The maximum income thresholds for the Commonwealth Seniors Heath Card (CSHC) significantly increased from 4 November 2022.
The relevant bill1 has passed both houses of Federal Parliament and received Royal Assent on 28 October 2022.
As a result, some who were previously ineligible will now be able to apply for the CSHC.
From 4 November 2022, the CSHC adjusted taxable income thresholds are:-
There is no assets test.
For CSHC purposes, ATI is the sum of a client’s (and if applicable their spouse’s):-
For members of a couple, their combined ATI is used, even if only one member of the couple is eligible to hold CSHC.
Generally, an applicant’s ATI is assessed using the financial year immediately preceding the current financial year. If the applicant has not received a tax notice of assessment for the last financial year, the previous financial year is used.
Where the historic ATI exceeds the relevant threshold, Services Australia may allow the CSHC applicant to instead use an estimate of their ATI. Generally, they will only apply such discretion where the estimate is ‘reasonable’, below the relevant ATI threshold, and the applicant can demonstrate a change in their circumstances. The most common changes in circumstances are retirement, or another ‘one off’ event such as triggering a large capital gain from the sale of an investment property.
In addition to the ATI requirement, an applicant must satisfy all the following requirements in be eligible for CSHC.
Colloquially the CSHC is often referred to as the concession card for ‘self-funded retirees’. However subject to the eligibility criteria, clients who are employed or self-employed are still eligible to hold CSHC.
For most the main benefit of holding CSHC holders is access to cheaper prescription medicine under the Pharmaceutical Benefits Scheme. This benefit is the same as those who hold the Pensioner Concession Card (PCC) (which is automatically granted to those receiving Age Pension), and those eligible to hold the Low Income Heath Care Card (LIHCC).
As is the case for PCC and LIHCC holders, CSHC holders are also entitled to a refund for medical costs when they reach the Medicare Safety Net.
Other benefits of holding CSHC are dependent on several factors which will significantly vary from client to client. These may include bulk billed doctor visits (at the discretion of the doctor) and various state/territory and local council benefits such as discounts on motor vehicle registration, rates and utility bills.
Clients who do not hold PCC (due to not receiving Age Pension) may also benefit from applying for LIHCC. This is because the ‘other benefits’ are likely to be more numerous than for CSHC holders. For example, a client’s local general practitioner may decide they will bulk bill PCC and LIHCC holders, but not CSHC holders.
Subject to the eligibility criteria, clients may concurrently hold CSHC and LIHCC.
John is age 67. He satisfies the all the requirements to be eligible for Age Pension, however he does not receive any rate of payment due to the means tests. Currently John does not hold CSHC and is surprised when you suggest he should apply on or after 4 November 2022.
As John has not yet received his income tax assessment notice for 2021/22, his 2020/21 tax return is used. The table below contain details of John’s assets and sources of ATI.
| Description | Asset value | Adjusted taxable income |
|---|---|---|
| Main residence | $3,000,000 | Nil |
| Investment property | $600,000 | $20,000 |
| Non-grandfathered account based pension | $1,700,000 | $37,122* |
| Salary income | N/A | $20,000 |
| Superannuation accumulation | $2,000,000 | Nil^ |
| Total | $7,300,000 | $77,122 |
Upon application on or after 4 November 2022, John will be eligible to hold CSHC as his ATI is less than the new $90,000 ATI threshold.
He is not entitled to LIHCC as his income for Social Security purposes is more than $5,440 in an 8 week period3.
As John’s scenario illustrates, some clients with significant means may be pleasantly surprised that they now qualify for CSHC.
2 For CSHC purposes, an account based pension will not be assessed if it was commenced prior to 1 January 2015, and the account holder has continuously held the CSHC since before 1 January 2015.
3 John’s income for Social Security purpose is the $122,122p.a ($77,122, plus an additional $45,000 in deemed income from the superannuation accumulation phase). This equates to $18,788 in an 8 week period which is above the $5,440 LIHCC income threshold.
* First $56,400 deemed at 0.25%, plus remaining $1,643,600 deemed at 2.25%
^ Unlike for Social Security payment and LIHCC purposes, superannuation in the accumulation phase does not form part of adjusted taxable income for CSHC purposes.
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