Week 7 Social Security Flashcards
Purpose of social security
The purpose of social security is to care for those in need, social security accounts 35-40% of governments budgeted revenue. Social security benefits include:
- Unemployment benefits
- Ages pension
- Disability benefits
Social security provides support for a basic level of living standards
Centrelink and the department of human services
Centrelink is delivered by the Australian Government Department of Human services and support people with payments and services at time of major change.
Department of human services is a department of the government if Australia responsible for delivering a range of welfare, health, child support payments and other services to the people of Australia.
Social benefits for: ages people, raising children, injured or disabled, unemployed looking for work, people caring for others, students and concession cards
Means testing
Is a determination of whether an individual or family is eligible for government assistance, based upon whether the individual or family possesses the means to do without that help.
Most benefits are means tested against income and assets. The higher the means the lower the benefits.
The asset test is more standard across the range of benefits whereas the income test varies considerably between the various benefits provided. Generally both tests are applied and the test which produces the lowest benefit entitlement is the one used by Centrelink
Means testing: income tests
Income derived from most sources e.g. wages and salaries, income from business, rental income, trust distributions. Includes income from both inside and outside Australia. Income earned by your partner.
Income includes: deemed income from financial assets which include (cash, shares, managed funds, superannuation)
Centrelink will use the amount of deemed (assumes) income in their income tests rather than the amount of actual income. Actual income might be higher or lower than the level of deemed income
Deeming rates for 1st July 2019
- Up to threshold 1% single ($51,800) couple ($86,200)
- Beyond threshold 3%
Example: assume a single person has $1m in financial assets
$51,800 x 0.01 = $51,800
$1,000,000 - 51,800= $948,000
$948,000 x 0.03 = 28,445
Total deemed income $1,000,000 = $28,964 per annum
Means testing: asset tests
The asset test will typically have a free area where assets below this level will not reduce the benefit. Generally with a pension any asset above the free area will reduce the pension entitlement. From 1st July 2019 still current, single homeowner $253,250 free area and age pension reduces by $3 for each $1,000 above the free area
Generally with an allowance any assets above the free area will mean that the individual is not entitled to any benefits
Example: Amy allowance is not payable if assets exceed $263,250 for a single homeowner
Assets assessable include: bank deposits, shares, managed funds, loans, bonds….
Assets exempted: family home and up to 2 hectares of land in a single title, life interest in assets created by others , prepaid funerals and funeral bonds up to 13,250 per person, gifts up to $10,000 in financial year and up to 30,000 over a five year period and accomodation bonds paid to an aged care facility.
the value of any loans used to assist in the purchase of financial investment assets is subtracted from the market value to arrive at a net market value and it is the net market value which is tested
The age pension
The age pension is a scheme which pays out a steady income to eligible Australians to help them cope with the costs of living when they’re retired. Up to $926.20 a fortnight from the government as part of the age pension or $1,396.20 a fortnight for couples.
Eligibility
- permanent resident for over 10 years
- 65.5 for men and women gradually increasing to 67
- satisfy assets and income test
Payment
- indexes at Amal’s total average weekly earnings 27.7% for singles and 41.76% for couples
- rates are indexed twice yearly in March 20th and September 20th
Aged pension income test
The income test imposes a limit on the allowable income for full or part benefits. Income test differs between pensions and allowances. Taper rate applies when income level exceeds a threshold.
Up to $174 (single) and $308 (couple)
Taper rare for each $1 above $0.50 (single) $0.50 (couple)
Age pension Asset test
Assets test. To be eligible assets must be within set limits:
- asset test differs between pensions and allowances
- taper rate applies when asset level exceeds a threshold.
Home owners: $263,250 (single) $394,500 (couple)
Non-Homeowners: $473,750 (single) $605,000 (couple)
Taper rate for each $1,000 above $1 (single) $3 (couple)
Age pension work bonus
From 20th September 2008 this eligible to receive an age pension may be entitled to disregard some of their employment income under the income test. The bonus allows those eligible to receive an age pension to disregard the first $250 of fortnightly employment income from the income test.
Any unused amount from this $250 in a fortnight can be added to the work bonus bank up to a maximum of $6,500
New start allowance
Ages 22 years or older but under age pension age looking for work. Prepared to meet the mutual obligation requirements you need to apply for jobs, train or study
Disability support pension
Financial support for people who have a physical, intellectual or psychiatric condition that stops them from working.
Eligibility basics:
- aged between 16 years of age and age pension age and either
- permanently bind or have been assessed as having a physical, intellectual or psychiatric impairment and unable to work for 15 hours or more per week at or above the relevant minimum wage within the next 2 years because of the impairment.
Sickness allowance
Is paid to eligible claimants over 22 years but under age pension age who are temporarily incapacitated for work or full time study. They must have a job or student place to which they can return when we’ll. Illness must be verified by medical certificate. Applicants must be Australian resident and have been in Australia for at least 2 years.
Cater payment
Hey Wynette to eligible caters who provide daily care for either an adult or child who is being nursed at home. The person being cared for must:
- require care in their home or in hospital
- be an Australian resident
The carer must:
- personally provide constant care in the home
- be an Australian resident or have equivalent permanent resident status
Austudy
Provides inform support to students
- aged 25 years or over
- undertaking qualifying study or a full time Australian apprenticeship
Youth allowance
Payable to full time students and Australian apprentices aged between 16-24. Also payable to job seekers under 22 years either looking for work or combining part time study with job search or undertaking other approved activity or temporarily incapacitated for work or study.
