Nick Bruining: More eligible for Commonwealth Seniors Heath Card as Centrelink age pension rates rise
Australian Independent Retirees has previously valued the discounts offered by these two cards at being worth up to $7000 a household each year. Do you have them?
Next month’s rise in Centrelink payment rates also heralds an increase to thresholds for the popular Commonwealth Seniors Heath Card.
The card is issued to seniors aged 67 or older who fail to qualify for an age pension under the means testing system.
While an income test applies, the new indexed levels combined with a unique method of calculating assessable income means that many seniors qualify without being aware.
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By continuing you agree to our Terms and Privacy Policy.From September 20, the cut-off threshold for singles increases to $105,048, and for couples it’s a combined $168,076. In the case of couples, all or most of the income can be generated by one member.
CSHC thresholds are linked to increases in the consumer price index.
The card entitles holders to purchase PBS-listed medicines for $7.70 per prescription with an annual safety net limit of $277.20. Once you reach this limit, subsequent medications are free.
Unique to WA, people who hold both the CSHC and the State Government-issued State Seniors Card receive similar discounts to people holding the Pension Concession Card.
That means substantial discounts on State Government services and utilities as well as reductions in local government charges.
For example, a person who holds both cards is entitled to a 50 per cent discount on most local government charges, capped to a limit of $750. Driver’s licences are free as are motor vehicle licence fees, but the concession does not extend to the third-party insurance component.
Australian Independent Retirees has previously valued the discounts at being worth up to $7000 a household each year.
The assessable income used to calculate eligibility for the CSHC includes taxable income from employment, foreign income and special defined benefit superannuation pension income.
Added to that is income from investments like bank interest, net rental income and share dividends. However, withdrawals from superannuation for those aged over 60 and payments and lump sum withdrawals from account-based pensions are ignored.
Instead, and specifically for the CSHC, Centrelink applies the deeming rate system to ABP balances. From September 20, the first $66,800 of the balance for singles is deemed to be earning 1.75 per cent a year. For couples the 1.75 per cent threshold applies to a combined $110,600 of ABP assets. All amounts above these levels are deemed to be earning 3.75 per cent a year.
A couple with a combined $1.5 million in ABPs would have Centrelink-assessable income of $54,038 a year attributed to the ABPs. With a $168,076 upper limit, that gives them a further $114,038 of assessable income to play with.
For a single with $1.5m in an ABP, the deemed income would be $54,914, giving them a further $50,134 of taxable income wriggle room.
The easiest way to apply for a CSHC is via my.gov.au when it is linked to the Centrelink services portal.
Nick Bruining is an independent financial adviser and a member of the Certified Independent Financial Advisers Association
