and Revenue Administration
Information Circular MV-1R3
||Alberta Treasury Board and Finance, Tax
and Revenue Administration
|For more information:
MV-1R3 / July
ACT HEALTH COST RECOVERY INFORMATION CIRCULAR:
NOTE: This Information Circular is intended to explain legislation and provide specific information. Every effort has been made to ensure the contents are accurate. However, if a discrepancy should occur in interpretation between this Information Circular and governing legislation, the legislation takes precedence.
This Information Circular gives an
overview of the recovery of the Crown's cost of health services
for automobile accidents covered by third party liability insurance.
The topics discussed include:
- The Hospitals Act was amended
effective August 1, 1996, to include a provision to recover from
the third party liability insurers the Crown's cost of health
services provided to victims of automobile accidents.
For each calendar year, automobile insurers must remit to the Finance Minister an amount representing their proportionate share of the total estimated Crown cost of those health services for that year. (See ”Estimate of Crown Costs” section for details.)
- An automobile insurer is defined
in the Hospitals Act as an insurer under a motor vehicle
liability policy. Third party liability insurance is also defined
in the Hospitals Act to mean that portion of an insurance
contract (motor vehicle liability policy made or renewed in Alberta)
"that insures against liability resulting from bodily injury
to, or the death of, one or more persons and loss of, or damage to,
- Automobile insurers do not have
to pre-register with Tax and Revenue Administration (TRA). (See ”Estimate of Crown Costs” section for details.) New automobile insurers will be registered automatically by TRA once a licence to provide automobile insurance in Alberta has been issued by the Superintendent of Insurance. An automobile insurer must file a report and remit an amount related to all automobile premiums written in the province during the calendar year. (See sections entitled “Filing and Remittance Requirements” and “Penalties and Interest”.)
of Crown Costs
- For each calendar year, the Minister of Alberta Health and Wellness determines an aggregate assessment to be paid by automobile insurers. The aggregate assessment is based on information prepared by Alberta Health, actuarial reports, and consultations with representatives of automobile insurers.
- A proposed aggregate assessment
is calculated and notice of this proposal sent to each automobile
insurer licensed to provide automobile insurance under the Insurance
Act. An automobile insurer has the right to make representations
concerning the proposed aggregate assessment. Representations can be sent to:
The Minister of Health and Wellness appoints a person (in previous years selected from the Insurance Bureau of Canada) to hear representations. After representations are considered, a report is submitted to the Minister of Health and Wellness, who then reviews the document and establishes the final aggregate assessment for a calendar year. All automobile insurers are notified of the amount.
ALBERTA HEALTH AND WELLNESS
ATTENTION: DIRECTOR OF THIRD PARTY LIABILITY
16th FLOOR, TELUS PLAZA NORTH TOWER
P.O. BOX 1360, STN. MAIN
10025 JASPER AVENUE
EDMONTON, AB T5J 2N3
- Alberta Health also notifies TRA
of the amount of the aggregate assessment so that the assessment
factor can be determined for a particular calendar year.
of Amount Owing by Automobile Insurers
- Once the aggregate assessment for
a particular calendar year has been determined, TRA determines
an "assessment factor" for that year by calculating the percentage the aggregate
assessment, provided by Alberta Health and Wellness, is to projected total
premiums for the year.
- Projected total premiums for a calendar
year are determined by the following formula:
B = 2[C(1-D)] + E; where
B is the projected total premiums for the assessment factor year;
C is the average of the changes in total premiums between:
- the 2nd and 3rd calendar years preceding the assessment factor year,
- the 3rd and 4th calendar years preceding the assessment factor year, and
- the 4th and 5th calendar years preceding the assessment factor year;
D is an adjustment factor established by the Provincial Minister for the assessment factor year;
E is the total premiums for the 2nd calendar year preceding the assessment factor year.
- TRA sends a notice to all automobile insurers of the assessment factor for a calendar year, prior to the commencement of that calendar year. Automobile insurers use this assessment factor to determine the amount that must be remitted to TRA. (See section entitled “An Example” for details.) For the assessment factor click here.
Filing and Remittance Requirements
- Automobile insurers must file a report of the premiums for third party liability insurance written in the calendar year. Third party liability insurance premiums placed by automobile insurers with the Risk Sharing Pool (RSP) are not taxable at the time ceded to the RSP. The RSP allocates to each automobile insurer its proportion of the total premiums received each month by the RSP. Automobile insurers must include the third party liability insurance premiums allocated monthly from the RSP on the Health Cost Recovery Report – Automobile Accidents (Form AT252). Form AT252 must be received by TRA on or before March 15th of the year following the particular calendar year, together with the automobile insurer's remittance. Automobile insurers will be charged penalties if they file returns late and interest on late remittances. (See ”An Example” below).
A company that is licensed under the Insurance Act to provide insurance, but does not write third party liability insurance in Alberta during a calendar year is not required to file the Health Cost Recovery Report – Automobile Accidents (form AT252) for a calendar year. If a company does not provide insurance in Alberta during a calendar year it should notify TRA of this.
Company A is an automobile insurance company licensed to provide automobile insurance for all, or part, of the 2005 calendar year. During the 2005 calendar year Company A has written $1,000,000 of total premiums for third party liability insurance. Company A is notified by the Finance Minister that the assessment factor for the 2005 calendar year is 2.31 %.
Company A prepares a Health Cost Recovery Report - Automobile Accidents (form AT252) and ensures the report and a remittance are received by TRA on, or before, March 15, 2006 in the amount of $23,100 calculated as follows:
Remittance = $1,000,000 x 2.31 %
= $ 23,100
- Remittances may be made by any of the following methods:
mailed, delivered by courier or hand-delivered to TRA. Remittances should be made payable to the Government of Alberta and accompanied by a Remittance Advice. The effective date of receipt of a mailed or delivered remittance is the date it is actually received by TRA. Remittance s mailed or couriered to TRA must be sent with adequate lead-time to ensure receipt on or before the due date. If hand-delivered, they should be taken to one of theAlberta Treasury Board and Finance, Tax
and Revenue Administration offices listed on this circular, between the hours of 8:15 a.m. and 4:30 p.m., Monday to Friday, except government holidays.
at most financial institutions in Canada, if accompanied by a Remittance Advice. The effective date of receipt is the business date stamped by the institution on the Remittance Advice.
c) by wire transfer. T he effective date of receipt is the business
date that the funds are received by TRA's bank. For more information
on this option, contact TRA at (780) 427-3044 or 310-0000 / (780)
427-3044 (Alberta toll free).
through internet payment services provided by major financial institutions in Canada. The effective date of receipt is the date TRA's account is credited. The earliest possible effective date is the next business day. For further details on this option, contact your financial institution or call TRA at the above number.
- Effective October 18, 2004, the penalty charged for failing to file a report by March 15th of the following year is the greater of:
a) $25 per day for each day the report is late, or
the total of:
i) five per cent of the unpaid Health Cost Recovery amount on the required filing date of March 15th , and
one per cent of the unpaid Health Cost Recovery amount on the 15th day of each subsequent month in which the report remains unfiled.
- Interest on late remittances and penalties
charged for late-filed reports is compounded
daily. The rate used is based on a reference rate
(the average interest rate, rounded up, on 90-day treasury bills
during the first month of the preceding calendar quarter). Effective
October 1, 1999, the interest rate is three and one-half percentage
points above the reference rate.
Current interest rates
can be obtained from
our Internet site or by calling TRA.
- Interest on late remittances or
on penalties for late-filed reports for a calendar year begins
to accrue starting on the first business day after the date the
remittance or report is due (March 15th of the following
year or, if a government holiday, then the next business
for a Review
- TRA may establish an amount that
an automobile insurer is required to pay using an estimate of
premiums for third party liability insurance written by the particular
automobile insurer and any penalties and interest accrued. This would occur where the automobile insurer
has not submitted the Health Cost Recovery Report - Automobile
Accidents or provided information requested by TRA.
A notice is sent to the automobile insurer indicating the amount owing and how it was calculated.
- An automobile insurer who receives
a notice as discussed in paragraph 16 above, may request a review
of the estimated premiums for third party liability insurance
used to calculate the amount payable.
- An automobile insurer who wishes
to have a review of the notice must submit a written statement to
the Director, Tax Services, within 30 days of the date on the notice.
The written statement must set out the reasons for the review request.
- On receipt of a request for a review,Tax Services conducts the review of all facts of the case and confirms or
varies the amount the automobile insurer is required to pay. The
automobile insurer is notified of the decision in writing.
- Interest will accrue on any unpaid
amount determined by the review from the time the amount should
have been paid; that is, March 15th of the year following the
year to which the premiums apply.
- If the review results in a reduction
of the amount to be paid by the automobile insurer and the amount
was paid in full prior to the review, interest will be paid at
the rate set out in the "Penalties and Interest" section. However, if the automobile
insurer has outstanding remittances from other years due to the
Crown the difference will be used to offset that liability.
of Automobile Insurer's Records
- TRA auditors are authorized by the
Finance Minister to conduct audits of automobile insurers' records to
determine whether the amount remitted was calculated correctly.
- An auditor may:
a) enter an automobile insurer's business
premises where relevant books and records are kept;
b) inspect, audit and examine
all books, records and other documentation of the automobile
insurer pertinent to the determination of the remittance for a
calendar year; and
c) make copies of the books, records
and other documentation of the insurer, as required.
- An auditor has the right to assistance
from the officer, employees and agents of the automobile insurer
in conducting the audit.
- If, in the course of the audit,
errors or omissions are found, TRA will notify the automobile
insurer of any additional amounts to be remitted.