Changes to the Commonwealth Seniors Health Card (Over 65's without Account Based Pensions)

The government has announced a number of changes to the Commonwealth Seniors Health Card (CSHC). The CSHC allows self-funded retirees to gain access to medicines listed on the Pharmaceutical Benefits Scheme (PBS) at a concessional rate as well as other concessions. To be eligible, a person must have an Adjusted Taxable Income (ATI) of:

·         $50 000 (Singles)
·         $80 000(Couples, Combined)
·         $100 000 (Couples, Combined, or Couples separated by illness or respite care)

You may not have applied for a CSHC due to your non-qualification at this stage; however it could be your intention to do so in the future. You need to do this prior to the 1st of January 2015 to avoid the announced changes.

The proposed changes include;

1.       Annual indexation of income thresholds to       consumer price index from Sept. 2014

2.       Account based pensions (ABP) that are subject to deeming will be included in the CSHC income test from the 1st Jan 2015. Grandfathering applies to holders of the CSHC on the 1st Jan 2015 who have an ABP that commenced prior to that date.

3.       Holders of the CSHC will cease to receive the seniors supplement beyond June 2014.

The proposed changes, especially number two, will have a major effect on the future eligibility for this card. If you have an existing account based pension that has commenced, or you commence one before the 1st January 2015, then it will be excluded from the calculations of the income tests. Again, if it is your intention to apply for this card and you’ve not already commenced an ABP, then you need to do so prior to the 1st January 2015.

The second of these proposed changes in regards to account based pensions, needs to be treated carefully. If you in the future become  a CSHC holder and you change your account based pension provider in the future and therefore will have a new commencement date of your account based pension after the 1st January 2015, then that change will cause this asset to be now deemed and included in the incomes test. The grandfathering provision essentially ‘locks’ account based pension holders into their existing account based pension providers as any change after the 1st January to the provider will see the account based pension deemed for CSHC purposes.