Does a compensation payout affect Centrelink benefits/payments?
Your personal injuries compensation payout may have an effect on your Centrelink payments. Whether received by the claimant or a partner, compensation generally affects most Centrelink payments, however not all Centrelink payments are affected.
What Centrelink payments are affected by compensation payouts?
The following Centrelink payments may be affected by compensation payouts:
- Advance Pharmaceutical Allowance;
- Age Pension;
- Carer Payment;
- Community Development Employment Project Supplement;
- Disability Support Pension (DSP);
- Education Entry Payment;
- Fares Allowance;
- Newstart Allowance;
- Parenting Payment (Partnered);
- Parenting Payment (Single);
- Partner Allowance;
- Pensioner Education Supplement;
- Rehabilitation Allowance (in place of DSP or Sickness Allowance);
- Sickness Allowance;
- Special Benefit;
- Telephone Allowance (other than a telephone allowance payable to the holder of a Commonwealth Seniors Health Card);
- Widow Allowance; and
- Youth Allowance.
What Centrelink Payments are not affected by compensation?
Payments such as Carer Allowance, Mobility Allowance or Disaster Relief Payments are not affected by your compensation claim. Family Tax Benefits, Child Care Payments and the Baby Bonus are also not affected.
How does compensation affect Centrelink payments?
If you receive any of the above payments from Centrelink during the course of your personal injuries claim and you make a claim for loss of income, then you may have to repay some or all of the benefits that you have received from Centrelink.
This is to prevent people from being doubly compensated – ie receiving an income supplement from Centrelink and then receiving income reimbursement as part of your personal injuries claim.
How much do you have to repay to Centrelink once you receive your compensation payout?
Centrelink use a mathematical formula to work out how much money you may have to repay upon settlement of your personal injuries claim.
Centrelink automatically deems that 50% of your settlement to relate to loss of earnings – this is called the “compensation part” of your settlement. The 50% deeming rule cannot be argued, even if you receive a lesser amount for loss of earnings as part of your claim.
What is a Centrelink preclusion period?
After the 50% deeming rule, Centrelink then divide the compensation part by the cut-off limit for a single rate pension under the income test as at the date of settlement of your claim. This then gives Centrelink a number of weeks that you may be precluded from receiving benefits. This is known as the “preclusion period”.
The preclusion period starts on the day that your WorkCover weekly benefits cease, or if you have not received weekly benefits, on the day of your accident. Centrelink will then calculate the amount of compensation affected benefits that you have received during the preclusion period, and that is the amount that you will have to repay to Centrelink out of your compensation payment. If your preclusion period ends on a date after your claim has settled, you will not be entitled to receive any of the compensation affected payments from Centrelink until after the preclusion period has ended.
Do I have to declare compensation to Centrelink?
If you have previously received Centrelink support payments, receiving payments currently or if you are looking to receive payments from Centrelink, you must inform the Department of Human Services, Compensation recipients or partners who are receiving Centrelink payments should inform the department within 7 days of receiving compensation or you may face penalty payments.
Anyone who receives Centrelink payments (or intends to make a claim for Centrelink payments) and who is entitled to make a personal injuries claim, is required by law to take reasonable action to claim compensation before they are entitled to Centrelink payments.
Any refund that is owing to Centrelink will be paid by the insurance company at the end of your claim. You will not have to make this refund yourself.
How can GC Law Help?
If you or any member of your family needs advice on a personal injury claim, contact GC Law on 1300 302 318 or you can visit our Free Case Review page.