Private Health Insurance Amendment (Lifetime Health Cover Loading and Other Measures) Bill 2012

The majority voted in favour of a motion that schedule 1 stand as printed, which means that the schedule will remain unchanged. The motion was put in response to a motion introduced by Liberal Senator Concetta Fierravanti-Wells that the schedule be opposed.

Schedule 1 is the part of the bill that is intended to remove the private health insurance rebate from the Lifetime Health Cover ('LHC') loading component of affected private health insurance premiums.

The LHC is a financial penalty on those who delay taking out private health insurance in the form of a two per cent loading on their premium for each year after their 31st birthday they delay purchasing cover. Currently, people with an LHC loading receive the private health insurance rebate on the total cost of their premium (i.e. the premium plus any LHC loading). Schedule 1 seeks to change this so that people with an LHC loading only receive the rebate to the cost of their premium, not including the LHC loading.(More information about the LHC loading and the effect of this bill is available in its bills digest. )

Background of the bill

As well as removing the private health insurance rebate from the Lifetime Health Cover loading component of affected private health insurance premiums, the bill was also introduced to end the Incentive Payments Scheme which allows people to claim the rebate as a direct payment.

Currently there are three ways that people can claim the private health insurance rebate: (1) through the Premiums Reduction Scheme, which is an upfront discount on the premium offered by the health insurer; (2) as a tax offset claimed through the Australian Taxation Office; (3) through the Incentive Payment Scheme, which is a direct payment from a Medicare office. This bill would remove the latter option.(Read more about the Incentive Payments Scheme and the bill generally in its bills digest.)