Low hanging fruit – Age Pension & Commonwealth Seniors Health Card
Disclaimer
The information in this article contains general advice and is provided by Hood Sweeney Securities Pty Ltd AFSL No.220897. That advice has been prepared without taking your personal objectives, financial situation or needs into account. Before acting on this general advice, you should consider the appropriateness of it having regard to your personal objectives, financial situation and needs. Please refer to our FSG (available at https://www.hoodsweeney.com.au/services/financial-planning/how-we-service-our-clients/financial-services-guide) for contact information and information about remuneration and associations with product issuers. All examples are provided for illustrative purposes only.
When consulting clients about potential strategies to enhance their financial position, responses often include sophisticated tax structuring, high-performing stocks, or insights into future market trends. While these are valid considerations, albeit some more reliable than others, it is often the overlooked opportunities that can significantly impact a client’s financial position.
Senior Financial Planner JC Botha* explores some of the commonly underestimated opportunities that can make a difference, beginning with the benefits available through Centrelink, notably the Age Pension and the Commonwealth Senior Health Card.
Age Pension & Commonwealth Seniors Health Card
Many self-funded retirees tend to underestimate the benefits available through Centrelink, most notably the Age Pension and the Commonwealth Seniors Health Card (CSHC). Australia boasts one of the world's most generous social welfare systems. A common misconception among retirees is that they do not qualify for these benefits or that the benefits are not substantial enough to merit the effort involved in the application process. Let us examine this with a hypothetical example.
John and Sue, both aged 70, are married and retired. They reside in their own home valued at $1,500,000 and possess superannuation benefits, two modest vehicles, and other smaller assessable assets collectively valued at $800,000. Given their total asset base of $2,300,000, it may be easy to mistakenly assume they are ineligible for Age Pension and CSHC benefits. However, the upper threshold for part-Age Pension under the asset test is $1,045,500, (which excludes their primary residence) as detailed below:
Their combined part-Age Pension would amount to $735.20 per fortnight, or $19,115.20 annually.
Additionally, they would receive a Pensioner Concession Card, providing numerous benefits, such as:
- Reduced-cost prescriptions under the Pharmaceutical Benefits Scheme
- Bulk-billed doctor visits (subject to the doctor's discretion)
- Refunds for medical costs upon reaching the Medicare Safety Net.
Other state or territory-specific benefits, potentially including concessions on:
- Electricity and gas bills
- Property and water rates
- Health care costs, including ambulance, dental, and eye care
- Public transport fares
- Emergency Services Levy
- Vehicle registrations
Eligibility for the CSHC is determined by Age, Residency, and Income tests, with the income threshold currently set at $158,440 per annum. This threshold makes a significant proportion of seniors eligible, even more so than those qualifying for the Age Pension. Thus, if you are not eligible for the Age Pension, there is a strong likelihood that you could qualify for a CSHC, which offers similar benefits to the Pensioner Concession Card.
All these benefits can easily amount to thousands of dollars annually. It is important to note that eligibility thresholds are indexed every six months, which may increase your benefits or the likelihood of becoming eligible. Therefore, regularly review of your position with your financial planner is advisable.
*JC Botha is a Senior Financial Planner and Representative of Hood Sweeney Securities AFS Licence No.220897.