14 May 2014

Harder for Self-Funded Retirees to get the Commonwealth Seniors Health Card


In the 2014 Budget the government has made it very clear it will impose  tougher income test rules for self-funded retirees applying for the Commonwealth Seniors Health Card. This will mean that fewer will be eligible for the pharmaceutical and health concessions provided by the CSHC.

The Budget papers also included a point not mentioned much in the media that the  government will reset the deeming thresholds from $46,600 to $30,000 for singles, and from $77,400 to $50,000 for a couple. So this will increase your reportable income for the Income Test.

We already knew that from January 2015 new superannuation pension income streams would be deemed  rather than receive the current favourable treatment for the Income Test for the Age Pension.  The new change in the Budget means that Pension Income Streams will be included in the incomes test for the Commonwealth Seniors Health Card.

Just in case you do qualify they have put a sting in the tail and reduced the benefits from the card.

  • Commonwealth Seniors Health Card holders will lose the Seniors supplement, which currently sits at $876.20 per year for singles and $1320.80 for couples
  • And the Commonwealth will dramatically cut its support for various state and territory based seniors’ concessions such as travel

Not all bad news!

One change  proposed to have a positive impact on holders of the CSHC:

  • the eligibility thresholds will index from 20 September 2014. This may allow some currently ineligible self-funded retirees to qualify and also allows current recipients  who are at the top end of eligibility to continue to qualify even if income is indexed.

Strategies to Consider:

  • you should review your Pension and Income streams of an existing cardholders before 1 January to ensure they are happy to stay in these accounts for the long-term as if you change you will be subject to the new deeming rules.
  • Self-funded retirees in receipt of the CSHS but who still have funds in  accumulation phase may wish to commence a pension income stream with those funds before 1 January 2015.
  • Ensure you have completed any Re-contribution strategies to improve the Tax Free components for estate planning by January 2015.

Are you looking for an adviser that will keep you up to date and provide guidance and tips like in this blog? then why now contact me at our Castle Hill or Windsor office in Northwest Sydney to arrange a one on one consultation. Just click the Schedule Now button up on the left to find the appointment options.

Liam Shorte B.Bus SSA™ AFP

SMSF Specialist Advisor™ & Financial Planner

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