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Making the most of concession cards (even if you’re not on the Age Pension)

Following an increase in income test thresholds, many more Australians are now eligible for the Commonwealth Seniors Health Card and other concession schemes that provide valuable discounts. But many don't realise they qualify even if they're too wealthy to receive the Age Pension.

Most Australians are familiar with concession cards, such as the Commonwealth Seniors Health Card (CSHC), that provide discounts and rebates for healthcare and other essential costs. But misconceptions about eligibility requirements mean many who might qualify for these benefits miss out – especially given recent increases to income thresholds.

The federal government-issued CSHC offers access to cheaper medicines through the Pharmaceutical Benefits Scheme and, depending on where the card holder resides, potential discounts and rebates on electricity and gas, property and water rates, and other expenses. It’s available for Australian residents who have reached their eligibility age for the Age Pension and satisfy a means test.

Many people with assets or income levels that put them above the cut-off limit for the Age Pension assume they are also ineligible for a CSHC, but that may not be the case, thanks to the differing means tests applied: both asset and income levels are tested for the Age Pension, whereas only income matters for CSHC eligibility.

  • Moreover, recent changes to the income limits for CSHC eligibility have greatly increased the universe of potentially eligible seniors, says Prue Cheeseman-Goodes, director of wealth management at accounting and advisory firm HLB Mann Judd.

    “In the 2022 federal budget, the government significantly increased the limits to support older Australians who rely on income from deemed financial investments, e.g., superannuation income streams (as well as the pension), to deal with the rising cost of living,” Cheeseman-Goodes says. As a result, seniors with up to $4 million invested in super can may now be eligible.

    New income thresholds expand eligilibity

    To meet the new income test for a CSHC, a single person must earn less than $90,000 a year; couples can earn up to $144,000 a year, or $180,000 for those separated by illness. Those limits are up from around $61,000 and 98,000, respectively, for singles and couples prior to November.

    The test captures adjusted taxable income, as well as deemed income from account-based pensions.

    Since most retirees have little or no taxable income, the CSHC means test largely hinges on their account-based income streams. That income is “deemed” at a 0.25 per cent rate for the first $60,400 in financial assets for single people, with any assets above that level deemed to earn a higher 2.25 per cent. (For couples not receiving a pension, the first $100,200 of combined assets is deemed at 0.25 per cent.)

    The low deeming rates mean people who hold a substantial amount in account-based pensions – as much as $4 million – can still qualify for a CSHC even if their asset levels rule out the Age Pension. And superannuation balances in the accumulation stage don’t count toward the CSHC threshold at all.

    According to Heffron Consulting managing director Meg Heffron (pictured), the income test changes mean “a lot more people are likely to be eligible than was previously the case”. The government has said it expects around 44,000 more seniors to become eligible for the CSHC this year as a result of the new limits, with that number rising to 52,000 newly eligible members by 2026-7.

    In addition, Heffron says, “it’s not necessary to be eligible to receive the Age Pension or any other benefits – many people who hold the CSHC aren’t eligible for any government benefits.”

    LIHC and state concession programs

    Like the CSHC, the Low Income Health Card (LIHC) is a concession card that provides the holder with valuable discounts and rebates, and its means test is limited to an income threshold. It also offers additional benefits not available through the CHSC, such as state and local government-level concessions; some companies even offer LIHC concessions.

    Also like with the CSHC, eligibility for the LIHC is likely open to many people who are not currently taking advantage of it, commentators say – and there is no bar against qualifying for both cards.

    While “income” is defined differently in the CSHC and LIHC tests, both definitions include the deemed-income component, so the LIHC similarly may be available to seniors with large pension account balances. Under its income test, single people with no children can earn up to $5,616 in income in the eight-week period before they apply (or $36,504 annualised) and be eligible for the LIHC; a couple with no children can earn up to $9,632 ($62,608 annualised).

    In addition to the CSHC and LIHC, state and territory governments also offer concession schemes that can offset the costs of essential services, including housing, energy, transport, health and education, for those with lower incomes.

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