Seniors with up to $4M in super and other investments may now be eligible for health concession cards.

The Age Pension & associated Pensioner Concession Card is the most comprehensive Centrelink benefit for seniors.

  • The assets test is now $935,000 for a homeowner couple or $622,250 for a single homeowner (excluding the home but including any account based pensions and other assets held).

But for those with assets above this level, the Commonwealth Seniors Health Card (CSHC) and potentially even the Low Income Health Care Card (LIHCC) may be available depending on how much income you are earning and the level of your financial assets including super.

Commonwealth Seniors Health Card (CSHC)

The CSHC provides benefits such as cheaper medicine under the Pharmaceutical Benefits Scheme and, based on which state you live in, may also provide discounts on electricity & gas, property & water rates and motor vehicle registration.

You must meet the following criteria to qualify for a CSHC:

  • You have reached your Age Pension eligibility age (currently 66.5)
  • You’re not eligible to receive any payment from the Department of Human Services (including the Age Pension) or from the Department of Veterans’ Affairs
  • You’re an Australian resident and you live in Australia (or you hold a special category visa as a New Zealand citizen living in Australia)
  • You satisfy an annual income test (different thresholds to the Age Pension income test).

In the 2022 Federal Budget, the Government significantly increased the limits to support older Australians who rely on income from deemed financial investments, e.g., superannuation income streams (as well as the pension) to deal with the rising cost of living.

From 4 November 2022, the income limit changed. If you earn no more than $144,000 a year for a couple combined or $90,000 for a single – being your adjusted taxable income as well as deemed income from your account based pensions – you are now eligible.

Note that the card is automatically renewed each year. It is cancelled if you leave Australia for longer than 19 weeks.

Low Income Health Care Card (LIHCC)

The LIHCC provides similar but not identical benefits e.g., one-off Government assistance payments or extra discounts.

It is worthwhile seeing if you are also eligible for the LIHCC and applying for both cards where you can.

You must meet the following criteria to qualify for a LIHC:

  • Be 19 years of age or older
  • You’re an Australian resident and you live in Australia (or you hold a special category visa as a New Zealand citizen living in Australia)
  • You satisfy an annual income test of less than $1,166 per week for a couple or $680 per week for a single – being your employment & rental income plus salary sacrifice and any allowances plus deemed income from your account based pensions and other financial investments such as bank accounts and shares.

Centrelink will assess the gross income you earned in the 8 weeks before you submit your claim.

You need to apply for renewal after a year and you must also not go over an income limit while you have the card. It is cancelled if you leave Australia for more than six weeks.

How to calculate the deemed income from your account based pensions

The first $46,800 of each of your own and your share of joint financial assets has a deemed income of 0.25% per year. Anything over $46,800 is deemed to earn 2.25%.

To illustrate, suppose that Mr Smith has $1.3M in account based pensions, and Mrs Smith has $1.3M in account based pensions. They are both aged 67. Total combined account based pensions of $2.6M would result in deemed income to be reported of:

(93,600 * 0.25%) = 234
(2,506,400* 2.25%) = 56,394
Total Deemed Income = $56,628 p.a. ($1,089 p.w.)
* $46,800 x 2
** $2,600,000 – 93,600

If Mr & Mrs Smith had no other income or assets, they would be eligible for the Commonwealth Seniors Health Card & the Low Income Health Care Card.

Please note: that your personal circumstances may affect your eligibility. If you think you might be eligible, the best place to start is the Centrelink website or a Service NSW branch. Feel free to contact us if you have further questions to discuss.

This article was first published in Personal Wealth Adviser Issue 5.