Low Income Health Care Card (LIC) income test 101-06040030

LIC entitlement is assessed on the:

• customer's gross income for the 8 week period ending on the date of claim, or calculated start date, or
• 8 week period ending 28 days before the card's expiry date for renewals

For partnered customers:

• assess the combined income of both members of the couple
• gross income for the LIC assessment period must be under 100% of the qualifying limit applicable to the customer

The income assessment for a LIC renewal is the same as a LIC new claim. See the Resources page for a link to the Services Australia website for LIC income limits. For customers and/or partners not on an income support payment (LIC only):

• all employment earnings paid during the 8 week assessment period are to be coded using the LOP frequency with the Date of event (DOV) being the paid date and each pay period to have the start and the end of the period coded

For current income support payment customers and/or partners:

• the LIC claim will be deemed to apply from the date paid to for their payment, and
• the 8 week assessment period will be the 8 weeks ending on the date paid to

For customers and/or partners where the income support payment has stopped within the 8 week assessment period:

• the employment income components for LIC will only need to be calculated from the date paid to plus one (DPT+1) of their previous payment. This will make sure that the employment income is not counted twice, as the employment income that was assessed for the customers and/or their partners income support payments are automatically included in the LIC income test

Past period payments (arrears) or advance payments paid within the 8 week LIC income assessment period should be included, as they were paid in the period.

Note: the exceptions to this rule for 8 week assessment are lump sum leave or redundancy payments and lump sum compensation payments.

Documents that provide proof of income include:

• payslips
• an employer statement
• income tax returns
• bank statements and
• rental income details

This evidence should be accepted. If there is reason to doubt the validity of changes to details provided by the claimant at renewal, then verification should be formally requested.

Note: evidence for employment income must show the gross rate, before taxation and any personal deductions including voluntarily salary sacrificed contributions to superannuation, to be accepted.

Customers may be presented with pre-filled Single Touch Payroll (STP) data during their online claim. Employer details, name and ABN, will be presented to the customer if STP data has been provided to the Australian Taxation Office (ATO) within the assessment period.

The system will also request a customer to update income if the assessment period changes due to delay in claim submission.

Although LIC is not subject to an assets test, the income test does apply with income derived from financial investments. The assessed income types are:

• deemed income from financial investments, such as bank accounts, managed investments and shares
• deemed income from account-based income streams
• income from income stream products, such as superannuation pensions and defined benefit income streams
• foreign income
• private trusts and companies
• lump sum payments such as redundancy, leave or termination payments
• compensation

For customers and/or partners receiving government payments, compensation or maintenance who are claiming or renewing a LIC, all taxable income is taken into consideration as well as any of the following:

• A social security pension or benefit paid to the customer or their partner within the meaning to the Social Security Act 1991
• If the person is receiving a social security pension or benefit within the meaning of the Social Security Act 1991 - the person's maintenance tested amount
• An ABSTUDY payment
• A pension payable under the Veterans' Entitlements Act 1986
• A payment received by a trainee in full-time training under a Labour Market Program, who is receiving JobSeeker Payment (JSP) or YA
• Payment of Self-Employment Allowance
• A payment of compensation within the meaning of section 17 of the Social Security Act 1991 (that is a lump sum and/or periodic payments, though they are assessed differently - see below)

Note: Prisoner of War (POW) Recognition Supplement is exempt income for LIC purposes

In addition, the following supplementary payments must also be included in the LIC income test:

• Language, Literacy and Numeracy Supplement (LLNS)
• Department of Employment and Workplace Relations, Pensioner Education Supplement (PES)
• Parental Leave Pay (PPL)
• Pharmaceutical Allowance (PhA)
• Pension Supplement (all 3 components)
• Rent Assistance (RA)
• Remote Area Allowance (RAA) (including RAA paid with ABSTUDY)
• Telephone Allowance (TAL)
• Training Supplement
• Work for the Dole (WFD) Supplement
• ABSTUDY PES
• Assistance for Isolated Children (AIC) Scheme PES
• Additional components of ABSTUDY, such as Boarding School Supplement and Additional Assistance
• Farm Household Allowance (FHA)

More details about the income test and income limits for LIC can be found on the Services Australia website.

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. For more information, see Assessing scholarship income.

Compensation is assessed as income for LIC purposes. It is treated differently for LIC than it is for all other Centrelink payments and products. The ordinary income test is used to assess all compensation payments using the gross compensation amount (settlement amount without reduction).

Periodic compensation payments that are paid in the 8 week LIC income assessment period are included in the income test.

Lump sum compensation payments are apportioned over a period of 12 months and affect a customer's LIC eligibility for 12 months starting on the date of settlement. Any part of the apportioned income that coincides with the LIC income assessment period is included in the income test. If a customer lodges a LIC claim within 56 days of the end date of the lump sum apportionment period, that part of the assessable lump sum payment/s that applies to relevant days within the LIC 8 week income assessment period will be included in the income test.

Service Officers may complete simple updates. For example, a customer and/or their partner has weekly compensation payments already recorded and is advising a new amount together with a letter that verifies the amount and date of change. For more details, see Role of staff outside Compensation Teams.

LIC renewals and reassessments, new instances, unsubstantiated or complex changes to these types of income should be referred to the Compensation Recovery Team (CRT).

Normal procedures apply where compensation amounts need to be assessed for LIC purposes.

LIC customers are not subject to an Income Maintenance Period (IMP).

The treatment of lump sum leave and redundancy payments for LIC is different to the way such payments are treated for income support payments.

If the customer:

• will be returning to the same employer after the leave period has ended, Lump sum leave payments are assessed as part of the customer's employment income for the assessment period. See Leave and termination payments paid by an employer for more details
• is not returning to the same employer after the leave period has ended, lump sum leave payments and redundancy payments are apportioned over a period of 12 months from the date they are paid. Any part of the apportioned lump sum payment that is paid in the LIC 8 week income assessment period is included in the income test

A customer who has an income support payment rejected because they are subject to an IMP may claim LIC and may be eligible due to the 12 month apportionment rule for LIC.

For LIC only customers and/or their partners: the DOV will be the start of the 8 week LIC assessment period. When there is a significant change in the account balance, number of shares, new account, an additional assessment line may be needed. Other ordinary income can be received from, but is not limited to:

• Bank accounts including term deposits, bonds, debentures
• Shares
• Managed investments
• Foreign income and foreign pensions
• Existing self-employment and real estate (which had started before the start of the 8 week LIC assessment period). If a business or rental property income started on or after the start of the 8 week LIC assessment period, the DOV will be the start date of the business or the date the property started generating income
• If the customer and/or partner are receiving an income support payment and have income from self-employment or a business
• If business/self-employment income has recently been assessed, do not request documents again but accept the assessment already done
• If the customer or their partner have provided an estimate of income for income support payments, this estimate should also be accepted for the LIC claim and previous year financial documents should not be requested

Note: this does not include private trusts and private companies that are recorded by the Complex Assessment Officers (CAO). See Identifying and making suitable referrals to the Complex Assessment Officer (CAO).

For income support or pension customers and/or their partner also receiving or claiming LIC

If coding financial investment or self-employment details for a customer and/or partner receiving an income support payment for the entire LIC 8 week income assessment period, primary benefit rules apply. Coding income and assets for Centrelink payments and services and General 14 day notification provisions have more details.

Multiple DOVs may apply for income support payment current, cancelled, rejected and/or assessed customers. See Resources for examples.

When a customer repays a debt to Services Australia and pays too much, the agency reissues the over recovered payment for the period of the debt.

Although the customer may receive the reissued amount during the 8 week income assessment period for LIC, it should not be included as income in that period. This is for the period of the overpayment.

A current LIC has a duration of 12 months. At the end of the 12 month period, the customer must submit another LIC claim (known as a LIC renewal) to remain eligible.

If there is a change of circumstances for a current LIC cardholder who is not yet due for renewal, the customer's and/or their partner’s gross income must not equal or exceed 125% of the qualifying limit on an 8 week basis to retain their current card. This higher income limit is in place to assist customers employed on a contractual, seasonal or casual basis.

Customers need to notify the agency when their total gross income reaches or exceeds 125% of the relevant income threshold in any 8 week period. If the customer's total gross income over any 8 week period is equal to, or greater than the 125% income limit, then:

• eligibility is reassessed, and
• entitlement to the LIC is cancelled

The customer will need to advise when starting work that their income will go over the limit, and they wish to surrender the LIC immediately.

Alternatively, the customer may wish to wait until their income reaches 125% of the qualifying limit.

In these cases, if an income support payment is not being paid, the customer's new income should be recorded from the start date of their employment. If they have a partner, an estimate of the partner's average income can be recorded as income from the beginning of the 8 week period. See Recording and correcting employment income details.

In these circumstances, income does not need to be verified. The outcome will be that once 125% of the qualifying limit has been reached:

• the LIC will cancel, and
• an appropriate letter will be sent

Note: while there is some flexibility in using an estimate for part of the assessed income, staff should request that employment earnings details be supplied by the customer.

When an unfavourable decision is to be made, the Decision Maker (DM) must provide the customer with an explanation of the decision and an opportunity to provide further details or evidence. See Advising verbally of an unfavourable decision for more information.