EXPLANATORY STATEMENT

 

Select Legislative Instrument 2005 No. 274

 

Private Health Insurance Complaints Levy Act 1995

 

Private Health Insurance Complaints Levy Amendment Regulations 2005 (No. 1)

 

Section 9 of the Private Health Insurance Complaints Levy Act 1995 (the Act) provides that the Governor-General may make regulations prescribing matters required or permitted by the Act to be prescribed.

 

Subsection 6(1) of the Act provides that the rate of the private health insurance complaints levy on registered organisations is the rate prescribed by the Regulations.

 

Subsection 6(2) of the Act provides that the rate is to be based on the number of contributors who contribute to the health benefits fund by means of which a registered organization conducts its health insurance business.

 

Subsection 6(3) of the Act provides that the regulations specify different rates of levy in respect of:

 

(a)           contributors who contribute to the health benefits fund in respect of one person; and

(b)          contributors who contribute to a health benefits fund in respect of more than one person.

 

Subsection 6(4) of the Act provides that the rate of levy must not exceed:

 

(a)           in respect of contributors who contribute to the health benefits fund in respect of one person—25 cents per quarter; or

(b)          in respect of contributors who contribute to a health benefits fund in respect of more than one person—50 cents per quarter.

 

Currently, $950,000 is collected annually via the levy and is used to fund the operation of the Private Health Insurance Ombudsman (PHIO).  The functions of the PHIO have been increased through changes to the Health Legislation Amendment (Private Health Insurance Reform) Act 2004.  The changes include additional investigation powers and a requirement for the PHIO to produce the annual “State of the Health Funds Report”.  The Department of Health and Ageing absorbed the increased costs to the PHIO of $200,000 in the first year of the reforms.

 

The Australian Government announced, in May 2005, an increase in the industry levy of $200,000 to meet the additional cost of running the PHIO due to the broadening of PHIO’s legislative functions. 

 

The Regulations amend the Private Health Insurance Complaints Levy Regulations 1995 (the Principal Regulations) to increase the amount collected under the levy by $200,000, to $1,150,000 per annum.

 

The Regulations change the formula used to calculate the rate of the levy that each health fund must pay.  The formula is based on the number of contributors who contribute to a fund and specifies a different rate in respect of contributors who contribute in respect of one person and those contributing on behalf of more than one person. 

 

The Regulations do not have retrospective operation.  While the Regulations calculate the levy with respect to the number of contributors a particular health fund has during periods which have occurred prior to the commencement of these Regulations, this is only for the purposes of calculating the levy and is consistent with the previous collections of the levy.  The liability to pay the levy occurred after registration of the Regulations.

 

The amended rate of the levy does not exceed 25 cents per quarter for contributors who contribute in respect of one person or 50 cents per quarter for contributors who contribute in respect of more than one person.

 

Details of the Regulations are set out in the Attachment.

 

The Act specified no conditions to be met before the power to make the Regulations was exercised.

 

The increase in the levy is a Budget decision of the Australian Government.  No consultation is required in relation to the amendment.

 

The Regulations are a legislative instrument for the purposes of the Legislative Instruments Act 2003.

 

The Regulations commenced on the day after they were registered on the Federal Register of Legislative Instruments. 

 

 

 

 

 

 

 

 

Authority:         Section 9 of the Private Health Insurance Complaints Levy Act 1995

 

 

 

 

 

 

 

 

 

 

 

 

ATTACHMENT

 

DETAILS OF THE PRIVATE HEALTH INSURANCE COMPLAINTS LEVY AMENDMENT REGULATIONS 2005 (NO. 1)

 

Regulation 1 provides that the title of the Regulations is the Private Health Insurance Complaints Levy Amendment Regulations 2005 (No. 1).

 

Regulation 2 provides for the Regulations to commence on the day after they are registered on the Federal Register of Legislative Instruments.

 

Regulation 3 provides that the Private Health Insurance Complaints Levy Regulations 1995 (the Principal Regulations) are amended as set out in the Schedule.

 

Schedule 1 - Amendments

 

Item [1] amends subregulation 5(2) of the Principal Regulations, by omitting the current formula and substituting a new formula with a new numerator of 28,750,000.

 

Item [2] amends subregulation 5(3) of the Principal Regulations, by omitting the current formula and substituting a new formula with a new numerator of 28,750,000.