Seniors with Account Based Pension are losing the health card because of the extended deeming revisions now applied to superannuation account based pensions.
These changes to the deeming are causing a rethink of how assets are held for people who are close to receiving the Commonwealth Seniors Health Card (CSHC).
Money held in an insurance bond does not generate assessable income and therefore does not contribute income to the assessable amount of those applying for the health card.
Under the new rules many people with account-based pensions may find that the deemed income is pushing them over the income threshold and excluding them from gaining the CSHC.
Why?
For example, a homeowner who took out a superannuation account based pension of $300,000 in 2015 is deemed by the government to earn $9,030 in income and this newly assessed income figure is causing some pensioners to lose their CSHC.
Insurance bonds do not generate assessable income and tax is paid inside the structure. The owner does not have any income to declare from the bond that will harm their application for the CSHC.
A modern Insurance bond that offers a range of investments from a portfolio of ‘Tax-Paid’ Term Deposits through to a menu of mainstream managed funds that covers all investment sectors is a good alternative.
Life Insurance Bonds, like superannuation offer choice of investment, pay tax on earnings internally plus a generous rebate system if funds are withdrawn within 10 years and tax free thereafter.
You can structure a flexible ‘annuity-like’ income stream from them which is tax and Social Security friendly.
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