Finance Your Budget The three election promises giving a big boost to retirees
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The three election promises giving a big boost to retirees

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Older people with significant assets will now get a seniors health care card. Photo: Getty
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An extra 50,000 Australians aged 67 or older will gain access to cheaper Medicare services and prescription medicines under changes proposed by the government and supported by the opposition.

From July 1, the Commonwealth Seniors Health Card will be made available to Australians above the age pension age who earn up to $90,000 individually or up to $144,000 as part of a couple.

It’s a significant increase from the card’s current income caps of $57,761 for singles and $92,416 for couples – and it means about 50,000 more Australians will access the card and get the same discount as pensioners on prescription medicines.

As we explain below, the change is one of three big election promises aimed at older Australians so far.

Here’s what you need to know about them.

1. Expanding access to the Commonwealth Seniors Health Card

Relaxing the eligibility requirements for the Commonwealth Seniors Health Card means an extra 50,000 Australians will pay a maximum of $6.80 per prescription medicine.

Additionally, the card provides access to state government discounts on rates, utility bills, transport, ambulance fees, dental care, eye care, and recreational activities.

Paul Versteege, policy manager with the Combined Pensioners and Superannuants Association, said “it will benefit those self-funded retirees who are currently unable to get a card and protect the positions of those who have just squeezed in”.

The health card has no asset test. But if retirees have too much money in the bank they could still lose access to the card because the returns from their investments could see them breach the income test.

This process is governed by what is known as deeming – a set of rules used to determine the income earned from people’s financial assets.

2. Freezing the deeming rate at pandemic lows

The deeming rate is the return that the government assumes you make on your investment. Centrelink uses it to determine how much you might be earning from your assets so they can adjust your pension payments accordingly.

During the pandemic – a time in which the official cash rate was held at 0.1 per cent from November 2020 until April 2022 – the deeming rate was halved.

Under current rules, the government assumes people earn a return of 0.25 per cent on the first $53,600 of their financial assets for singles and the first $89,000 for couples. Above those thresholds, the government assumes people earn 2.25 per cent on their investments – no matter how much they actually earn.

After the Reserve Bank lifted the cash rate on Tuesday for the first time since 2010, the Coalition promised to keep those deeming rates at current levels for another two years.

Council on the Ageing chief executive Ian Yates said the decision was welcome “because it actually provides people with certainty [about their income from pension and investments] down the track”.

He said the lower deeming rate was a big leg-up for retirees as “it means you can earn above the deeming rate on your investments and keep the money without diminishing what you earn [from the pension]”.

Combined with big increases to its income caps, the low deeming rates mean that people with considerable wealth will soon be able to access the seniors health card.

Under the changes – expected to benefit as many as 900,000 people – a single person with $4 million in financial assets and a couple with $6.5 million will have access to the card, up from $2.3 million and $4 million respectively. And the family home is excluded from those calculations.

“It’s certainly the effect that better-off retirees benefit from these changes,” Mr Versteege said.

3. Cutting the cost of prescription medicines

Given that older people are far more likely to be in poor health and use more medication than younger people, they will benefit disproportionately from another set of changes being promised at this election.

Currently, the cost of drugs obtained under the Pharmaceutical Benefits Scheme is capped at $42.50 per prescription filled.

The Coalition has promised to reduce that to $32.50 and Labor has promised to reduce it to $30.

Both parties have said the cuts will come into effect from January 1, 2023.