Are you eligible for a Commonwealth Seniors Health Card?

The question is a popular one among prospective retirees, and the answer can be best explained by dividing the question into four parts.

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

The CSHC gives you access to cheaper prescriptions via the Pharmaceutical Benefits Scheme, bulk-billing rates for doctor appointments, and an increase in benefits for medical expenses above a certain threshold via the Medicare Safety Net.

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 Centrelink’s guide to concession cards. I have included the link for the guide at the bottom of the article.

As a CSHC holder, you will also receive a Seniors Supplement of around $200 each quarter (every 3 months), and this supplement is not taxable and doesn’t count towards the income threshold for the CSHC. (The Seniors Supplement replaces the Seniors Concession Allowance and Telephone Allowance.)

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

The CSHC is available to Australians of Age Pension age or older (at least 65 for men and currently at least 64 years for women), who don’t qualify for the Age Pension.

An individual can apply for a CSHC if they earn an adjusted taxable income of less than $50,000, or $80,000 for a couple. ‘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 reportable superannuation contributions.

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) from the income tax system since July 2007 means that a greater number of retirees are eligible for a CSHC.

Warning: 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 new super rules.

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, I have included an extractfrom the Centrelink website that explains ‘adjusted taxable income’:

Adjusted taxable income

Adjusted taxable income is:

Taxable income

This is income for which you would pay tax to the Australian Government on, for example bank interest and earnings. Whilst 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.

‘Net losses from rental property income’ is where the expenses of owning the property (i.e mortgage interest payments and maintenance costs) exceed the income the gross rental income.

‘Net losses from financial investment income’ is where the expenses of owning the investment (i.e. interest payments on the money loaned to purchase the investments) exceed the income 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 Commonwealth Seniors Health Card include benefits such as cars, school fees, loans, housing, health insurance, etc. Employer provided benefits in excess of $1,000 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. These contributions are on top of those required by law, such as those included in industrial awards or by the superannuation guarantee levy (currently 9%), 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.

C. 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 the financial year prior to the year the claim is lodged. For example, if the claim is lodged in the 2010/2011 year, the CSHC assessment is based on the taxable income for the 2009/2010 year. “Verified taxable income” generally means the taxable income shown on a person’s Tax Notice of Assessment.

For the thousands of Australians who have just retired and hoping to receive a CSHC for the first time in the 2010/2011 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 provided in Centrelink’s ‘Information you need to know about your claim for Commonwealth Seniors Health Card’ (the link is at the bottom of this article).

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

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

Your first port of call is the Centrelink website. The website contains plenty of information about the CSHC, or you can contact them by phone on 13 23 00. Check out the following documents:

• A Guide to Centrelink Concession Cards.
• Information you need to know about your claim for the Commonwealth Seniors Health Card booklet.
• Claim for a Commonwealth Seniors Health Card form.

Related topics