary cover.