4.13.1.60 Effect of Compensation on Low Income Health Care Cards

This topic

This topic contains information on how compensation (1.1.C.240) is assessed when determining qualification for the LIC.

The LIC is issued to people who meet a test of their average gross income and if appropriate their partners in the 8 weeks immediately before they make a claim for a card.

Summary

Usually persons who receive a lump sum compensation payment (that includes an economic loss component) are precluded from certain social security payments and related benefits such as concession cards for a certain period of time (the preclusion period).

However, it is recognised that some people may be on a low income as a result of receiving a compensation payment.

A person who is on a low income may ordinarily be eligible for a LIC.

Special arrangements apply to compensation recipients and their partners to determine when they are eligible for this card. The assessment procedures are set out below.

Lump sum compensation

Lump sum compensation (as defined in SSAct section 17(2)) is assessed as 'ordinary income' for the purposes of determining qualification for a LIC. As a result, the ordinary income test is used to apportion the lump sum compensation payment across 52 weeks, from the day the person becomes entitled to receive the amount.

Where any part of the period over which the income is apportioned, coincides with any part of the 8-week income assessment period for the LIC, the relevant income must be counted. This is applicable if either member of a couple applies for a LIC.

The entire lump sum compensation amount is counted as income for LIC purposes, i.e. both the economic and non-economic loss components.

Assessment of periodic compensation

The gross amount of periodic compensation (as defined in SSAct section 17(2)) is assessed as ordinary income for the purposes of determining qualification for a LIC. Where any part of the period for which periodic compensation is paid, coincides with any part of the 8-week assessment period for the LIC, the relevant income must be counted.

Act reference: SSAct section 17(1) Compensation recovery definitions, Part 3.14 Compensation recovery, section 1071A-4-'income', section 1071A-1 Satisfying the health care card income test: persons claiming a card, section 8(1)-'ordinary income', section 1073(1) Certain amounts taken to be received over 12 months

Policy reference: SS Guide 3.9.1.70 LIC - assessment of income, 4.13 Compensation

Assessment of compensatory type payments

Some compensatory type payments do not meet the definition of compensation in SSAct section 17(2) as they are not made wholly or partly in respect of earnings or lost capacity to earn resulting from a personal injury. These payments are not included as compensation income for the purposes of determining qualification for a LIC.

These compensatory type payments are, however, assessed as ordinary income for the purposes of determining qualification for LIC, unless they have been exempted as income under SSAct section 8(8) or section 8(11). There is a specific section 8(11) determination that exempts certain compensatory type payments from the income test (Social Security (Exempt Lump Sums Payments Compensatory in Nature for Non-Economic Loss) Determination 2017).

Act reference: SSAct section 8(8) Excluded amounts - general, section 8(11) An amount received by a person is an exempt lump sum if…, section 17(2) Subject to subsection (2B), for the purposes of this Act, compensation means: …

Policy reference: SS Guide 4.13.1.20 Assessment of Compensatory Type Payments, 4.3.2.30 Income exempt from assessment - legislated, 4.3.2.35 Income Exempt from Assessment - s 8(11) Exempt Lump Sums

Last reviewed: 20 September 2017