Why can’t expatriate health insurance policies cover my routine medical expenses in Australia and exempt me from the (MLS)?

This is a follow up post on the Medicare Levy Surcharge (MLS) article prompted by questions from employees on  the way expatriate insurance operates within Australia.

I've covered the MLS issue in my previous article.

As I have mentioned before the Australian public health system Medicare works well in Australia for Australian citizens but has lots of twists and turns for Australian expatriates on temporary return to Australia and requiring medical treatment.


National Health Act 1953+ National Health regulations that will affect expatriate policies in Australia.

S67 (1)    Health insurance business to be carried on only by registered health fund organizations

S67 (4)    Health insurance business =fees for Australian hospital treatment or an ancillary benefit.

The following are three questions asked constantly with the main one being why can't my expatriate health insurance cover my out-of-pocket expenses which, depending on the medical services provided, can be in the thousands.

Why can’t Insurance companies, or any other entity, top up Medicare benefits in Australia?

Health Insurance Act 1973- Sect.126

Prohibition of certain medical insurance

    A person shall not make a contract of insurance with another person that contains a provision purporting to make the first-mentioned person liable to make a payment in the event of the incurring by the other person of a liability to pay medical expenses in respect of the rendering in /Australia of a professional service for which a Medicare benefit is, but for subsection 18(4)*, would be payable.
    Penalty $1,000 per event
    *18(4) Medicare benefit not payable where a Compensation benefit is payable (i.e. Workers Compensation)

Why Insurance companies in Australia do not pay Medicare  benefits?

Section 67(1) of the National Health Act 1973 states;

Subsection (1)

“A person (other than a registered health benefits organisation (RHBO) shall not carry on health insurance business”

Subsection (2)

“A person who contravenes subsection (1) is, in respect of each day on which the person contravenes that subsection guilty of an offence punishable on conviction by a fine not exceeding:

    If the person is a body corporate $20,000, or
    If the person is a natural person, $2,000

In view of the above section why can non RHBO insurers pay non Non-Medicare benefits in Australia?

Private Health Insurance (Health Insurance Business) rules 2010

Section 121(30) previous regulation 48(1)

The relevant regulation under the Private Health Insurance Act 2007 is section 121(30) which provides for types of business which may be carried on by an organisation which is not an RHBO, i.e. general insurers such as Chubb, ACE, AIG, QBE etc., and relates to liability undertaken in respect of :

A resident temporarily employed outside Australia

Insurance for a person who is a resident of Australia and who is engaged in temporary employment outside Australia, or a dependent of that person, in respect of whom an insurance policy provides that liability for hospital treatment or general treatment may arise;

    In Australia; or
    Outside Australia, if the absence of the person from Australia is due to temporary employment.

Note – This does not include Medicare related Medical expenses in Australia.

I hope you found the above information useful.
If you need advice on expatriate programs or assistance with communication to your expatriate employees please drop me an email. berry@hica.com.au

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