About 50,000 self-funded retirees who were unable to access the Commonwealth Seniors Health Card (CSHC) can now take advantage of the concessions.
The CSHC entitles cardholders to cheaper medicines under the Pharmaceutical Benefits Scheme (PBS). Cardholders also qualify for more bulk-billed doctor visits and refunds on medical costs once the Medicare Safety Net has been reached.
The card also offers a range of state-specific benefits, such as access to public dental care in Queensland and a $459 energy rebate in NSW.
Read: Age Pension increase for many with new thresholds
New thresholds set to widen CSHC eligibility
There is no asset test for the card, but there are limits on how much income you can earn. Those limits were increased late last week.
The new limits are $90,000 a year if you are single (up from $57,761), $144,000 a year for couples (up from $92,416) and $180,000 a year for couples separated by illness, respite care or prison. Add $639.60 to those amounts for each child in your care.
Social services minister Amanda Rishworth says the new limits will help older Australians when they need it most.
“Like other Australians, self-funded retirees are also under pressure in the current economic environment,” she says.
“Cost-of-living pressures are hurting and we are determined to do what we can as a government to assist.
“We’re committed to leaving no-one behind and holding no-one back and this important legislation is true to those guiding principles.”
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How does Centrelink assess income for CSHC eligibility?
Centrelink looks at both your adjusted taxable income (ATI) for the year as well as the deemed amount from any account-based income streams.
Adjusted taxable income is your gross taxable income minus any deductions you are entitled to. This includes income you receive from wages and salaries, a business, dividends or capital gains.
If you receive an income stream from your superannuation, either through a pension account or through a purchased annuity, then Centrelink will assess your income using what’s known as the deeming rate.
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This rate assumes the income stream pays a set amount, regardless of what is actually paid out for the year. By using this method, income assessments are streamlined as Centrelink doesn’t need to request paperwork from customers.
Deeming applies only to superannuation pensions and annuities. If you have other assets, they will be measured according to the income they produce.
So, if you have shares that don’t pay dividends or an investment property sitting vacant, that will not affect your CSHC eligibility.
Personal finance expert Noel Whittaker says rules around CSHC eligibility, and what exactly constitutes an ‘income’ can be hard to understand. For instance, what about income received from your super fund?
“It can be confusing,” he says.
“Under the CSHC rules, Centrelink only deems superannuation that produces an income stream.
“Superannuation funds in accumulation mode are not tested at all, because they are not producing a taxable income and you are not drawing an income from them.”
On his website, Mr Whittaker shares the following case study:
Jack and Jill have a share portfolio of $900,000, producing an income of $34,000 a year, plus franking credits of $10,000, so their ATI is $44,000 a year.
They also have very large superannuation balances, but since the Turnbull government restricted the amount that could be held in the tax-free pension mode to $1.6 million back in 2016, they are most unlikely to have more than $1.7 million each in pension mode, unless their super fund has been performing spectacularly well.
The deemed value of their super would be $74,720 a year which, when added to their ATI, gives them a total income for CHSC purposes of $118,720.
So, thanks to the changes, Jack and Jill – and a huge number of other self-funded retirees – will be able to pick up a CSHC and its generous concessions.
Are you eligible for a CSHC under the new limits? Should the card be available to everyone over a certain age? Let us know in the comments section below.