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The purpose of this instruction is to outline the changes resulting from the 1994 Budget relating to the cancellation of Pharmaceutical Allowance for service, disability and war widow/er pensioners, orphans or other veterans eligible under the Repatriation Pharmaceutical Benefits Scheme who are overseas for an extended or indefinite period.


2.Pharmaceutical Allowance (PA) was introduced in 1990 to compensate pensioners for the cost of the Australian pharmaceutical patient contribution.  Previously available free of charge, this cost is currently $2.60 for each prescription item supplied under the Pharmaceutical Benefits Scheme and the Repatriation Pharmaceutical Benefits Scheme with a safety net for pensioners who have to pay for more than 52 prescriptions ($135.20) in a year.


3.From 1 January 1995, Pharmaceutical Allowance will no longer be paid by Veterans' Affairs to recipients who fall within one of the exclusion categories, these being pensioners who are:

  • overseas on an indefinite basis;

  • intending to be overseas for 12 months or more; or

  • have been currently overseas for 12 months.

Each year, pensioners in these categories who are overseas on 1 January will be identified and PA cancelled if in payment.

4.After the initial PA cancellation action for 5 January 1995, pensioners departing overseas falling within the exclusion categories will remain unaffected unless they are still permanently absent from Australia on 1 January of the following year.  PA in such cases will then be cancelled if in payment.  If only one member of a pensioner couple satisfies the conditions for cancellation of PA, only that overseas pensioner will have PA cancelled and the rate of PA in payment to the pensioner partner residing in Australia is to be increased to the single rate of $5.20, using manual rates (PP.MR) if this person is not receiving single rate.

5.Where a pensioner with PA cancelled under these new provisions advises of their return to Australia, their PA will be restored from the pay-day after return or pay-day after advice is received whichever is the later.  If that return or advice date coincides with a pension pay-day PA will be restored from that pay-day.  The pensioner's period of stay in Australia, if less than 14 days, need not coincide with a pay-day to have PA restored.  If the pensioner/s again departs overseas under conditions outlined in one of the exclusion categories, PA will continue and be cancelled on the first pay-day in January in the next calendar year after the date of their departure.  If a pensioner returns or advises of their return to Australia after the last pay-day in December and then leaves Australia prior to the end of that same calendar year, no PA is payable.


6.The change will affect pensioners falling within the exclusion categories.  There are approximately 2,450 pensioners affected by this change and almost all of these are currently administered by the Tasmanian office.

7.In addition, there are approximately 60 affected cases where pensioners are resident in New Guinea and are paid through Queensland Branch Office as special register payments.


8.Currently there is an overseas indicator field on the Personal Assessment (PP.PA) screen to record whether a pensioner is permanently overseas, primarily intended for the purpose of determining eligibility for Rent Assistance.  An additional field has been added to this screen relating specifically to eligibility and payment of PA.

9.The PP.PA screen has been amended by relocating the 'resident overseas' indicator and a new Cancel Pharmaceutical Allowance ('cancel pharm allow') field has been added.

10.If a 'Y' is recorded in the 'resident overseas' field, the cursor will go directly to the new 'cancel pharm allow' field below for the appropriate indicator to be entered.

The three alpha characters available as options for entry in the new field are:

  • N - for No  :applicable for temporary absences less than 12 months;

  • I - for Interim  :used when advice is received that a pensioner is likely to

be overseas under circumstances outlined in the exclusion


  • Y - for Yes  :For cases requiring immediate cancellation of PA, it will

be possible to enter the 'Y' on a manually processed case

resulting in cancellation of PA from the pay-day recorded

on the authority.

Note:  Other than on manually processed cases, the indicator will be automatically converted from a 'I' to a 'Y' via the bulk cancellation run in mid-December of each year.

11.The Personal Assessment screen for children is currently used for dependant's disability pension and service pension allowances.  A Resident Overseas and Cancel Pharmaceutical Allowance fields have been added to this screen to record PA eligibility status for orphans.

12.The 'resident overseas' field on the PP.PA screen will be accessible for non SP cases (ie disability pensioners, war widow/ers, orphans and PA only payments) as will be the new 'cancel pharm allow' field.  Edits on the update of other fields on the PP.PA screen for these cases still applies.

13.A new 'oseas canc PA' field has been added to the trial screen (PP.TR) to reflect the inclusion of the 'cancel pharm allow' on the personal assessment screen.  For service pension cases, the General Inquiry screen IQ.EB (used to display a history of SP and allowances) will record the date of cancellation of PA and the IQ.CE screen will indicate current eligibility for PA.


14.Affected cases have been identified based on postcode and overseas indicators.  In December a conversion or update run will occur to record a 'Y' in the 'resident overseas' field for all DP only cases with a 0099 and 0019 postcode as SP and SP/DP cases already have a 'Y' recorded in this field.  An 'I' indicator will be recorded in the 'cancel pharm allow' field for all identified cases.  Therefore all cases after the conversion run will have a 'Y' in the 'resident overseas' field and an 'I' in the 'cancel pharm allow' field.

15.Though the majority of cases are maintained on the Tasmanian and Queensland data bases, a conversion run will be run from the Data Access file for all states to ensure affected clients are re-assessed.

16.In line with current procedures, any files in the process of being transferred out to Tasmania prior to the initial conversion run should have their postcodes updated to 0099 prior to transfer out to reflect an indefinite overseas status and to ensure they are picked up on the run.  After the conversion run, the new  'cancel pharm allow' field will be available for manual update during the transfer in process.


17.A second automatic update will be run to convert all 'I' indicator to a 'Y', resulting in the cancellation of PA.  This run scheduled for the weekend 17-18 December 1994, will select any cases recorded with an 'I' in the 'cancel pharm allow' field, convert that indicator to a 'Y', automatically cancelling the pharmaceutical allowance, for service pensioners, from pay-day 5 January 1995.

18.The run will largely affect Tasmanian Branch Office as that state administers payments for the majority of permanent overseas residents.  Due to system design costs, DP only cases will require a manual update of the indicator to a 'Y'.

19.Advices generated from the cancellation run will be forwarded to the office responsible for administering the overseas pension.


20.Each year, an annual bulk cancellation run will occur in conjunction with 'SI' processing effective for the first pay-day in January.  All pensioners with an 'I' indicator recorded in the 'cancel pharm allow' field over the previous year will have that indicator converted to a 'Y' by the run and PA cancelled from the first pay-day in January of the following year.

21.Any pensioner who does not receive service pension will be listed on an exception report for manual cancellation.  This report will be produced as part of the BAL run.



22.Service pensioners going overseas currently have the 'resident overseas' indicator updated with a 'Y' for Yes.  The recording of a 'Y' in this field precludes payment of rent assistance.  When advice is received that a pensioner will be overseas for more than 12 months, files and pension payment should be transferred to the Tasmanian Branch office for administration.

Data Collection

23.After the initial cancellation run, it will be necessary for Branch Office staff to record 'I' in the new field for any new cases affected by this change so they can be selected automatically for appropriate action on the following conversion run for the first pay-day in January.

24.If actioning a case for an advance pay period with a date of effect after the first pay-day of January, examiners will have to ensure that the 'I' indicator is not set on the 'cancel pharm allow' field until after the 'cancel PA' run has occurred.

25.There will still be a small number of cases in various states where the client previously departed overseas permanently and requested payment and correspondence to be administer by, for example, a relative.  Most of these cases won't be readily identifiable if no action was taken at that time to set the overseas indicator or change the postcode.  When cases administered by states other than Tasmania are detected, action should be taken to transfer the file to Tasmania for administration by that state and to update the appropriate fields on the PP.PA screen.

Manual variation of PA

26.After the annual run a 'Y' may be entered to immediately cancel PA for any cases that missed the run or had a 'N' indicator incorrectly recorded.

27.If a pensioner advises of departure overseas in the current calendar year and that advice is received:

  • in the intervening period between the run date (mid-December) and the effective date of the run (1st pay-date in January); or

  • before the run and the case is not actioned on the run for some reason,

the examiner is required to take manual action to cancel PA from the next available pay-day.  An example is shown overleaf.

For example: a person, who departs overseas on 31/12.  PA should be manually cancelled from the next available pay-day (assuming advice was received within the appropriate time and there is no overpayment involved), whereas a person who departs on 1/1 should have an 'I' recorded in the 'cancel pharm allow' field for auto cancellation of PA effective for the first pay-day in January of the following year.

28.Pensioners identified as departing overseas on a permanent basis on or after 1 January of each year remain unaffected until the first pay-day in January of the following year.  If they are still permanently absent from Australia on 1 January of the year following departure, PA is cancelled, usually on the cancellation run or manually if necessary.

29.Where clients are going or returning from overseas, manual action is required to set or reset the indicators on the 'overseas resident' field or the 'cancel pharm allow' field as appropriate.  To reinstate PA, the resident overseas field will be changed to a 'N' and the 'Y' deleted from the cancel pharm allow field.  If set to 'I' for Interim, the case will await the automatic cancellation run in mid-December.

Requirements For Pensioners To Advise

30.If a PA recipient, upon departure, doesn't know whether they will be overseas for more than 12 months, they will still be obligated to notify the Department.  When examining such cases, the indicator should be updated to 'I' so that the case can be selected, if appropriate, on the mid-December cancellation run.  The pensioner should be advised to notify the department if they return to Australia or have a definite return date less than 12 months after departure.  PA can then be restored if currently cancelled.

Overpayment action

31.Late advice may be received from a pensioner who departs Australia permanently during the year and that absence would have resulted in cancellation of PA.  If such cases are not identified before cancellation for the first pay-day in January can be effected, overpayment action for failure to advise will have to be considered.  Failure to cancel PA due to delays in Departmental processing will result in PA being cancelled from the first available pay-day.

Bereavement Payment Policy

32.Bereavement Payment (BP) will be calculated taking into account, the current assessment module.  This means that if PA is in payment at the time of service pension death processing, it will be included in BP.  Conversely if PA has been cancelled, it will be excluded from the BP.  A very small number of cases may require adjustment and are outlined for information.

33.A situation may occur where a widow/er returns to Australia following the death of a spouse.  PA is to be restored to the widow/er from the pay-day following return or advice, whichever is the later, with no recalculation of the BP.

34.Where one or both of a couple are overseas with an 'I' interim indicator recorded on the PP.PA screen (PA is still in payment as the January run having yet to be processed), the system will include PA automatically in the assessment of the BP.

35.Where a surviving partner decides not to depart overseas due to the death of a spouse but PA has been automatically cancelled on the annual cancellation run in December the PA will be retrospectively restored back to the date of cancellation, being the first pay-day in January, and continue as part of the ongoing payment to the survivor.  Payment will be made at the standard rate with no other adjustment necessary.

36.The death processing system will continue to automatically assess the amount of BP taking into consideration the PA in payment at the time of calculation.  Any adjustments necessary due to unusual circumstances should be made through payments of arrears, or adjustments to ongoing payments of service pension to the survivor.


37.If SP and allowances are cancelled as a result of the loss of PA in January, no exception report will be produced or action taken to identify those disability pensioners reverting from PTEC to STEC.  This is because these pensioners are only eligible for treatment of accepted conditions whilst overseas.  Upon return to Australia, they would be issued a new PTEC provided SP and allowances including PA are restored.


38.Where cancellation of PA results in a calculated rate of service pension at less than $1.00, service pension will be increased to and paid at a minimum rate of $1.00.  As an example, a person may receive PA and $0.10 cents SP.  When PA is cancelled because of the pensioner's overseas status, the rate of SP will be assessed at $1.00, this being the minimum SP payment.


39.All affected pensioners will be forwarded the following advice paragraph:

"Pharmaceutical Allowance was introduced in 1990 to compensate pensioners for the cost of the Australian pharmaceutical patient contribution under the Pharmaceutical Benefits Scheme.  In the May 1994 Budget, the Government announced that pensioners who live overseas will no longer be entitled to a payment of Pharmaceutical Allowance.  Your Pharmaceutical Payment has been cancelled from 5 January 1995.  If you return to Australia, you should immediately notify the Department so that payment of Pharmaceutical Allowance can be made to you once again."

Obligation Changes

40.Current advices includes an obligation for service pensioners to notify the Department if they are travelling overseas permanently.  Recipients of rent assistance received a different advice requiring them to notify if they go overseas temporarily.  This latest initiative will result in an amendment to those pensioners receiving the former advice.  The phrase 'overseas permanently' is to be replaced by an obligation to advise if a pensioner 'will be or have been overseas for 12 months or more'.

41.A similar formal obligation will need to be placed upon:

  • Disability pensioners;

  • War Widow/ers;

  • Veterans with accepted disabilities which do not warrant payment of a pension at any rate

  • Veterans receiving treatment through section 85(2) and 85(4) of the VEA (WWI, female returned WW2, cancer and POW);

  • BP&OD veterans e.g. British, New Zealand, Hong Kong, Malaysia); and,

  • Single and double orphans with Education allowance.

42.There is currently an obligation in the daily advices to disability pensioners to notify if they go overseas but only a small number of disability pensioners would have received such an advice.  Changes to obligations relating to overseas residency for non SP cases will be notified to the states as and when they can be implemented.  It is planned to include an appropriate obligation to war widow/er pensioners transferring from DSS to DVA in March 1995.


44.The relative legislation effective from 1 January 1995 has been given Royal Assent and can be found at section 118A of the Veterans' Entitlements Act 1986.


45.If Branch Officers have any queries related to this change, they should first contact their system support officer.  If further clarification is required, please contact either the Project Officer, Tim Adams, telephone number 03 284 6450 or the Assistant Director, Nigel Parmenter on 03 284 6361.




      January 1995