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1 WHAT IS THE WELFARE RIGHTS CENTRE AND HOW DO WE HELP HESTA CUSTOMERS? The Welfare Rights Centre is a community legal centre which specialises in social security law and its administration by Centrelink. The Centre is located in Sydney but provides a nationwide telephone advice service for HESTA members. When you talk to us, you will need to know what Income Protection you have with HESTA. For example, how many units of Income Protection (IP) you have and to what age are you covered. INCOME PROTECTION HESTA has advised the Welfare Rights Centre that its IP benefits may continue until age 67, unless a member has opted for cover to age 60, or to age 55 if a member was ineligible for the cover extension in November HESTA members can elect to have cover to age 67 or to age 60 with a 2 year benefit. The levels of HESTA s IP cover are: Level of cover Monthly payout (limited to 85% of your pre-disability income) I unit $425 2 units $850 3 units $1,275 4 units or more $1,700 up to a maximum of $25,000 per month During the period you are not able to work making sure you and your family members also receive any social security to which they are entitled is very important. The Welfare Rights Centre often finds, for example, that a person may be entitled to Sickness Allowance or Newstart Allowance or the Disability Support Pension or that a family member may be entitled to Carer Allowance. The Centre can advise HESTA members about their social security rights, entitlements and obligations and assist people through the social security review and appeals system. The Welfare Rights Centre is entirely independent from Centrelink. Since its foundation in 1983 the Centre has built expertise in helping people through the social security system and upholding their rights. HESTA has engaged the Welfare Rights Centre to provide you with free information, legal advice and assistance about how your HESTA income protection payments affect any Centrelink payment you or your family members are receiving. The Centre can also talk to you about payments you or your family members may be entitled to and help you with any problems you may have with Centrelink. The Centre may be able to help you by providing:

2 Advice about social security entitlements you or your family members may be entitled to which will assist you with income immediately and during the Income Protection (IP) qualifying period which may be between 30 and 90 days, plus an assessment period Advice about how your income protection payments may interact with social security payments and family tax benefits under the relevant legislation Advice about how other sources of income that you have in addition to income protection (such as worker s compensation) may be assessed under social security law Advocacy on your behalf with Centrelink or representation in appeals to the Social Security Appeals Tribunal or Administrative Appeals Tribunal should this become necessary A client file for you and help you sort out problems you may be having with Centrelink or with accessing your social security entitlements HOW DO I CLAIM SOCIAL SECURITY PAYMENTS? Generally you must lodge your claim for a social security payment at your local Centrelink office. You can register your intention to claim a payment by calling Centrelink, sending Centrelink a secure message through their website and for some payments you can start a claim online. Contact numbers and information about claiming is at When you lodge your claim form you need to provide; Proof of identity Your tax file number Your Employment Separation Certificate if relevant Your lease or rent certificate if relevant Details of income you or your partner may be receiving Details of your and your partner s assets Your bank account balance If you don t have the above information you should still lodge the claim and provide the information at a later date. HOW DO THE HESTA IP PAYMENTS INTERACT WITH SOCIAL SECURITY PAYMENTS? If you receive a regular payment under the HESTA Income Protection (IP) scheme, this counts as income for Centrelink purposes and may affect you, or your partner s, rate of payment. This means that you need to tell Centrelink if you receive an IP payment, as well as updating Centrelink within 14 days if your rate of payment changes. How an IP payment affects you or your partner s Centrelink payments is complicated. There are different income tests for different payments, as well as different tests if you are single or a member of a couple, and if your partner

3 is receiving a Centrelink payment or not. The most important thing is to ensure that Centrelink is updated about any changes in your or your partner s income or assets as soon as possible, and within 14 days of the change, so that you get the correct rate of payment and do not incur a debt unnecessarily. The Welfare Rights Centre can also advise you about any questions you may have about whether you are getting the correct rate of Centrelink payments. WHAT IF I RECEIVE A LUMP SUM PAYMENT FOR A PAST PERIOD FROM HESTA? Sometimes you may receive back-pay of IP as a lump sum. Centrelink will recalculate what social security and family assistance payments you would have received, if you had been receiving the IP at the time. Centrelink will then notify you of a debt. To ensure the debt is calculated correctly, you need to make sure you give Centrelink the letter stating the period to which the lump sum payment relates and how your lump sum was calculated. You can appeal the debt at any time if you have special circumstances, but many debts have to be paid back. If you have urgent expenses and cannot pay all the debt back at once, you can call Centrelink on and negotiate a payment plan. If you have any problems with this, or are thinking about appealing the debt, you can call the Welfare Rights Centre for advice and help. EXAMPLES The following examples give you an idea how a HESTA IP payment can affect a person s rate of social security payment. One of the examples shows how a partner s rate of social security payment may be affected. The examples assume that a person has no other source of income and is being assessed for social security purposes under the income test. The examples use figures current at 1 July However, rates of payment and income tests change regularly. Example 1: Allowance Income Test Meena is a member of HESTA she is 25 years old and single with no children. She is insured for 2 units of IP cover through HESTA. She is eligible for Sickness Allowance. The maximum fortnightly rate for Sickness Allowance is $ IP is not generally paid until 30 to 90 days after the date of incapacity depending on your choice of cover. Sickness Allowance paid to Meena will initially be paid at the maximum rate of $519.20, providing she does not have income from any other source. After her IP wait period is over Meena starts to receive IP payments of $ per calendar month. Meena reports this income to Centrelink within 14 days of receiving it. Generally the IP income will be annualised then divided by 26 to give a fortnightly income amount. Her rate of Sickness Allowance will then be reduced by the same amount each fortnight. For example if Meena receives a monthly IP payment of $850 (the fortnightly rate of $392.30) the fortnightly reduction of her Sickness Allowance will be:

4 Income free area $0 - $102 No impact 50c reduction for each $1 earned in this area 60c reduction for each $1 of any income in excess of $252 $102 to $252 $75 reduction $252 - $102 = $150 $150 x.50c = $75 $252 to $ $85.38 reduction $ $252 = $ $ x.60c = $84.18 Total reduction: $ The total reduction of $ per fortnight is taken from the maximum rate of Sickness Allowance of $ Therefore Meena receives IP of $ per fortnight and $ Sickness Allowance per fortnight. Please note this example does not include Rent Assistance. Example 2: Pension Income Test Jai is a member of HESTA, he is single, 42 years old with no children, and qualifies for Disability Support Pension (DSP). He has reported his IP income to Centrelink. As Jai is over 21 the maximum rate of DSP is $ per fortnight excluding Rent Assistance and the pension and energy supplements. If Jai is receiving $850 per calendar month ($ per fortnight) from his Hesta IP, the pension income test would reduce his DSP by 50c in the dollar for every $1 he has above $ per fortnight. A summary of the impact of $ on Jai s DSP per fortnight is: Income free area $0 to $162 No impact 50c reduction for each $1 earned in excess of $162 $162 to $ $ reduction as Jai receives $ from IP each fortnight in excess of the $162 free area $ $162 = $ $ x 50c = $ Example 3. Allowance Income Test with higher IP cover Total reduction: $ Celia is a HESTA member, single and qualifies for Newstart Allowance. She insured for 3 units of IP cover. The maximum fortnightly rate for Newstart Allowance is $ As IP is not generally paid until 30 to 90 days after the date of incapacity (depending of a person s choice of cover), any Newstart Allowance paid to Celia will initially be paid at the maximum rate of $519.20, providing she doesn t have income from any other source. After her IP wait period is over Celia starts to receive Hesta IP payments of $1,275 per calendar month. Celia has reported her IP income to Centrelink. Generally, the IP income will be annualised then divided by 26 to give a

5 fortnightly income amount. Her rate of Newstart Allowance will then be reduced by the same amount each fortnight if IP is her only other income. If Celia receives a monthly IP payment of $1, ($ per fortnight) the fortnightly reduction of her Newstart Allowance will be: Income free area $0 to $102 No impact 50c reduction for each $1 earned in this area 60c reduction for each $1 of any income in excess of $252 $100 to $252 $75 $252 - $ $ reduction Total reduction: $ Example 4: A couple receiving Centrelink pensions and a HESTA IP payment Leon is a HESTA member, a member of a couple with no children and qualifies for Disability Support Pension (DSP). He is insured for 2 units of IP cover, currently $850 per month. Leon s partner is receiving Carer Payment (CP). IP isn t generally paid until 30 to 90 days after the date of incapacity any DSP will be paid to Leon at the partnered rate of $ per fortnight providing Leon or his partner do not have income from any other source. This rate does not include any supplements or rent assistance. After his IP wait period is over Leon will receive IP payments of $ per calendar month. Leon and his partner report this income to Centrelink within 14 days of Leon receiving it. Generally the IP income will be annualised then divided by 26 to give a fortnightly income amount of $ Where each member of a couple receives a pension their income is combined. There is a combined income free area, income over this amount is divided by two apportioned equally to each partner. The fortnightly reduction of Leon s DSP and his partner s CP is calculated as per example and their total reduction will be $13.53 per fortnight each: Member of a couple Income free area $0 - $288 No impact Income over the free area $288 to $ $ = $ A member of a couple has a 25c reduction for each $1 in excess of the combined income free area $250 to $ $26.07 reduction $ x.25 = $26.07 Total reduction: $26.07 each

6 MY PARTNER IS RECEIVING A CENTRELINK PAYMENT If your partner is receiving a Centrelink payment your IP payments could impact on their rate of payment as well your rate of payment. The way Centrelink calculates the impact of your IP income is different depending on whether you or your partner are working or the type of Centrelink payment received. You can contact the Welfare Rights Centre for advice about this. Both you and your partner are required to report any changes to your IP income to Centrelink within 14 days of you receiving it. SUPERANNUATION AND ITS IMPACT ON SOCIAL SECURITY PAYMENTS If you are below Age Pension age, your superannuation assets are exempt from social security income and assets tests. Different rules apply if you access your super early. If you are of Age Pension age, your superannuation assets are assessed under Social Security income and assets tests. TOTAL AND PERMANENT DISABILITY PAYMENT AND ITS IMPACT ON SOCIAL SECURITY PAYMENTS In some cases, you may be able to access a lump sum payment for total and permanent disability. This may be under insurance or early access to your superannuation. If this happens, you must tell Centrelink within 14 days of being entitled to the money. The rules governing the impact of this type of lump sum on social security payments are very complex. Sometimes a person s social security payments may be cancelled for a period. Therefore, we generally recommend that you do not spend the money until you are notified of Centrelink s decision. You should also get advice from the Welfare Rights Centre if the decision is adverse, including about whether you should appeal the decision. Appeals need to be made within 13 weeks of receiving notice of Centrelink s decision to ensure maximum backpay. COMPENSATION PAYMENTS AND SOCIAL SECURITY If you receive a lump sum compensation payment that includes a component for lost earnings or capacity to earn, this lump sum will usually have an impact on your entitlement to receive social security. The rules governing the impact of compensation on social security are very complex. If you are to receive compensation and wish to know the impact it may have on your social security entitlements please call the Welfare Rights Centre. See also our information on Compensation and its effect on social security. APPEAL RIGHTS If you disagree with a Centrelink decision you have the right to appeal against it. Appealing is easy and free. For more information on appealing see the Factsheet Appeals: how to appeal against a Centrelink decision. You can contact your local Welfare Rights Centre for advice. THIS FACTSHEET CONTAINS GENERAL INFORMATION ONLY. IT DOES NOT CONSTITUTE LEGAL ADVICE. IF YOU NEED LEGAL ADVICE PLEASE CONTACT YOUR LOCAL WELFARE RIGHTS CENTRE. YOU CAN FIND YOUR LOCAL WELFARE RIGHTS CENTRE AT WELFARE RIGHTS CENTRES ARE COMMUNITY LEGAL CENTRES, WHICH SPECIALISE IN SOCIAL SECURITY LAW, ADMINISTRATION AND POLICY. THEY ARE INDEPENDENT OF CENTRELINK. ALL ASSISTANCE IS FREE. THIS FACTSHEET WAS UPDATED IN AUGUST