Nick Bruining: Eligibility limits for Low Income Health Care Card rise to offer more cost-of-living support

It’s not only wealthy seniors who will benefit from the March 20 increase to Centrelink benefits.

Families struggling to make ends meet may now qualify for a special concession card and Australians in receipt of allowance payments such as Jobseeker will also see a slight improvement.

Unlike pensions, allowances only rise by the published consumer price index rate. These payments will jump by between $3.10 and $4 a fortnight, depending on your domestic arrangements.

“The March round of increases also expands access to the Low Income Health Care Card,” said Midland-based financial adviser Annette Sinclair.

The LIHCC is issued by Centrelink and is available to individuals and families who meet the low income threshold, averaged over the preceding eight weeks before claiming.

Holders of the card receive a green healthcare card from Centrelink, which does not identify your personal circumstances.

“Apart from PBS-listed medicine being available for $7.70 per prescription, medical tests are usually bulk-billed and many doctors provide concessions,” Ms Sinclair said.

“State and local government authorities will often provide discounts and other concessions to cardholders.”

Transperth, for example, will charge the concession fare on all public transport.

From March 20, the single’s eligibility income level will be $786 a week, and for couples or single parent families it’s $1343 a week. Each dependent child increases the figure by $34 a week.

Once granted, your income can increase by 25 per cent before the LIHCC is cancelled. For a single, the cancellation threshold will be $982.50, and for couples a combined $1678.75

There is no asset test for the card.

“Centrelink-assessable income used to check for eligibility is different to taxable income used by the Australian Taxation Office,” Ms Sinclair said.

“For the LIHCC, it is the same system that is used for the pension and allowance income means test.”

Centrelink-assessable income includes before-tax employment income plus an add-back for any investment losses like negative gearing and voluntary concessional contributions to superannuation.

It also includes foreign income and the income from older style defined benefit superannuation pensions along with after-expenses rental income from investment properties. Added to this is the deemed income from financial assets.

Actual income from financial investments is ignored.

Instead, the deeming system applies to all financial investments which includes bank accounts, shares, managed investments, cash, bullion and gifts over certain limits. It also includes account-based pensions but not money in accumulation phase if under the age pension eligibility age of 67.

This twist means that many seniors who retire early and are not yet pension age may have access to the LIHCC to help with the cost of living.

For singles, the first $62,600 of the grand total of financial assets is deemed to be earning 0.25 per cent, with the balance earning 2.25 per cent. This annual figure is divided by 52 to ascertain the deemed weekly income. A total of $1 million in financial assets for a single would have deemed income of $408.62 a week.

For couples, the 0.25 per cent rate applies to the first combined $103,800 of financial assets and the balance is deemed to be earning 2.25 per cent. In this case, $1m would have combined deemed income of $392.77 a week.

The easiest way to apply for the card is via the my.Gov.au website.

Nick Bruining is an independent financial adviser and a member of the Certified Independent Financial Advisers Association