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2008. International Health Cover & Recent Changes in Legislation. John Loechel, Senior Vice President, International Health Marsh Pty Ltd. Overview. Marsh International Health The Private Health Insurance Act – 2007 What are the Insurers doing? How could my Non-residents be affected?
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2008 International Health Cover& Recent Changes in Legislation John Loechel, Senior Vice President,International HealthMarsh Pty Ltd.
Overview • Marsh International Health • The Private Health Insurance Act – 2007 • What are the Insurers doing? • How could my Non-residents be affected? • What steps should I take?
Marsh International Health • Part of Marsh, the world leader in delivering risk and insurance services and solutions • Marsh International Health provides sophisticated solutions for Corporations with international employees or assignees. • Cover employees in over 100 countries • Design International Health Solutions for :Mining & Energy Airlines BankingTertiary Education Legal Firms Chemicals & Scientific Property Management Engineering Manufacturing
Marsh International Health Political, Environmental and Natural Disasters “457” Inpat Medical Insurance Expat Insurance Top-up Workers Compensation for Expatriates Terrorism Cover Corporate Travel & STFS Cover Death & Capital Benefits Weekly Benefits Corporate Health Kidnap & Ransom War Cover Claims Management USA Claims Facility
Private Health Insurance Act – 2007 – A Snapshot • Enacted on 1st April 2007…..Takes full effect on 1st July 2008 • Changed the way Private Health Insurers (PHI’s) can provide cover & transact Business in the future • Prior to 1/7/2007, there was some doubt whether Private health Insurers could write Overseas Visitor’s Health Covers (OSVHC’s) for 457 Visa holders. • Also some concern if an overseas visitor was refused insurance under a Complying Health Insurance Product (or “CHIP”) , it may be a breach of Community Rating rules. • The new Act tried to clear up confusion, but has caused issues in the industry.
Private Health Insurance Act – 2007 – A Snapshot • After 1/7/2007, the Act confirmed Health Funds could write OSVHC but under the class of Insurance known as “Health Related Business”. ( General Insurers can also write this cover for 457 Visa Holders) • From 1 April 2007, Australian Health Funds could insure an overseas visitor under a non-community rated Policy… ie a non Complying Health Insurance Product. • However after 1 July 2008, this will cease to be “Health Insurance Business” • The Insurer will have the option whether to place in “Health Benefits Fund”
Private Health Insurance Act – 2007 – A Snapshot • If placed in Health Benefits Fund - controlled by PHIAC • If placed outside Health Benefits Fund - controlled by APRA • After 1 July 2008, even if the OSVHC cover is placed within the Health Benefits Fund, but still may not be a CHIP policy. • As well as Australian citizens, Non-residents on 457 Visas can take out a CHIP product.(The Act is silent on this and there is still some difference of opinion)
Private Health Insurance Act – 2007 – A Snapshot What is a CHIP Policy?A CHIP policy- Is not subject to GST,- Is community rated- Does not cover Outpatients (GP’s etc.) as covered by Medicare. • Members of a CHIP policy who are eligible for Medicare:- Will earn the 30% rebate …..No rebate if not from RHCA country.- Will have Medicare Levy Surcharge exemption. BUT of no real value to a non-RHCA employee if no GP cover
Private Health Insurance Act – 2007 – A Snapshot • Note: There are no major changes to MLS rules. - For MLS exemption a Chip Policy will still be required after 1/7/2008 - All the previous rules still apply • If not a CHIP Policy….- Will be subject to GST- Won’t be community rated- Won’t provide Medicare Levy Surcharge exemption BUT of no real value for an employee from an RHCA country if no MLS exemption
Private Health Insurance Act – 2007 – A Snapshot Reciprocal Health Care Agreements (RHCA) • Agreement Countries:UK, Ireland, Malta, Norway, Sweden, Finland, New Zealand, Netherlands, Italy. • Provides varying levels of Medicare eligibility in Australia. • Non-Resident from RHCA country is subject to Medicare Levy. • If employee earns over $50,000 (single) or $100,000 (couples combined income), the Medicare Levy Surcharge taxed.
What are Private Health Funds doing? • All funds with OSVHC are currently reviewing how they do business • Most have not advertised their intentions. • However one fund, Australian Health Management (AHM) has taken decisive action.
What are Private Health Funds doing? Most of the General Insurers with Expatriate & Non-resident policies inAustralia have an arrangement with Australian Health Management. • This arrangement provides:- Continuity of private health insurance cover,- Lifetime Health Cover CAE protection (Australian expats)- Medicare Levy Exemption (for one Insurer). • It also allows claims to be paid in Australia for Australians on temporary return as provided under the Health Act ( eg Hospital Gap Cover).
What are Private Health Funds doing? • In January 2008, AHM advised all relevant General Insurers & Brokers, that effective from 1 July 2008, this arrangement will cease.
Exposures to 457’s If General Insurers do not replace this arrangement, - Waiting Periods can apply when taking out Australian Health cover after applying for Permanent Residency status. - Medicare Levy Surcharge costs may apply (RHCA countries only). OSVHC’s provided by Private Health Insurers may also change by 1/7/2008 and cause the same result - Membership in a non-Chip OSVHC does not necessarily qualify to waive Waiting Periods, nor does it qualify for MLS exemption.
What are General Insurers doing? • This situation is new and still very fluid…..no definite industry direction yet. • The General Insurers in Australia with an arrangement with AHM are investigating whether AHM can withdraw midway through a Policy term. • They are all in discussion with AHM at present. • One Insurer has indicated they will definitely negotiate with another Health Fund to replace this arrangement before 1 July 2008. • Websites are changing without notice, changing their benefits (eg IMAN ).
What steps should I take? • First establish exactly what cover you wish to provide, or are required to provide under your Sponsorship Agreement,..What is your HR Policy? • For Example: - General Insurers provide broader worldwide cover- Australian Private Health Insurers provide less cover limited to Australia (but may have lower premium structures) • Establish whether your Non-residents have an exposure to any of these issues….they may not. • Refer to relevant Government Private Health or ATO websites for clarification if action is required.
What steps should I take? • Refer to your Tax Advisor regarding any potential MLS liability if appropriate. • If you deal direct with an Insurer, establish exactly what they are going to do after 1st July 2008. • Finally , discuss with your Insurance Broker…- Are they aware of the changes? - What action have they taken to deal with any potential exposures?
In Summary • The Private Health Act 2007 sought to clear up confusion but has not succeeded. • The Act takes full effect from 1 July 2008 • There is no definite announcements yet from Australian Health Insurers regarding action • AHM will withdraw from its arrangements with General Insurers from 1/7/2008 • You need to monitor your Insurers to confirm whether these changes will have any effect on your Non-Residents.
