Specification / PHI Software developers / June 2014 / UNCLASSIFIED
format / Audience / Date / Classification
Companion Guide
Read this in conjunction with the:
Electronic
reporting
specification
Private health insurance report version 2.1.1
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COMPANION GUIDE TO ELECTRONIC REPORTING SPECIFICATION
- PRIVATE HEALTH INSURANCE REPORT VERSION 2.1.1
Table of contents
1 ACRONYMS 4
2 INTRODUCTION 5
Disclaimer 5
Who should use this guide? 5
How to use this guide – related documents 5
Lodging your PHI report early to assist pre-filling 6
3 DEFINITIONS 7
4 BACKGROUND 11
The main changes 11
Further change to PHIR commencing 1 July 2013 11
Income thresholds for 2012–2013 13
Income thresholds for 2013-2014 13
Increases to the family income threshold 14
Single or family threshold 14
Who is a single? 14
When does a family income threshold apply? 14
How is the rebate claimed? 14
What happens if the wrong level of rebate is nominated with a fund? 14
5 RELATIONSHIPS BETWEEN DATA 15
6 REPORTING DATA 16
Supplier Data Records 1, 2 and 3 16
Reporting entity Data Record 16
Individual Identity Data Record 17
Individual Statement Data Record 18
When is a premium paid to a fund? 20
When is a premium paid if a taxpayer has an arrangement with their employer? 20
Individual MLS Data Record 24
File total Data Record 25
7 AMENDMENT PROCESSING 26
General information 26
Circumstances where amendments must be reported 26
Discretionary choice 27
What data to report 28
Cancellations 28
Providing information to members 29
Amendment file example scenarios 29
When should an Amendment file be submitted? 30
8 EXAMPLE SCENARIOS 31
File Format Example 31
File format 32
Example 1 - Single person, no dependents and no policy suspensions – hospital cover 34
Example 1 - Statement 35
Example 1 – Reporting to ATO 36
Example 2 - Single person, no dependents and no policy suspensions – pre-payment 38
Example 2 – Statement 2013–14 year 38
Example 2 – Reporting to ATO 2013–14 year 39
Example 2 – Statement 2014–15 year 41
Example 2 – Reporting to ATO 2014–15 year 42
Example 3 - Single parent policy that changes to a family policy. PHIIB added to policy and more than one Benefit code applicable. 44
Example 3 - Statements 45
Example 3 – Reporting to ATO 46
Example 4 - Dependent child only policy, Responsible person not known, no policy suspensions, policy paid for by salary deduction 52
Example 4 - Statement 54
Example 4 – Reporting to ATO 55
Example 5 - Dependent child only policy, Responsible person is known, no policy suspensions, and policy paid for by salary deduction 57
Example 5 - Statement 59
Example 5 – Reporting to ATO 60
Example 6 - 6 PHIIBs on a family policy. 63
Example 6 - Statements 64
Example 6 – Reporting to ATO 67
Example 7 - Prepaid policy where more than one Benefit code is applicable 81
Example 7 – Statements 2013–14 year 82
Example 7 – Reporting to ATO 2013–14 year 83
Example 7 – Statements 2014–15 year 87
Example 7 – Reporting to ATO 2014–15 year 88
Example 8 - Family policy, two dependents (including one who is over 18 years of age), no policy suspensions, premiums paid via employer (group) 92
Example 8 - Statement 94
Example 8 – Reporting to ATO 95
Example 9 - Single person, no dependents, policy suspensions, refund and amendment 101
Example 9 – (Original) Statement 2013–14 year 102
Example 9 – (Original) Reporting to ATO 2013–14 year 103
Example 9 – (Amended) Statement 2013–14 year 105
Example 9 – (Amended) Reporting to ATO 2013–14 106
Example 9 – Statement 2014–15 year 108
Example 9 – Reporting to ATO 2014–15 year 108
Page 35 of 110
COMPANION GUIDE TO ELECTRONIC REPORTING SPECIFICATION- PRIVATE HEALTH INSURANCE REPORT VERSION 2.1.1
1 ACRONYMS
Acronym / Expanded /ATO / Australian Taxation Office
ERS / Electronic Reporting Specification
Fund / Private Health Insurance Provider
LHCL / Lifetime Health Cover loading
MLS / Medicare Levy Surcharge
PHI / Private Health Insurance
PHIIB / Private Health Insurance Incentive Beneficiary
PHIR / Private Health Insurance Rebate
2 INTRODUCTION
Disclaimer
This guide has been prepared based on information from health funds about how premium payments are applied to policies and premium reduction amounts are calculated. No inferences should be drawn as to how start and end dates of policies are determined or what health funds may or may not be able to do in relation to applying payments to a policy.
The examples contained in this document are merely illustrative of how to report data in respect of a policy and do not endorse how a health fund may interpret and apply the PrivateHealthInsurance Act 2007, and applicable product rules, in relation to the creation and alteration of policies. All questions in relation to what is allowed under the PrivateHealthInsurance Act 2007 need to be directed to the Private Health Insurance Branch of the Department of Health and Ageing.
Who should use this guide?
This guide is for any of the following:
§ commercial software developers
§ funds developing software 'in-house'
§ other users of the Electronic reporting specification - Private health insurance report version 2.1.1
How to use this guide – related documents
You should read this guide in conjunction with the Electronic reporting specification - Private health insurance report version 2.1.1.
References in this document relate to sections within the Electronic reporting specification - Private health insurance report version 2.1.1.
The purpose of this guide is to provide information and examples which will complement instructions detailed in the Electronic reporting specification - Private health insurance report version 2.1.1. This guide does not address every field detailed in the Electronic reporting specification - Private health insurance report version 2.1.1, only those where it was considered that extra information and/or examples would be beneficial.
The Private Health Insurance Statement Functional Requirements (for the relevant Financial Year) provides information regarding mandatory statement input fields and an example of a statement format.
Lodging your PHI report early to assist pre-filling
We encourage early lodgment of the PHI Report to assist taxpayers with completion of their income tax return through providing timely information that is pre-filled into e-tax.
E-tax is a free service we offer that provides information to individual taxpayers to assist them to complete and lodge their income tax returns electronically. The information received in the PHI Report is also made available to tax agents to help them complete their client’s tax returns.
You can make it easier for those persons insured under a complying health insurance policy to lodge their income tax return by both of the following:
§ lodging in a timely manner
§ providing data in a format as set out in the ERS.
3 DEFINITIONS
Common term / Description /Adult / An adult is anyone that is not classified as a dependent child on the policy. (See Schedule 1 Dictionary to the Private Health Insurance Act 2007.)
Benefit code
(Age rebate code) / The benefit code indicates which (maximum) age based rebate percentage is applicable in relation to an associated premium amount and when in the financial year the premium amount was paid.
Complying PHI policy / For the purposes of claiming a PHIR, section 63-10 of the Private Health Insurance Act 2007 defines when a policy will be regarded as complying.
For the purposes of calculating a liability to MLS, subsection 3(5) of the MEDICARE LEVY ACT 1986 defines when a policy provides complying PHI.
Dependent child / A dependent child means a person:
(a) who is:
(i) aged under 18; or
(ii) a dependent child under the rules of the private health insurer that insures the person; and
(b) who is not aged 25 or over; and
(c) who does not have a partner.
Anyone who meets this definition is not a PHIIB.
For the purposes of determining whether a family income threshold applies, a ‘Dependent child’ can include children other than a person’s natural child (e.g. adoptive sibling). See 22-30(1) of the Private Health Insurance Act 2007 and Schedule 1 Dictionary to the Private Health Insurance Act 2007.
These definitions of dependent child do not apply for the $1,500 increase to the family thresholds for every MLS dependent child after the first.
Entitling person / The entitling person will be the oldest person insured under the policy. However, if the oldest person insured under the policy ceases to be insured, that person will still be the entitling person unless another adult, who was not insured under the original policy at the time the entitling person ceased to be insured under it, becomes insured under the policy.
Human Services / The Australian Government Department of Human Services
Income / Income for surcharge purposes.
Lifetime Health Cover loading / A loading which is applied to the premium cost when a person purchases hospital cover who is 31 years of age or older. A 2% loading is added to the premium cost for every year the person is over the age of 31.
Medicare / Service delivery brand of Human Services
Parent / Parent is defined under Part 2.11 the Social Security Act 1991.
Policy membership number / The reference number used by the fund to identify a particular policy. This must be the same membership number that appears on the PHI statement(s) issued by the fund.
Private health insurance incentives / The term used to describe the methods of claiming the concession:
1. premium reduction;
2. tax offset.
Private health insurance rebate / The PHIR is a percentage of the premium paid to a registered fund for a complying private health insurance policy. The percentage (rebate) is determined with reference to the age of the entitling person and when in the year the associated premium amount/s were paid and by the level of ‘income for surcharge purposes’. Any PHIR entitlement is shared between the relevant PHIIBs.
Private health insurance incentive beneficiary / In relation to a premium amount paid, a PHIIB:
(a) is each adult, insured under the complying health insurance policy, on the day the premium or amount was received by the fund; or
(b) in the case of a dependent child only policy:
§ will be the parents of the child/ren insured under the policy provided the parents are married at the end of the relevant financial year; otherwise
§ will be the payer of the premium provided that person is not a dependent child.
Note: In the case where an adult is insured under a complying policy, it is not necessary that the adult pay the premium or amount which results in cover being provided. The key element is that the adult was covered under the health insurance policy on and for the day the premium or amount was received by the fund.
In any case of:
· arrears payments;
· prepayments; or
· whole of policy suspensions
the PHIIB/s will be determined with reference to the person/s insured under the policy on the first day of cover that the premium amount was received in respect of[1].
PHIIB is defined at section 22-5 of the Private Health Insurance Act 2007.
See also the flowchart at the end of the Definitions section.
Premium reduction / The subsidy amount paid by Human Services directly to a fund in respect of a policy during the year.
Responsible person / In relation to a dependent child only policy, a Responsible person is the person to whom the fund refers matters concerning the policy.
Rounding / In relation to the amounts to be reported in an Individual Statement Data Record, whole dollars only must be reported. All dollar amounts must be rounded to the nearest whole dollar (49 cents and below rounded down, 50 cents and above rounded up).
Rounding is to occur at the last point before amounts are reported. See example 1, table 1 and example 3 - Statements
Supplier / The organisation sending the data to the Australian Taxation Office (ATO).
The flowchart below may assist in establishing the identity of any PHIIB/s with reference to a particular premium amount.
4 BACKGROUND
In the 2009-10 Budget, the government announced a proposal to income test the PHIR. The Bills giving effect to the Government’s announcement received royal assent on 4 April 2012.
Income testing of the PHIR applies to all payments made on or after 1July 2012. The income test applies to all adults on the policy – regardless of who pays the premium.
There are two new Medicare levy surcharge thresholds and rates that apply from 1 July 2012 for individuals without the appropriate level of private patient hospital cover.
The main changes
· From 1 July 2012, an adult’s entitlement to a PHIR will be income tested.
· Each adult (as defined by the Private Health Insurance Act 2007) will be income tested for their share of premiums paid during their membership and their share of the rebate received for those premiums.