Cheaper medicines and significant discounts on government services for seniors October 27th, 2022

The passage of the bill fulfills an undertaking by the new Albanese government, to match a coalition campaign promise in the lead up to the May federal election. The change increases the cut-off limits to $90,000 per annum for singles and a combined $144,000 for couples.

The Association of Independent Retirees (AIR) welcomed the change and said the ability to access the card could have a major impact on increases in the cost of living being felt by many seniors. For seniors with either a Pension Concession Card or Commonwealth Seniors Health Card (CSHC), PBS listed drugs which would normally cost $42.50 per prescription, are capped at $6.80 per script. There is also an annual safety net of $244.80 per annum. Once the limit is reached, prescriptions are free for the rest of the calendar year.

Combined with a State Seniors Card

When combined with the State Seniors Card, WA residents holding both cards enjoy most of the benefits received by Age Pensioners. That includes big discounts on local government charges, water supply charges and other State government services. AIR estimates that in some cases, the combined discounts could be worth up to $7,000 per year.

In other sates, different discounts apply.

What gets included in Centrelink's assessment of access to the CSHC card?

Many seniors will not be aware of their entitlement to the CSHC because of confusion surrounding the way Centrelink calculates assessable income for the card. Centrelink use a combination of taxable income and deemed income on certain investments to calculate income for the card.

Significantly, any money taken out of a taxed super scheme whether as a regular payment or a lump-sum withdrawal, does not count towards the annual limit. Gross employment income, foreign income, net rental receipts, assessable capital gains and grossed-up share dividends are all part of the annual figure.

Centrelink’s deeming system is applied to money in superannuation, but only to the funds held in an account based pension or ABP. Money retained in superannuation accumulation phase is ignored.

The allowances

For singles, the first $56,400 of the money in ABPs is deemed to be earning 0.25 percent per annum and the balance 2.25 percent per annum. For couples, the combined lower amount of $93,600 attracts the 0.25 percent rate with the remainder at 2.25 percent.

A single that has the maximum permitted amount of $1.7 Million in an account based pension would have deemed income on the amount of $37,122. That leaves a generous $52,878 to be earned from other investments or employment income before losing access to the CSHC.

A couple with a maxed-out amount of $3.4 Million in ABPs or $1.7 Million each, would have deemed income of $74,628 per annum, leaving them with $69,372 of “wriggle-room”.