The Commonwealth Seniors Health Card: a guide for self-funded retirees

If you’re a self-funded retiree of age pension age, you may be entitled to the Commonwealth Seniors Health Card (CSHC). The card can unlock a useful

set of discounts and with a little planning, it can be easier to qualify for and hold onto than many people realise.

What the card gets you

The main benefit is cheaper healthcare. Card holders pay less for prescription medicines under the Pharmaceutical Benefits Scheme and may be bulk billed by their GP. They also reach the Medicare Safety Net sooner. Once your out-of-pocket medical costs for the year reach a set amount, Medicare starts refunding a higher portion of those costs CSHC holders hit that point earlier than other patients.

State and local governments often add their own concessions. In NSW, card holders get free emergency ambulance transport and a $200 energy rebate.

Victoria offers a one-off stamp duty concession when buying a home under $750,000, and South Australia provides a cost-of-living payment. It’s worth checking what your own state offers.

Who can get it

To qualify, you need to be of age pension age (currently 67), an Australian resident living in Australia, and not already receiving a Centrelink payment. For most people, the main hurdle is the income test.

Your combined adjusted taxable income and deemed income from any account-based pensions must sit below:

» $101,105 if you’re single

» $161,768 for couples

» $202,210 for couples separated by illness, respite care or prison

These thresholds are indexed each September.

How your income is assessed

Centrelink looks at your taxable income (from your most recent Notice of Assessment) plus a few extras such as foreign income, reportable super contributions and net investment losses. Your account-based

pension balance is also “deemed” to earn a set rate of return, currently 1.25% on the first $64,200 (singles) or $106,200 (couples), and 3.25% on anything above that. Money in super accumulation is not counted.

Strategies to get or keep the card

If you have an account-based pension consider moving part back to accumulation. Accumulation balances aren’t deemed, so shifting some money back can bring your assessable income under the threshold. The trade-off: earnings in accumulation are taxed at 15%, whereas pension earnings are generally tax-free.

Consider an investment bond. Bonds aren’t deemed and don’t produce assessable income unless cashed in within 10 years. Earnings inside the bond are taxed at 30%, which suits some retirees more than others.

Lodge your tax return promptly. If a one-off event like selling a property tipped you over the limit, lodging the next year’s return quickly can get the card back as soon as your income returns to normal.

Keep track of deductions. Charitable donations and work-related expenses reduce your adjusted taxable income, which can be the difference between qualifying and not.

Time retirement and leave payments. If you’re cashing out unused annual or long service leave at retirement, when you retire can affect the income test that year.

Reporting changes

If your income rises above the threshold, you must tell Centrelink within 14 days of receiving your Notice of Assessment. The same 14-day rule applies if you start or stop an account-based pension.

The bottom line

The CSHC can save you a meaningful amount each year. The income rules look complicated at first, but a few well-timed decisions around super, investments and tax can make all the difference. If you’re close to the threshold, speak with your adviser about which strategies suit your situation.