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Changes to the Seniors Health Card Eligibility

Changes to the Seniors Health Card Eligibility

23 October 2014

One of the few superannuation announcements in the May Federal budget was a change to the eligibility conditions for the Commonwealth Seniors Health Card (CSHC).

The Seniors Health Card provides two main benefits which are highly valued by holders:

  • Concession prices for medicines listed on the Pharmaceuticals Benefit Scheme; and
  • Bulk billing by doctors (who are incentivised by the Government to bulk bill CSHC holders).

It is also often the only Government benefit received by retirees who are not eligible for the age pension. 

Background to the change

In April 2013 the previous Labor government announced that it intended to align the Centrelink income test assessment of account based pensions with the deemed income rules applying to other financial assets. On 20 November 2013, the Coalition introduced a Bill to Parliament to put that initiative in place.

If the legislation is passed, superannuation pensions from 1 January 2015 will be taken into account as part of the income test to determine eligibility for a Seniors Health Card.  This will mean many future retirees may not be eligible for the card.

What’s changing from 1 January 2015?

Currently, to be eligible for a CSHC, you must:

  • Have reached age pension age;
  • Not be entitled to any ‘income support payment’; and
  • Receive less than $50,000 pa ($80,000 for couples) in “adjusted taxable income”

Assuming the legislation before Parliament is passed, the amount of income counted toward the income test for the purposes of the CSHC from 1 January 2015 will be:

  • Your adjusted taxable income plus
  • A deemed amount of income in respect of tax free superannuation pensions for anyone aged over 60.

What you can do:

The Bill provides for existing account based pensions to be grandfathered (and therefore excluded from the income tax calculations) as long as:

  • The particular pension was in place prior to 1 January 2015;
  • The person held a CSHC on 30 December 2014; and
  • The person has continued to hold the CSHC ever since.

Unfortunately, if you reach age pension age after 1 January 2015 you will be caught by the changes even if your pension is already in place. Similarly, an existing CSHC recipient who makes a change to their pension after 1 January 2015 will have their eligibility reassessed.

Whilst every client’s situation needs to be addressed individually, it is clear that many may benefit by taking some action prior to 1 January 2015. If you would like to know more please speak with your local Boyce Director or one of our Superannuation specialists on 02 6452 3344.

SOURCE: Heffron Consulting Pty Ltd. 

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