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2019-2020-2021
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
PRIVATE HEALTH INSURANCE LEGISLATION AMENDMENT (AGE OF
DEPENDANTS) BILL 2021
EXPLANATORY MEMORANDUM
(Circulated by authority of the Minister for Health and Aged Care,
the Hon Greg Hunt MP)
PRIVATE HEALTH INSURANCE LEGISLATION AMENDMENT (AGE OF
DEPENDANTS) BILL 2021
OUTLINE
The Private Health Insurance Legislation Amendment (Age of Dependants) Bill 2021
(the Bill) implements the 2020-21 Budget measure, 'Supporting Our Hospitals --
simpler and more affordable private health cover for all Australians', of which
'Private Health Insurance - increasing the age of dependants' was an element.
The Bill amends the Private Health Insurance Act 2007 and associated legislation to:
change the maximum allowable age for people to be covered under a family
private health insurance policy as a dependent from up to 24 years old to up to
31 years old;
allow people with a disability, regardless of their age, to be covered under a
family private health insurance policy as a dependent.
The amendments do not make it mandatory for private health insurers to offer this
increased coverage for family products.
The first change helps provide continuity of care for younger Australians and
encourages them to continue with private health insurance up until they reach the age
of 31 years, which is the age at which Lifetime Health Cover commences. Lifetime
Health Cover is a Government measure designed to encourage young people to take
out private hospital insurance earlier in life and maintain it. Allowing younger people
to remain on a family policy until the start of Lifetime Health Cover provides them
with a clear decision point about maintaining their private health insurance, and
increases the attractiveness of private health insurance to young people.
The second change provides people with a disability with the flexibility to access
more affordable private health insurance as they can be covered under their family's
policy at a lower cost - rather than purchase their own policy.
Extensive consultation was undertaken in relation to this reform including the public
release of a consultation paper, meetings with peak bodies and interested parties, and
the receipt of written submissions.
These changes are part of the Government's commitment to ensuring private health
insurance is affordable and provides value for money for consumers.
The legislations to be amended are:
Private Health Insurance Act 2007;
Private Health Insurance (Prudential Supervision) Act 2015; and
Age Discrimination Act 2004.
Financial Impact Statement
The total estimated financial cost of the changes contained in the Bill from 2020-21 to
2023-24 is $0.5 million.
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Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny)
Act 2011
PRIVATE HEALTH INSURANCE LEGISLATION AMENDMENT (AGE OF
DEPENDANTS) BILL 2021
This Bill is compatible with the human rights and freedoms recognised or declared in
the international instruments listed in section 3 of the Human Rights (Parliamentary
Scrutiny) Act 2011.
Overview of the Bill
The Bill amends the Private Health Insurance Act 2007 and associated legislation to:
change the maximum allowable age for people to be covered under a family
private health insurance policy as a dependent from up to 24 years old to up to
31 years old;
allow people with a disability, regardless of their age, to be covered under a
family private health insurance policy as a dependent.
The references to family include a single adult with a dependent. The amendments do
not make it mandatory for private health insurers to offer this increased coverage for
family products.
The first change helps provide continuity of care for younger Australians and
encourages them to continue with private health insurance up until the age of
31 years, which is the age at which Lifetime Health Cover commences. Lifetime
Health Cover is a Government measure designed to encourage young people to take
out private hospital insurance earlier in life and maintain it. Allowing younger people
to remain on a family policy until the start of Lifetime Health Cover provides them
with a clear decision point about maintaining their private health insurance, and
increases the attractiveness of private health insurance to young people.
The Age Discrimination Act 2004 will be amended to allow private health insurers to
cover older dependent people.
This change engages the Right to Equality and Non-Discrimination, but is reasonable,
proportionate and to the advantage of all insured people. By allowing for people aged
under 31 years to be covered on a family policy, the number of younger people with
private health insurance is expected to increase. Furthermore, those who continue to
be covered until 31 years are expected to be significantly more likely to take out and
maintain their own policies. This is of significant benefit and to the advantage of
people not covered by this measure. Private health insurance in Australia is based on
community rating where all people pay the same price for the same product,
regardless of age or health status. Younger people, as a group claim fewer benefits
than older people. Encouraging younger people to opt in and retain private health
insurance by making it more affordable for them, also benefits older people with
affordability, because the sustainability of the sector and affordability of products
relies upon lower claiming younger people subsidising higher claiming older people.
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This change may engage the Right to Health but does not adversely affect any
person's access to this right. The Australian Government maintains that private health
insurance is an essential part of Australia's mixed public and private health system.
By encouraging more young people to take out private health insurance, the private
health system becomes more sustainable without removing any other person's right to
the highest possible attainment of mental and physical health.
The second change provides people with a disability with the flexibility to access
more affordable private health insurance as they can be covered under their family's
policy at a lower cost - rather than purchase their own policy.
The overall changes in their entirety will be to the advantage to a person with a
disability compared to their current situation and compared to others. Since it will be
to the advantage of people with a disability, these changes qualify as a special
measure under the Disability Discrimination Act 1992. The changes provide more
favourable treatment for people with a disability because they can be dependents on
family policy when they are over the age of 31 years. Thus, a person with a disability
may have access to lower cost private health insurance for a longer period of time
compared to others. In addition, a person with a disability will not face a Lifetime
Health Cover loading if they decide to purchase their own standalone product after
having been continuously covered on their family's product, because they will be
considered to have had private health insurance for the period they were covered as a
dependent.
It is proposed a definition of disability will be included in the Private Health
Insurance (Complying Product) Rules, and this will be 'a participant under the
National Disability Insurance Scheme under the National Disability Insurance
Scheme Act 2013'. It is also proposed private health insurers will be permitted to be
more expansive in their definition under their insurer rules, but will not be able to
apply a narrower definition than that in the Rules. The commencement date will be
stated in the Rules.
Extensive consultation has occurred, including through a consultation paper that was
published on the Department of Health's Consultation Hub, group and bilateral
meetings with a number of external stakeholders, and specifically with disability peak
organisations and private health insurers.
Human rights implications
The Bill engages, or has the potential to engage, the right to health - Article 12 of the
International Covenant on Economic, Social and Cultural Rights (ICESCR).
The right to health
The right to health - the right to the enjoyment of the highest attainable standard of
physical and mental health is contained in article 12(1) of the International Covenant
on Economic, Social and Cultural Rights to which Australia is a signatory. Article
12(2)(d) provides for " steps to be taken by the States Parties to the present Covenant
to achieve the full realization of this right shall include those necessary for the
creation of conditions which would assure to all medical service and medical attention
in the event of sickness."
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This Bill is designed to improve private health insurance participation rates and
increase the uptake of private health insurance by both younger people and people
with a disability of any age.
In summary, the amendments in this Bill do not derogate a person's right to health,
and to the extent that they improve the uptake of private health insurance, they are
intended to promote access to health services.
Conclusion
The Bill is compatible with human rights because it promotes the right to health, and
to the extent that it may limit human rights, those limitations are reasonable, necessary
and proportionate.
The Hon Greg Hunt MP, Minister for Health and Aged Care
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PRIVATE HEALTH INSURANCE LEGISLATION AMENDMENT (AGE OF
DEPENDANTS) BILL 2021
NOTES ON CLAUSES
Clause 1 - Short Title
Clause 1 provides for the short title of the Act to be the Private Health Insurance
Legislation Amendment (Age of Dependants) Act 2021.
Clause 2 - Commencement
This clause sets out that the Act commences on 1 April 2021.
Clause 3 - Schedule(s)
This clause provides that each Act that is specified in a Schedule to this Bill is
amended or repealed as set out in the applicable items in the Schedule concerned, and
any other item has effect according to its terms. This is a technical provision which
gives operational effect to the amendments contained in the Schedules.
SCHEDULE 1 - AMENDMENTS
This Schedule will allow private health insurers to offer coverage under family
policies for dependent students and non-students up to the age of 31, and dependent
people with a disability regardless of age. It will not be mandatory for insurers to offer
this increased coverage.
Age Discrimination Act 2004
Item 1 - Schedule 2 (table item 9A, column headed "Provision(s)")
This item amends the Age Discrimination Act 2004 to allow private health insurers to
cover older dependent people by adding to an existing exception for private health
insurance in the Age Discrimination Act 2004.
Private Health Insurance Act 2007
Items 2 to 9 - Subsections 22-5(2) (heading), 22-5(2), 22-5(3), 22-5(4)(c), 22-15(5)
(note 2), 22-25(1)(b), 22-25(2) and 22-30(1)(b)
These items substitute the term of 'dependent persons' for 'dependent children', or
'dependent person' for 'dependent child' as a result of the definition of 'dependent
child' being replaced with 'dependent person' in Schedule 1 the dictionary of
definitions for the Private Health Insurance Act 2007.
Items 10, 11 and 12 - Subsection 63-5(4)
The current subsection 63-5(4) allows insurers to charge a different premium for a
policy that covers a dependent non-student than the premium for a policy in the same
product that includes one or more dependent children or dependent students.
These items allow insurers to charge a different premium for a policy that covers a
dependent person with a disability than the premium for a policy in the same product
that includes one or more dependent children or dependent students.
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These items have the effect, through subsection 55-5(2)(c) of the Private Health
Insurance Act 2007, of excluding premiums charged in compliance with subsection
63-5(4) from being improper discrimination under the Private Health Insurance Act
2007.
The amended subsection 63-5(4) substitutes the term of 'dependent non-student' for
'dependent child non-student' and 'dependent persons' for 'dependent children' as a
result a new definition of 'dependent child non-student' and 'dependent child' being
placed in Schedule 1 the dictionary for the Private Health Insurance Act 2007.
Item 13 - Subsection 63-5(5)
This item repeals the definition of 'dependent child non-student' as part of the
consolidation of the definitions of 'dependent person' into Schedule 1 the dictionary
for the Private Health Insurance Act 2007.
Items 14, 15 and 16 - Subsection 333-20(1)
These items allow the new term 'person with a disability' to be defined, if necessary,
by the Minister for Health in the Private Health Insurance (Complying Product) Rules.
The Private Health Insurance (Complying Product) Rules are made by legislative
instrument by the Minister for Health. These items enable the Private Health
Insurance (Complying Product) Rules to provide for matters required or permitted in
Schedule 1 the dictionary of definitions for the Private Health Insurance Act 2007.
Item 17 - Clause 1 of Schedule 1
This item is intended to allow a dependent person with a disability to be treated the
same as an adult for the purpose of Lifetime Health Cover. Part 2-3 of the
Private Health Insurance Act 2007 outlines the rules to determine when a person is
subject to a Lifetime Health Cover loading and the amount of the loading. This
amendment means a person with a disability is considered to have private hospital
cover if they are covered under a family policy as a dependent person with a
disability. It is of relevance should the person with a disability, after 31 years of age,
not be covered under a family policy and decide to purchase their own private hospital
cover, they will not immediately be subject to a Lifetime Health Cover loading.
Consistent with other persons, the person with a disability would have 1,094 days
from the date they ceased to be covered under a family policy, before a Lifetime
Health Cover loading would apply.
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Items 18, 19 and 20 - Clause 1 of Schedule 1
Schedule 1 forms the dictionary of definitions used in the Private Health Insurance
Act 2007. These items unify, name and define, and expand the current categories of
'dependent child'.
They replace the term of 'dependent child' which covered three categories of
'dependent child' with 'dependent person' which covers four categories of 'dependent
persons'.
The new category of 'dependent person' is a 'dependent person with a disability'.
Two of the current categories of 'dependent child' which were not individually
defined have been named 'dependent child' and 'dependent student' and are
individually defined. The current categories of 'dependent child' which was
individually defined has had its name changed from to 'dependent child non-student'
to 'dependent non-student'.
'Dependent student' and 'dependent non-student' have had their maximum age of 24
years old increased to 31 years old.
Dependent child, student and non-students, retain the requirement to not have a
partner. The new category of dependent person, dependent person with a disability,
are allowed to have a partner and has no maximum age limit.
The terms 'partner' and 'dependent' are not defined in the
Private Health Insurance Act 2007 as these terms are commonly understood and
applied, with some aspect of the definition contained in the rules of individual private
health insurers. There is no evidence additional regulation is required at this stage.
Item 21 - Clause 1 of Schedule 1
This item substitute the term of 'dependent person' for 'dependent child' as a result of
the definition of 'dependent child' being replaced with 'dependent person' in
Schedule 1 the dictionary of definitions for the Private Health Insurance Act 2007.
Item 22 - Application
This item makes it clear the amendments to subsection 22-30(1)(b), a provision
related to the income testing of families for private health insurance, of the
Private Health Insurance Act 2007 apply from 1 April 2021 onwards.
Private Health Insurance (Prudential Supervision) Act 2015
Items 23, 24 and 25 - Subsection 4(1) and Subsection 15(4)
These items substitute the term of 'dependent persons' for 'dependent children', or
'dependent person' for 'dependent child' in the Private Health Insurance (Prudential
Supervision) Act 2015 as a result of the definition of 'dependent child' being replaced
with 'dependent person' in Schedule 1 the dictionary of definitions for the Private
Health Insurance Act 2007.
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