Are you eligible for a Commonwealth Seniors Health Card?

IMPORTANT: Effective since 20 September 2015, the government again indexed the income test thresholds for the CSHC (see this article for latest thresholds). The next indexation of the CSHC income thresholds takes place on 20 September 2016. Note that since 1 January 2015, new applicants for CSHC need to include tax-free superannuation income when assessing CSHC eligibility.

Any Australian hoping to be a self-funded retiree should also ask, ‘Am I eligible for a Commonwealth Seniors Health Card (CSHC)?’ Any Australian affected by the Age Pension assets test changes taking effect from January 2017, may also be asking themselves whether they can now claim the CSHC (for more information on the 2017 changes see SuperGuide article Latest retirement deal! Lose Age Pension, receive Seniors Health Card.

CSHC eligibility is a popular prospect for budding self-funded retirees, and the answer can be best explained by dividing the question into four parts:

1. What is the Commonwealth Seniors Health Card (CSHC)?

The CSHC gives you access to cheaper prescriptions via the Pharmaceutical Benefits Scheme, and an increase in benefits for medical expenses above a certain threshold via the Medicare Safety Net. You may also be eligible for bulk-billing for doctor’s appointments (at the doctor’s discretion).

As a CSHC holder you can also travel on the Ghan, Indian Pacific and the Overland rail services at concessional rates. Depending on the state that you live in, you may also be entitled to concessions from your state government and, from some private businesses. You can find out about the other discounts that you’re entitled to by reading the Centrelink guide to concession cards on the Department of Human services website. I have included the link for the guide at the bottom of the article.

The Energy Supplement continues to be paid and the Liberals planned to fix it at the rate that was applicable before July 2014 (that is, $361.40 for a single person, and $546 for a couple, that is $273 for each member of the couple). Since September 2014, the Energy Supplement increased $5.20 to $366.60 a year (for a single), paid quarterly in arrears, and increased by $5.20 to $551.20 for a couple, that is $275.60 for each member of a couple. This change is now law which means the rates set at 20 September 2014 – $366.60 (single person) and $551.20 (for a couple) – will remain fixed going forward, and the supplement was renamed Energy Supplement (previously called Clean Energy Supplement).

Background: The CSHC was introduced in 1994 to encourage individuals to become self-funded retirees. The income thresholds for eligibility steadily increased from 1994 to 2001 to reflect cost of living increases. Since 2001 however, the income thresholds for eligibility had not changed for 13 years; until the government committed to indexing the CSHC income test thresholds each year, effective from 20 September 2014. The thresholds were again indexed from September 2015 (see the next section of this article for the latest thresholds).

2. Who is eligible for the Commonwealth Seniors Health Card (CSHC)?

The CSHC is available to Australians of Age Pension or older age or older (at least 65 for men and since 1 July 2013, at least 65 years for women), and who don’t qualify for the Age Pension or who don’t qualify for a Department of Veterans’ Affairs pension. You must also be an Australian resident and currently living in Australia.

You must satisfy an income test (currently based on ‘adjusted taxable income’ and this ATI includes a deemed income amount for applicable applicants post-December 2014), but you do not have to satisfy an assets test to be eligible for the CSHC.

Income thresholds for CSHC: Effective since 20 September 2015, the CSHC income test thresholds have increased. Your annual adjusted taxable income must now be less than $52,273 (for a single person) or less than $83,636 (for a couple, combined. If a couple is separated due to illness, respite care or prison, then the combined income threshold rises to $104,546.

Background: Until 19 September 2015 (and from 20 September 2014), your annual adjusted taxable income had to be less than $51,500 (for a single person) or less than $82,400 (for a couple, combined). If a couple was separated due to illness, respite care or prison, then the combined income threshold rose to $103,000. Before 20 September 2014, the income test thresholds were $50,000 (for a single person) and $80,000 (for a couple) or $100,000 (for a couple separate due to illness or jail).

What is annual adjusted taxable income (ATI)?: The current definition of ‘adjusted taxable income’ is an individual’s taxable income plus total net investment losses, plus foreign income not normally taxed in Australia, plus employer-provided fringe benefits (if worth more than $1,000), and plus reportable super contributions. Since 1 January 2015, ATI also includes a ‘deemed income amount’ for new applicants. I explain what all of these items mean later in the article.

Super benefits not counted as taxable income (except for payments from some public sector funds): Any super benefits paid to individuals aged 60 or over are tax-free and, importantly, do not form part of an individual’s taxable income. As a consequence, the removal of super benefits (from a taxed source) received by over-60s from the income tax system since July 2007 means that a greater number of retirees are eligible for a CSHC. The one exception to the exclusion of superannuation benefits from taxable income (since July 2007), however, is where an individual receives pension income from an untaxed source, which is the case for some retired public servants. Pension income from an untaxed source is still counted when considering CSHC eligibility because this income forms part of a person’s taxable income. This is another example of retired public servants missing out under the tax-free super rules.

New rules for new CSHC applicants since 1 January 2015

Note: Since 1 January 2015, new applicants for CSHC need to include superannuation pension income when assessing CSHC eligibility. For more information on this proposed change see SuperGuide article More retirees eligible for Seniors Health Card (CSHC), but harsher income test.

Salary sacrifice super contributions count for adjusted taxable income: For the 2008-09 year and earlier years, salary sacrificing didn’t count when determining eligibility for the CSHC. Since July 2009 however, the definition of income for the purposes of the CSHC, includes salary sacrificed contributions.

You can confirm your CSHC eligibility with Centrelink.

For the convenience of readers who are eligible for the CSHC under the OLD rules, I have included an extract  that explains ‘adjusted taxable income’ (applicable for those eligible for CSHC before 1 January 2015):

Adjusted taxable income is a combination of taxable income, foreign income, total net investment losses, employer-provided benefits, and reportable superannuation contributions:

Taxable income

This is income that you would pay tax to the Australian Government on, for example bank interest and earnings. Although you may not be required to lodge a taxation return due to the level of your income, you may still have taxable income.

Foreign income

This is income from overseas that you do not pay Australian income tax on.

Total net investment losses

Total net investment losses are the sum of net losses from rental-property income plus net losses from financial investment income. The losses will be added back on to adjusted taxable income.

A net loss from rental property income is the amount by which the expenses of owning the property (e.g. mortgage-interest payments and maintenance costs) exceed the gross rental income from it.

A net loss from financial-investment income is the amount by which the expenses of owning the investment (e.g. interest payments on the money lent to purchase the investments) exceed the income that the investments are earning. Such investments are often referred to as ‘negatively geared’.

Employer-provided benefits

Employer-provided benefits that are taken into account for the Commonwealth Seniors Health Card include benefits such as cars, school fees, loans, housing, and health insurance. Employer-provided benefits in excess of $1000 form part of a person’s adjusted taxable income.

Reportable superannuation contributions

Reportable superannuation contributions are discretionary or voluntary contributions. They can also be referred to as ‘concessional’ or ‘before-tax contributions’. They include:

  • reportable employer superannuation contributions, such as voluntary salary-sacrificed contributions (which are on top of those required by law, such as those included in industrial awards or by the superannuation guarantee levy—currently 9.5 per cent), and
  • personal deductible superannuation contributions, if they can be claimed as a tax deduction on a personal tax return.

Note: Post-tax contributions to superannuation are not reportable superannuation contributions

3. What year of income does Centrelink use when testing for CSHC eligibility?

This is where it gets tricky. The income assessment for the CSHC is based on the verified taxable income from one of the two financial years prior to the year the claim is lodged. For example, if the claim is lodged in the 2015/2016 year, the CSHC assessment is based on the taxable income for the 2014/2015 year or the 2013/2014 year. “Verified taxable income” generally means the taxable income shown on a person’s Tax Notice of Assessment.

Since 1 January 2015, new applicants also have to include deemed income amounts from super pensions.

Note: For the thousands of Australians who have just retired and hoping to receive a CSHC for the first time in the 2015/2016 year, based on an income that you no longer receive, then your entitlement to the CSHC could be problematic. Fortunately, Centrelink has anticipated this issue. If the verified taxable income for the previous year is above the CSHC income limits, then it is possible for an individual to supply an estimate of their taxable income for the current financial year using the calculation table (see pages 7 and 8) provided in Centrelink’s ‘Information you need to know about your claim for Commonwealth Seniors Health Card’ booklet (the link is at the bottom of this article).

Warning: When you do receive your Tax Notice of Assessment for the year that you used for testing your CSHC eligibility, and if you discover that your estimate is incorrect and that your taxable income is in fact above CSHC income limits, then you must notify Centrelink immediately.

4. Where can I find more information about the CSHC and eligibility?

Your first port of call is the Department of Human services website (which now manages all Centrelink information). The Centrelink section of the DHS website contains plenty of information about the CSHC, or you can contact them by phone on 13 23 00. I suggest you write down this phone number because when I first searched for this phone number it took me 20 minutes to find it on the DHS website, and it was hidden away in a 19-page booklet. More recently however the number is more prominent on the website although it only invites you to use the number if you have lost your CSHC, when it is the main phone number for any CSHC question.

For more information on the CSHC, check out the following documents:

For more information on the proposed changes to the CSHC income test see the following SuperGuide articles:

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  1. David Horwitz says:

    I did a recombination strategy last year so all my superannuation is now effectively my own money and not concessionally taxed. As my super payments are effectively only returning to me my own already taxed money how will this be dealt with when I apply for a CSHC?

  2. The combined income threshold for CSHC holders has been fixed for the past 13 years at $80,000. It is proposed to increase this level to $82,400 from 20/9/2014 or an increase of 3.00% OR an average indexed annual increase of 0.23% over 13 years. This could be regarded as acceptable if inflation had been held at these levels.

  3. Mike ELLIOTT says:

    CSHC. If you already have one it will be “grandfathered”. Are you in danger of losing it by moving from a Transition Pension to a Accumulation Pension??
    Can you alter from one pension type to another mid year, or only on 1 July each year??
    If you lose your health card for one year by earning too much, ie the capital gain of selling a property, would you then be covered by the old rules or the new rules the next year ??
    Thanks for any response.

  4. Lyn Harrison says:

    I have been told there is a seniors card for the over 50’s in Queensland but am having trouble obtaining any information on this. Can you let me know if this is the case and how I go about applying if it is. Thanks

    • Hi Lyn,

      We’re you able to find out any info? I’m still searching so if I find anything I’ll post it here.

      Many thanks

      • Try Might be what you are talking about. It offers discounts from different businesses for over 50s members.

  5. How long has the $80K taxable income limit per couple been in place?.Surely it should have been indexed like all other benefits etc.80K is not that much more than a married pension.I am still paying tax after 55 years but I can’t get subsidised medicines like an (illegal?) immigrant who has never put in a cent.I am not entitled to a pension and I get no pension concessions.What about a fair go for self funded retires at the time when their chemist bills can run to $300 per month like my wife and mine?

  6. The Low income health care card is a differant card to the CSHCC, it has it’s own income test and income is assessed as per Centrelink rules & legislation, current income limits are: single (no children) $497. per week, couple, combined (no children) $862. per week. The income test applies to average weekly income (Centrelink rules) for the 8 weeks prior to claiming, although redundancy & leave payments received in the 12 mths before hand are averaged for 12 mths from the date of receipt.

  7. The Low income health care card is a differant card to the CSHCC, it has it’s own income test and income is assessed as per Centrelink rules & legislation, current income limits are: single (no children) $497. per week, couple, combined (no children) $862. per week. The income test applies to average weekly income (Centrelink rules) for the 8 weeks prior to claiming, although redundancy & leave payments received in the 12 mths before hand are averaged for 12 mths from the date of receipt.

  8. Hi Trish,

    My husband and I are self-funded retirees and last year applied for and received a Commonwealth Seniors Health Card for each of us. I notice the cards expire on September 30. Do we need to reapply each year or produce evidence of income on an annual basis or is the card automatically renewed?

    We really appreciate receiving your SuperGuide newsletter which keeps us up to date with changes in an easily understood fashion. Keep up the great work.


  9. Hi Trish,

    I am about to turn 65, my wife is 57 and we are both self funded retirees. Our adjusted taxable incomes are each $40k from our investments, but are increasing marginally each year.
    Can I apply for a CSHC and what measures would I need to consider over the next few years?

    • Hi Ian
      Thanks for your comment. The threshold for a couple remains at $80,000 a year, and whether you are eligible may vary from year to year depending on returns from investments. We have updated the CSHC article, but the rules remain the same as for the previous year.
      Your accountant may be able to assist you with managing your affairs to ensure you remain eligible for the CSHC.

    • Hi Trish,
      I am 62 and a retired commonwealth public servant in the CSS super scheme.

      In addition to an indexed pension, I converted my contributions made into the CSS fund into a non-indexed, tax free pension. The combined indexed and non-indexed pension is just above the $80k eligibility limit for a CSHC for a couple.

      Is the non-indexed, non taxed pension counted towards the income test for the CSHC? I would appreciate your opinion.

  10. Trish, my wife has tax losses from a managed investment portfolio which has now been liquidated.

    She no other income now except for a small amount of bank interest earnings.

    What is the effect of those losses on her application for a CSHC? Those ‘losses’ will be carried forward forever is my understanding. They can never be reduced by any capital gains now in her situation.

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