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Home » Circulars » 2010 » 10/04

 

Circular No 10/04

Contact Officers:
Paul Collins 02 6215 7955

paul.collins@phiac.gov.au

Replaces Circular: NA
24 March  2010

PDF Format:

Circ 10/04

 

 Advice to insurers on PHIAC 1 requirements when Lifetime Health Cover status changes.

 
The Private Health Insurance Act 2007 includes a provision in section 34-10 requiring health insurers to remove the Lifetime Health Cover (LHC) loading on adults with hospital cover after ten years of continuous hospital cover subject to a loading.
 
The Department of Health and Ageing provided Circular 54/09 of 18 August 2009, and held information sessions in early February 2010 to assist insurers in regard to the removal of the LHC loading.
 
This circular is to inform insurers of the reporting requirements for the quarterly PHIAC 1 Form in regard to the removal of LHC loading.
 
Part 10 of the PHIAC 1 Form collects information on the number of adult males and females with hospital cover for each LHC loading level. Currently, since no adult has had 10 years of continuous hospital cover with a loading, all adults are reported in one of the first two columns on Part 10. Those adults without any loading are reported in one of the first two columns in the row corresponding to a certified age at entry of 30.
 
When an adult paying a loading has had ten continuous years paying the loading and the loading has been removed, that person should be shown as having the loading removed in the quarter in which that occurs. In subsequent quarters, they should be reported as having a certified age at entry of 30.
 
The following describes the PHIAC 1 reporting requirements with an example using a fictitious female who is initially paying a loading of 4%.
 
  • Initially the insurer has no adults who have paid the LHC loading for ten years.  All adult persons are reported in the first two columns, signifying they are paying a loading or their certified age at entry is 30 and they do not incur a loading.
                                                                                          
                          
  •  In the quarter in which the loading is removed, the person should be reported in the column under “Male LHC loading removed” or “Female LHC loading removed” in the row corresponding to the loading they were previously paying. They should not also be reported in the row corresponding to a certified age at entry of 30 with no loading. There should be no double counting.                

Assume a female has paid the LHC loading at 4% for ten years, so the loading is removed. In the first quarter that the loading is removed the adult female is reported in the column "Female LHC removed" in the same row (4%). 

  •     In the quarter after the quarter in which the loading is removed  the person  should be reported in one of the first two columns,
        “Male” or “Female”, in the certified age at entry of 30 row
In subsequent quarters the adult female is reported in the second column at a certified age at entry of 30, with no loading.

                

 

  • If a person ceases to have hospital cover after their loading is removed, for more than the prescribed “Permitted days without hospital cover” as defined in section 34-20 of the Private Health Insurance Act 2007, and they take up hospital insurance again they should be reported in one of the first two columns “Male” or “Female”, in the certified age at entry row corresponding to the loading they incur on rejoining.
Example: The same female then drops private health insurance for a number of years including a period that is not permitted days without hospital cover. The adult female later takes up private health insurance again. Due to the period without private health insurance she may have to pay, for example, a 10% loading. She is reported in column 2 at a certified age of entry of 35 (refer to LHC legislation for calculation of the appropriate loading).
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