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22 September 2010
PHI benefits and overseas treatment
The purpose of this circular is to provide clarity about private health insurance legislation and how it relates to overseas treatment.
Section 121-1(2) of the Private Health Insurance Act 2007
(the Act) stipulates that private health insurers can only undertake liability or pay benefits for treatment provided in Australia, or for the happening of an occurrence connected with treatment in Australia. This continues the provisions that were previously in place under the National Health Act 1953
Benefits for treatment in Australia are provided as part of the registered insurer’s health insurance business
, which is comprised of complying health insurance products that are community rated and are subsidised by taxpayers through the private health insurance rebates.
It is not the intention of Australia’s private health insurance legislation to cover people who choose to travel or live overseas. The Government cannot ensure the safety and quality of health care goods and services provided overseas, so it does generally not allow private health insurers to pay benefits for them. This includes goods purchased over the internet, such as drugs, contact lenses or glasses, where the goods are being provided from an overseas supplier, as the transaction is considered to have taken place outside of Australia.
Limiting benefits to services provided in Australia helps contain private health insurance costs and keep premiums affordable for all Australians. If insurers covered the costs of medical treatment provided overseas this could result in higher benefit outlays for insurers and increased insurance premiums. It could also have far-reaching implications for the prudential regulation of individual insurers.
In addition, Australian taxpayers subsidise private health insurance through the rebates, and the Government has a responsibility to ensure that this cost to taxpayers is managed responsibly.
Options for people requiring treatment overseas
Insurers are permitted under the Act to offer other limited insurance products that are not part of an insurer’s health insurance business
. These products fall under the category of health-related business
and may include travel insurance policies that comply with section 131-15 of the Act and Rule 5 of the Private Health Insurance (Health Benefits Fund Policy) Rules 2007 (No. 3).
The Private Health Insurance (Health Benefits Fund Policy) Rules were amended in November 2007 to enable private health insurers to cover routinely required treatments in limited circumstances when a policy holder is temporarily overseas as health-related business
if an insurer wishes to do so.
Rule 5 states that private health insurers may provide cover for overseas treatment that is intended to manage a disease, injury or condition when:
- the disease, injury or condition is chronic and permanent; and
- the liability is confined to treatment that would be required routinely, whether or not the person had remained in Australia; and
- the amount of the liability incurred by the insurer for any particular treatment does not exceed the amount of the liability that would be incurred by the insurer for that treatment if it were provided in Australia; and
- the liability does not extend to any treatment administered to a person more than 60 days after the person last departed from Australia.
Insurers are not required to offer this sort of health-related business
product, but they may choose to do so. This is a commercial decision for an insurer to make. Any insurer operating health-related business
from its health benefits fund must ensure all requirements of the Act and Rules are strictly complied with. This is essential to ensure that the private health insurance rebate is only applied to premiums for complying health insurance products.
Whilst Medicare benefits are not available for treatment received overseas, the Australian Government has signed Reciprocal Health Care Agreements which entitle Australians to assistance with the cost of medical treatment in the following countries: New Zealand
; the United Kingdom
; the Republic of Ireland
; the Netherlands
; and Norway
Australia's Reciprocal Health Care Agreements cover any medically necessary treatment which may arise while in the specified country. However, Reciprocal Health Care Agreements do not replace the need for comprehensive private travel health insurance, and travellers should ensure that they take out suitable insurance for the period that they will be away.
If Australians wish to receive insurance benefits for other treatment provided overseas, they may wish to approach a health insurance company in the relevant country or an international company that operates in that country.
If you require further information please telephone: (02) 6289 9853/24 hr answering machine or email the enquiry to Private Health Insurance Branch
For more information visit 2010 Private Health Insurance (PHI) Circulars
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