Retirement comes with its own set of financial considerations and responsibilities. In Australia, the Commonwealth Seniors Health Card (CSHC) is a valuable resource for seniors, providing access to a range of concessions and benefits related to healthcare costs.
However, for those who have received superannuation fund inheritances from deceased loved ones, understanding how this inheritance affects their eligibility for the CSHC is important. In this article, we will delve into the mechanics of the Commonwealth Seniors Health Card and explore the issues surrounding superannuation fund inheritances in the context of eligibility for the CSHC.
The Commonwealth Seniors Health Card (CSHC)
The Commonwealth Seniors Health Card is a vital resource for eligible seniors in Australia, offering various concessions and benefits related to healthcare expenses. Here are some key aspects of the CSHC
Eligibility
To be eligible for the CSHC, you must meet the following criteria
- Be of Age Pension age (at least 67 years old as of 1 July 2023).
- Be an Australian resident living in Australia.
- Meet an income test and an assets test, with specific thresholds for both.
Benefits
Holders of the CSHC enjoy several benefits, including
- Access to the Pharmaceutical Benefits Scheme (PBS) at a reduced cost.
- Discounts on medical expenses, including visits to doctors and specialists.
- Savings on various other services and utilities, such as public transport and council rates.
Application Process
To apply for the CSHC, you must complete an application form available on the Services Australia website or at a local service centre. You will need to provide proof of your identity, residence, and income and assets details.
Superannuation Fund Inheritances and CSHC Eligibility
Superannuation fund inheritances can have a significant impact on an individual’s finances, especially during retirement. However, it’s essential to understand how these inheritances can affect your eligibility for the Commonwealth Seniors Health Card.
Income Test
The CSHC includes an income test that considers both taxable and non-taxable income. Superannuation fund income, including pensions and annuities, is considered as part of your assessable income. If your superannuation fund inheritance increases your assessable income above the income threshold, it may affect your CSHC eligibility.
Under current Services Australia rules, the income test thresholds are as follows, in terms of annual numbers
- $95,400 for single people
- $152,600 for couples
- $190,800 for couples who may be separated by unavoidable circumstances
For all three categories, the test adds $639.60 for each child under your custody. If you are a single parent with two children, for example, your income test threshold is $96,679.20.
Assets Test
Services Australia has not programmed an asset test for the CSHC.
Managing CSHC Eligibility with Superannuation Inheritances
Receiving a superannuation fund inheritance doesn’t necessarily mean you’ll lose your CSHC eligibility. Here are some strategies to consider
Seek Professional Advice
Consulting a financial advisor or an accredited Age Pension expert can help you understand the potential impact of your superannuation inheritance on your CSHC eligibility. They can provide tailored advice on how to manage your finances to meet the income and assets tests.
Income Streams
Consider the type of income streams you receive from the superannuation fund. Some income streams, such as account-based pensions, may have a lower impact on your CSHC eligibility compared to others. Explore different options that may help you optimise your income.
Gifting
Keep in mind that gifting a significant portion of your superannuation inheritance to family members or others can affect your CSHC eligibility. The federal government has gifting rules in place, and exceeding these limits may have consequences.
Financial Planning
Engage in thorough financial planning that takes into account both your superannuation inheritance and your CSHC eligibility goals. A well-structured plan can help you balance your financial needs and benefits.
Regular Review
Periodically review your financial situation, especially if there are changes in your income or assets. This will allow you to adjust your strategies to maintain CSHC eligibility while making the most of your superannuation inheritance.
The eligibility issues with the CSHC came forth in a Q&A by John Wasiliev for the Australian Financial Review. A reader asked him about whether a market-linked pension from his recently-deceased spouse left via Binding Death Benefit Nomination may affect deeming for the CSHC. Leigh Mansell, director of SMSF technical and education service at SMSF vendor Heffron, said the introduction of account-based pensions in 2007 rendered market-linked pensions like the reader’s wife’s pension stopped when she passed away, since he was not a reversionary pensioner. As such, the reader was asked to pay the death benefits from that pension’s balance into an account-based pension for himself – but will still undergo CSHC income testing.
Inheritance Laws in Australia
Understanding inheritance laws in Australia is essential when dealing with superannuation fund inheritances, such as
Superannuation Binding Nominations
Superannuation funds typically allow members to make binding nominations for beneficiaries. This means that the fund member specifies who should receive their superannuation benefit upon their death. Binding nominations provide certainty in the distribution of super funds and can be an essential part of estate planning.
Taxed Superannuation Benefits
The taxation of superannuation benefits, including inheritances, can vary depending on factors such as the recipient’s age and the relationship between the deceased and the beneficiary. It’s important to be aware of the tax implications associated with superannuation inheritances.
Estate Planning
Effective estate planning, including the use of wills and trusts, can help ensure that your superannuation fund inheritance is distributed according to your wishes while considering taxation and other legal implications.
Moving Forward with the Card
The Commonwealth Seniors Health Card is a valuable resource for eligible seniors in Australia, providing access to various concessions and benefits related to healthcare costs. Superannuation fund inheritances can have an impact on CSHC eligibility due to income and assets tests. However, with proper financial planning and consideration of the strategies outlined above, it’s possible to reconcile superannuation inheritances with CSHC eligibility.
The A.S.A.G. Reverse Mortgage
A Retirement Planning package may involve evaluations for your superannuation status as drawn up by your super provider. Call the A.S.A.G. at 1300 002 724 or email info@asagfirst.com.au to explore your retirement plan options including where your superfund fits in through the A.S.A.G. Reverse Mortgage.
You can also use the equity assessment tool below.