Following the promising news about the upcoming Centrelink pension increases, there’s more good news on the horizon for seniors. Starting September 20, the Commonwealth Seniors Health Card (CSHC) will see significant enhancements.
This Centrelink issued concession card, allows multi-millionaire retirees to get prescription drugs for less than $8 per script. Depending on where you live in Australia, when combined with your State’s Seniors Card, discounts on utilities and other expenses can add up to thousands per year.
This CSHC card is usually available to people who are pension age, but ineligible to receive a pension because of means testing. Pensioners don’t receive the CSHC but instead, receive a Pension Concession Card when they are granted the pension.
The basic nation-wide concession for CSHC holders is an ability to access PBS listed drugs at just $7.70 per script with an annual maximum of $277.20. Once you reach the limit, they’re free.
While no asset test applies to the CSHC, it is subject to an income means test. The cut-off thresholds will increase from September 20.
The cut-off limit for singles will be annual Centrelink assessable income of $99,025 and for couples, a combined income of $158,440 per annum.
Assessable income for CSHC purposes is a mish-mash of taxable and deemed income, but only on certain assets.
This is a different set of calculations to those used for pension means testing.
Like the Tax office, all pre-tax employment income and income from investments count towards the CSHC assessable income. But also like the ATO, allowable tax deductions can be applied including interest on investment loans, office and other expenses.
Dividend income from Australian shares is included at the “grossed-up” amount, which is simply the cash dividend plus any franking credits.
Foreign pension income is included, but those receiving a British state pension get an 8 percent tax deduction.
Income including any withdrawals from a normal “taxed” super fund is completely ignored, including regular ABP payments.
If any of your money is still in superannuation accumulation phase, the account balance and any withdrawals are completely ignored.
Only money invested in an Account Based Pension is assessed but in this case, under the complicated deeming system.
For singles, the first $62,600 in an ABP is deemed to be earning just 0.25 percent. Anything above this in an ABP is deemed to be earning 2.25 percent. For couples, the lower 0.25 percent applies to the first $103,800 and then the remainder at 2.25 percent.
It means a couple who have maxed out the superannuation system could each have the $1.9 Million in super.
The deemed income on the $3.8 Million total, works out to be $83,424 per annum. With a new upper limit of $158,400, they still have an additional $74,976 of “wriggle room” they could earn in other income, before losing the card.
At 67 years of age, our maxed-out couple would be compelled to draw 5 percent per annum or more than $15,800 per month, tax free. They are still entitled to the CSHC, getting their pills for $7.70 a prescription. With the state seniors card, they can also catch the train to Mandurah between 9:30 and 3:30 each day for free and get a discount of up to $750 on their local government charges.
For a single, the deemed amount on a $1.9 Million ABP would be $84,248, still leaving them with an additional $14,777 they could earn before losing the card.
The CSHC is issued by Centrelink and you can lodge a claim on line via my.gov.au after linking the Centrelink service to your account.