How to Save Thousands by Running Through a Rare Open Door

Sometimes governments leave the door open just a crack when it comes to accessing valuable benefits and on a very rare occasion they swing the door wide open to allow just about everybody in.

The latter is what has happened with the Seniors Healthcare Card, with the interesting result that many people who are eligible to claim its benefits don’t do so, perhaps thinking there’s no way they could be eligible.

After all, it’s not every day that someone with millions of dollars in assets can get access to a handout that can be worth as much as $60,000 in total and even more in some states.

A Million People Missing Out

It has been estimated that more than a million people who are eligible for the card don’t have one, in the process missing out on significant benefits such as cheaper visits to the doctor and lower prescription medicine prices.

The card is available for those who have reached the pension age of 67 but are not receiving Centrelink payments like the age pension and it is not subject to an assets test.

Commonwealth Seniors Health Cardholders are able to access prescriptions under the Pharmaceutical Benefits Scheme for just $7.70 a script and even that lower price is capped at $277.20 a year, meaning you can get free medicines once you reach this limit.

Around 500,000 people use the card, most of them self-funded retirees, with perhaps the best benefit being a 75% discount on the cost of prescription medicines and a lower Medicare safety net threshold that means doctor’s visits are much cheaper.

Obviously, the value of the card differs according to how much medical care someone uses but the value has been estimated to average about $3000 a year for a single person up which adds up to $60,000 in total for the average 20 years of life expectancy of a 67-year-old Australian.

Income Limits Very Concessional

Another reason many may be missing out on the card is that it used to have a similar income limit to the pensioner health card which offers very similar benefits.

However, that limit dramatically increased back in 2022, jumping sharply from $57,761 for a single and $92,416 for a couple to $90,000 for a single and $144,000 for a couple.

Since then, the limits have only improved further with indexing – now running at $99,025 and $158,440.

Getting the card can be even easier because the definition of income that is used excludes many things that many people would regard as in capital stop

The major concession here is that qualification for the carb is adjusted taxable income plus deemed income from account-based income streams.

Income from other sources such as lifetime annuities which is sourced from super do not count as income at all.

That means an individual can reduce their assessable income for the card by investing in an annuity using some of their existing account based pension or contributing more funds to super to start a superannuation annuity.

Deemed Income a Low Bar

By using the deemed income from account-based pensions this can often be significantly lower than the actual income earned by many superannuants.

Say someone with the maximum of $1.9 million in an account-based pension would be deemed to only earn around $41,500 – well short of the $99,025 threshold.

In reality, many people will be pocketing significantly more income than that from their super.

Also, non-income producing assets such as art, cars and other items are not assessed.

Some States Better Than Others

Somewhat strangely, the extra benefits of the card changes according to the state in which we live, with the best states being Western Australia, South Australia and NSW.

The positive lifetime benefit gap can be as high as an extra $32,440 for a WA resident, with the “good” states offering discounts on energy, council and water rates, registration, driver’s licences and even glasses.

That can really add up, with WA residents with a Seniors Card and Commonwealth Seniors Health Card able to save up to an extra $750 a year on council rates, $600 on water rates, $238 on car registration, $47 on their driver’s licence and $27 on glasses.

Some of these charges apply to households rather than individuals so the amounts can change according to individual circumstances but the savings can be considerable.

Unfortunately, those in Victoria, Queensland and Tasmania don’t get many of these extra state-based bonuses and will need to be content with around $3000 a year in health benefits.

All told though, it is still well worth the effort involved in filling out the form which can be downloaded on the internet and briefly dealing with the local Centrelink office.

When the Government leaves a door swinging wide open like this, it can certainly be worth the effort of strolling through it, even if many others think it is too good to be true.