Nick Bruining: Thresholds to access Low Income Health Care Card and its multiple benefits have changed

The recent increase in Centrelink payment rates also saw a rise in a number of other important thresholds which could benefit many people not aware of some State and Federal Government concessions. This includes the valuable Low Income Health Care Card and the amount of money you can owe to Centrelink before it will pursue you for overpayment of debts. The health care card, as the name implies, is a concession card issued by Centrelink to adults surviving on a low income. There is no age limit to get one, so younger people, often those who are self-employed, may be eligible. The card provides a number of concessions and discounts on State and Federal Government services, including PBS-listed medicines at $7.70 per script, concessional fares on public transport, rebates and concessions from Synergy, and some dental services. Remember most means-tested Centrelink income support payments come with their own concession cards, which in many cases offer additional discounts and concessions. The LIHC card is issued when average income — taken over the eight-week period before applying — falls below the relevant thresholds. It is also issued to those families receiving the maximum Family Tax Benefit Part A payment. There is no asset test applied to the card. To qualify, an person’s income needs to be below $811 a week. For couples or singles with a dependent child, it’s a combined $1385 a week. Each additional child adds $34 to the threshold. Once you qualify, income can increase by 25 per cent a week so a single, for example, wouldn’t need to forfeit an existing card unless their weekly income exceeded $1013.75 For couples, that increased figure is $1731.25 Centrelink does not calculate income the same way as the Australian Taxation Office. For the card, before-tax income from employment counts, as does net rental income from real estate, foreign pensions or income, distributions from private companies and trusts, and special superannuation pensions. Crucially, income from superannuation such as one-off withdrawals or regular payments is ignored. Instead, all financial investments including bank accounts, shares, cash, bullion, gifts made over the gifting limits, and money in account-based pensions are caught under the deeming system. All money in superannuation accumulation phase, if under age pension age, is ignored. As a rough guide, a single with no other Centrelink-assessable income could have assessable financial assets of about $1.3 million and qualify. A couple could have about $2.25m and also qualify. For someone who has retired early and is over 60 — and perhaps doing some part-time work — you could park your money in superannuation accumulation phase, knowing it is disregarded by Centrelink. Your employment income could be topped up with occasional withdrawals from super, remembering those withdrawals are tax-free and also ignored for the card’s eligibility purposes. The other figure that changed on March 20 is the amount you can owe Centrelink before it will consider “recovering” the money. It was previously set at $200, but it’s now $250. Below this level, Centrelink’s parent agency Services Australia considers it not economically viable to pursue the debt. Beyond this amount however, Services Australia is legally obliged to recover the money. Nick Bruining is an independent financial adviser and a member of the Certified Independent Financial Advisers Association