3.9.1.70 Low Income HCC - Assessment of Income

Introduction

The low income HCC (LIC) is a claimable concession card that can be issued to people who meet a particular income test. This topic covers the following related information:

• assessment of income,
• income limits,
• income for LIC purposes,
• assessment of compensation for LIC purposes,
• LIC claimants with business income,
• LIC claimants and gifting,
• scholarships,
• claimants receiving ABSTUDY,
• LIC claimants subject to IMP, and
• income received to cover expenses.

Assessment of income

At new claim stage, a claimant's eligibility for a LIC is based upon their average weekly assessable income for the 8-week period before the claim. The 8-week assessment period ends on the claim date, having regard to any applicable deemed date of claim provisions. At LIC renewal (review of eligibility) stage, the 8-week assessment period runs between 12 and 4 weeks before their card expires (date is printed on automatically issued renewal forms).

Claimants must supply evidence of income with their claim or renewal form, and this evidence should generally be accepted. If there are any doubts, details should be verified.

While most LIC claimants have straightforward types of income such as salary and wages, a small percentage of claimants have varying forms of income such as from businesses, trusts or companies, shares or other investments, superannuation pensions and annuities, and so on. In ALL cases it is important to:

• identify the source and amount of a claimant's income,
• identify the period that income is for, and
• include relevant income in the 8-week assessment period for LIC eligibility.

Examples:

Andrew derives his income from interest on money deposited in bank accounts. His assessable income for LIC would include 8 weeks worth of the deemed annual interest.

Terry and Cate are retired and receive bi-annual payments of a super pension. Their assessable income for LIC would include 8 weeks worth of their annual pension amount (assessable amount under current social security rules).

Act reference: SSAct section 1071A Health care card income test, section 8(1)-'ordinary income', section 1072 General meaning of ordinary income

Policy reference: SS Guide 4.3 Ordinary Income, 2.2.3 Verifying Financial Information

Income limits

A claimant's average weekly income must be under the 100% limit to qualify at either the new claim or renewal stage.

The income limit to retain the HCC after grant is 25% above the 100% limit, on an 8-weekly basis. If the total income over any 8-week period is equal to, or greater than the 125% limit shown below, then eligibility is reassessed and the entitlement to the HCC is withdrawn.

The table below shows the 100% and 125% income limits for the LIC. Limits are current from 20 March 2012 to 19 September 2012.

Explanation: The upper limit of the allowable income is actually the disqualifying amount.

Act reference: SSAct section 1071A Health care card income test, section 1061ZO Qualification for health care cards for which claim required

Income for LIC purposes

A claimant's gross 'ordinary income' is the basis for assessment of eligibility for the LIC. However, certain other types of income and payments MUST ALSO BE INCLUDED as income for LIC purposes, even though they are not generally regarded as ordinary income. These include:

• a social security pension (1.1.S.220) or benefit (1.1.S.190) within the meaning of the SSAct, and
• if the person is receiving a social security pension or benefit within the meaning of the SSAct - the person's maintenance tested amount (if any), and
• a pension or ISS payable under the VEA, and
• a payment of DFISA payable under the VEA, and
• a payment received by a trainee in full-time training under LMPs (1.1.L.10), who is receiving NSA or YA, and
• a payment under NEIS, and
• a payment of compensation (1.1.C.240) within the meaning of SSAct section 17 (i.e. a lump sum and/or periodic payments).

Note: The above is NOT a comprehensive list of income included for LIC purposes.

Example: George is a full-time student receiving YA and he claims the LIC. His assessable income must include the payments of YA that he received during the assessment period.

Assessment of compensation for LIC purposes

The ordinary income test in SSAct Part 3.10 is used to assess compensation (1.1.C.240) for the purposes of determining qualification for a LIC.

The gross amount of the compensation payment, without reduction, is assessed as income for the LIC.

Both the economic and non-economic loss components of the compensation payment are counted as income.

The following table shows how compensation is assessed for the LIC.

Act reference: SSAct section 1071A Health care card income test, section 1071A-4 Definition of income, section 17 Compensation recovery definitions, section 1073(1) Certain amounts taken to be received over 12 months

Policy reference: SS Guide 1.1.A.125 Allowable income for low income HCC (LIC), 4.13.3.10 Overview of Periodic Compensation Payments

LIC claimants with business income

If a claimant has business income, the annual income must be determined before the 8 weekly income can be established.

Example: Business income may be derived from:

• self-employment, such as a shop owner or primary producer, or
• income from assets or investments.

This annual amount is then divided by 6.5 to establish the claimant's assessable income over an 8-week period. Where a change in the claimant's income has occurred during the past year, an estimate of the claimant's current annual income must be made.

Example: A change could have occurred because of a downturn in business.

Act reference: SSAct section 1074 Ordinary income from a business - treatment of trading stock, section 1075 Permissible reductions of business income

Policy reference: SS Guide 4.3 Ordinary Income, 4.7 Business Structures, Primary Production & pre-01/01/2002 Assessment of Trusts & Private Companies

LIC claimants & gifting

A person is not able to give away income or assets so that they can receive social security entitlements, including concession cards. Even though the LIC is not asset tested, deemed income from the disposal of an asset can be included in a claimant's assessable ordinary income.

Policy reference: SS Guide 4.1.2.10 Disposal of Assets Pre 1 July 2002, 4.1.2.20 Disposal of Assets Post 1 July 2002

Scholarships

The income treatment of scholarships for LIC purposes is the same as the treatment of scholarships for all other social security purposes - scholarships are treated as income unless specifically exempted.

Policy reference: SS Guide 4.3.9.40 Income from Scholarships

Claimants receiving ABSTUDY

As payments of income support under the SSAct (such as YA and Austudy) are treated as income for the LIC, certain ABSTUDY allowances are also income for LIC purposes.

The following taxable ABSTUDY allowances are regarded as 'income support' and should be treated as income for LIC:

• living allowances (for students aged 16 years and over),
• additional assistance (paid as a fortnightly payment), and
• Masters and Doctorate living allowance.

There is also a range of other ABSTUDY allowances, which are non-taxable and NOT assessable as income for the LIC. Details of these can be found in the ABSTUDY Policy Manual.

Note: It may be necessary to confirm the amount of an arrears payment where its receipt could affect the claimant's eligibility for the HCC over a particular 8-week period.

LIC claimants subject to an IMP

Where a claimant is subject to an IMP for payment-related purposes, assessable income for LIC is determined by apportioning the (lump sum) payments over a 12-month period, from when they were received.

Example: Jacqueline ceases work and receives a total of 12 weeks ($6,000) of unused leave payments on 1 May. She claims NSA on 20 May and has an IMP. If she claimed a LIC, Jacqueline's assessable income for any part of her assessment period between 1 May this year and 30 April next year must include $115.38 per week of leave payments. ($6,000 of leave payments apportioned over 52 weeks from 1 May.)

Income received to cover expenses

Payment of an allowance from an employer for expenses is NOT included in income assessment.

Examples:

• Allowances for travelling, clothing or meals.
• Allowances paid to people such as mayors, aldermen, council members and Justices of the Peace for out of pocket expenses.
• Allowances paid to ministers of religion (1.1.M.150) for out-of-pocket expenses associated with their ministry.

Exception: If the employer pays MORE than the amount actually incurred by the person, the extra IS included in the income assessment.

Policy reference: SS Guide 4.3.2.10 Income Received to Cover Expenses

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Last reviewed: 20 March 2012