How retirees can save more than $3000 a year

First published in the Financial Review on 1 December 2022.

The income threshold for eligibility for a Senior’s Health Card has just been significantly increased in gift to many self-funded retirees.

For some self-managed super fund (SMSF) members, Christmas has come early. Seven weeks and two days early, to be precise.

On November 4, the income test thresholds for the Commonwealth Seniors Health Card (CSHC) were increased. The Coalition and Labor had both promised to increase the limit if they won government, and the Albanese government delivered when the Social Services and Other Legislation Amendment Bill 2022 passed parliament on October 26.

The CSHC, one of the principal concession cards allowing those eligible to access healthcare and other benefits, saw the income limits increased significantly from $57,761 to $90,000 a year for singles and from $92,416 a year to $144,000 a year for a couple’s combined income.

For couples separated by illness, respite care or prison, this limit jumps to $180,000 a year (combined), and, if the care of a child is involved, an extra $639.60 per child can be earned in a year.

In one fell swoop, more SMSF members will have access to the CSHC.

Remember, too, SMSF members – they must be an Australian resident, live in the country and meet the pension eligibility age (66.5 increasing to 67 in 2023) to qualify – can still be eligible for a card even if they are no longer receiving a pension, either because of changes to their income and assets
or the pension assets test on January 1, 2017.

Eligibility is also possible for those widowed or separated from a partner who receives either the age pension or an invalidity service pension.

However, having a Pensioner Concession Card (PCC) makes you ineligible for a CSHC.

The CSHC, which was introduced by the Labor government in 1994, was set up to give low-income retirees who were ineligible for the Age Pension access to similar concessions available to those having a PCC.

Over the intervening 28 years, more retirees have been able to access the CSHC – a number that will increase substantially in the wake of the recent legislation increasing the limit – and the benefits have widened.

In short, it has become a significant part of the retirement income package of self-funded retirees.

So, what are the benefits of the CSHC? In a nutshell, they are considerable. On the healthcare front, it’s estimated those having the CSHC can save up to $2500 a year.

This is due to receiving benefits such as cheaper medicine under the Pharmaceutical Benefits Scheme, bulk billing doctor visits (this is at the doctor’s discretion) and a refund on medical costs on reaching the Medicare Safety Net.

COVID-19 stimulus

There is also the potential to get the Economic Support Payment, extra payments that were part of COVID-19 economic stimulus package. Services Australia says most eligible people have been paid (there were one-off payments of $750 from March 2020 and July 2020 and $250 from December 2020 and March 2021) but it’s worth checking to see whether a payment is outstanding.

However, anyone who received any payment from the Coronavirus Supplement will be ineligible.

Helping self-funded retirees with their medical and pharmaceutical expenses is the principal function of the CSHC. But there is an extensive range of other benefits that vary from state to state – the actual discounts are set by the organisations and businesses charging these fees – so it’s worth checking what’s on offer in your state.

They include:

  • Discounts on electricity and gas bills. Cardholders can apply for Seniors Energy Rebate to help cover electricity costs for up to $200 a year. Gas rebates are also available.
  • Free or lower rates on healthcare expenses such as ambulance, eye check-ups and dental care. In NSW, for example, cardholders are exempt from ambulance charges.
  • Discounts on water and property rates. For example, in Western Australia, there is the potential for rebates of up to 50 per cent on water service charges.
  • Discount on transport fare. In New South Wales, cardholders are eligible to receive the regional seniors travel card worth $250.
  • Discounts on recreational activities. These can include gift shops, parks and picture theatres.

Card applications can be made via Services Australia or the Department of Veterans’ Affairs with eligibility depending on the CSHC income test that includes adjustable taxable income and deemed income on account-based pensions.

If applying as a couple, both partners will need to provide the relevant information, including ATO tax assessments.

Certainly, it’s worth the effort. When all the benefits are included, the savings can be worth more than $3000 a year. It’s a tidy sum for retirees on tight budgets.

Opinion piece written by
John Maroney, 
SMSF Association