If you are 67 or over and haven’t qualified for a Commonwealth Seniors Health Card (CSHC) yet, you may be eligible from July 1.
That’s because during the election campaign both parties promised to dramatically increase the income threshold above which access to the card cuts off.
The table below describes the new situation: The government believes an extra 50,000 people will now be eligible for the card.
“That is a substantial increase and it means a lot of people who have just been missing out will be eligible,” said John Goldie, a director of Paramount Financial Solutions.
Currently, singles and couples cannot get a card if they earn more than $57,761 and $92,416, respectively.
The new limits will be $90,000 and $144,000, respectively.
Getting the card entitles you to bulk billing at many medical clinics and means you can obtain many prescriptions listed on the Pharmaceutical Benefits Scheme from as little as $6.60 per script.
There is no asset test on the CSHC, but your superannuation will have a deemed income attached, which will contribute to the income test.
The deeming rate will be frozen for the next two years at 0.25 per cent for the first $56,400 in assets for a single and for the first $93,600 for a couple.
Above those figures, income will be deemed to earn 2.25 per cent a year.
The table above shows how much in assets outside your home you will be able to hold and still be eligible for the CSHC.
How do you get it?
Although legislation hasn’t yet been passed to deliver the more generous income limits, the Services Australia website notes they are coming.
There are two ways you can apply. The simplest is probably to visit Centrelink and make an application directly.
But for many people that’s not an attractive option, as it could mean waiting in a long queue and perhaps being exposed to COVID-19 or flu while you are in the office.
The other option is to go online and either fill in forms directly or print them out and send them in via post.
Filling in the forms
Like lots of official forms, those linked to the CSHC can be intimidating, but if you follow the directions you will find your way through it.
One potential stumbling block with the form, however, is how you report your income.
The form asks for your estimated taxable income, but for many retired people their only income will be a super pension, which is not taxable.
So, you don’t need to report super pensions here.
However, if you have a part-time job you should report your income at this point.
And if you have an investment property or other investments that pay income, then you must also report that in this part of the form.
The form will direct you to yet another form – SA 330 – if you answer that you have superannuation income.
So fill in that one if you have a super pension or annuity. Centrelink will work out a deemed income from that amount and use that to establish your eligibility.
The deeming provisions for the CSHC apply only to superannuation pensions and annuities. If you have other assets these will be measured only according to the income they produce.
If you have an investment property that is unoccupied or shares that don’t pay dividends, these will not restrict your eligibility as no deemed income will be placed against them.
“You can have enormous wealth and still qualify for the CSHC, which does raise social equity issues in my view,” said Paul Versteege, policy manager at the Combined Pensioners and Superannuants Association.
Annuities can be an advantage when it comes to claiming the CSHC.
That is because only 60 per cent of their value, for annuities over particular time frames, or none of the value, for lifetime annuities, will be subject to deeming.
There are many sweeteners added to the CSHC depending on where you live. State and territory governments give card holders a number of additional benefits.
These range from energy and transport rebates, to a whopping $1660.60 in sweeteners from the Western Australian government.
For many people, there is a strong emotional value in getting the card, too.
“The seniors card has almost become a symbol for some people,” Mr Versteege said.
“They say, ‘I mightn’t get the pension, but I’m getting something from the government’.”