Purpose

The purpose of this Departmental Instruction is to replace DI B12/95 DVA/DSS Clearance, and to provide further direction on the revised procedures between Department of Veterans' Affairs and Centrelink for clearances processing and associated debt recovery.

Commencement

The changes commence on 1 November 2002.

Contact

The NO contact officers for this project are Elaine Tse on (02) 6289 6011 and Peter Feinler on (08) 8290 0441.

ROGER WINZENBERG

Branch Head

INCOME SUPPORT

Background

The clearance process is a long established arrangement between Centrelink and DVA to prevent excess payments to pensioners when they transfer between the agencies and excess payment that results from the grant/variation of a disability pension (DP) that affects the benefit currently being received.

The process ensures that:

•     the losing (ie the first) agency's payments are cancelled or varied from the date on which the gaining (ie the second) agency commences payment, and

• w — hen a retrospective grant or increase of a DVA pension is made to a Centrelink income support recipient, the backdated amounts are adjusted to account for any overlapping payments.

Both DVA and Centrelink have acknowledged that the existing arrangements were inefficient, with associated risks such as processing delays, inadequate training/support and lost transmissions leading to adverse client impact.

Streamlined Clearance procedures

Centrelink and DVA have worked together to identify the priorities in the clearance process.  The jointly initiated project has a phased approach.  The objective of Phase 1 is to s — treamline the procedures and to resolve some of the concerns raised in State Office consultations that could be achieved independent of significant IT system changes.

Functions provided by the current clearance and printing systems used by some State Offices will not require any major amendments to accommodate the new procedures.

Electronic transmission options will continue to be investigated in Phase 2 of this project, and enhancements to IT systems for both agencies to facilitate fully automated clearance processing will be explored in Phase 3.

Key components of Phase 1

To streamline the clearance and debt recovery procedures, the following standards/changes are being introduced:

• Centralised processing of DVA clearance requests by Centrelink
• Agreed service levels/service delivery times
• Enhancement of Centrelink clearance forms
• Recovery of overpayment
• Revised letters
• Debt Reporting

Centrelink Centralised Processing Units

Centralised processing or 'cluster' office structure was already in place in some states. The direct liaison between a limited number of personnel in Centrelink and DVA has achieved excellent response time for clearance processing and debt transactions.

However, in other states where clearance requests were sent to the local area offices, the response times varied significantly, with lack of awareness or lack of priority for DVA work by some Centrelink staff leading to long delays.

From October 2002, designated processing units will be responsible for the processing of clearances from DVA.  There are 1 to 3 Centrelink Centralised Processing Units (CCPU) established per state, with the work allocated according to the postcode of the pensioner concerned.

This arrangement will allow staff in the CCPU to establish a good network with DVA teams and build up their knowledge of all aspects of clearance and debt processing.

Communication protocols for data exchange between DVA and Centrelink are being established.  These will detail service level agreements and recommend that biannual meetings take place within the states to consolidate local relationships and business arrangements.

The procedures, protocols and contact details are available in the CLIK Reference Library, under Centrelink Information.

Clearance Requests

Decision-makers should assess the need to send a clearance based on the information provided by the claimant.   Where claimants have declared themselves as non-recipients of Centrelink payments, the question of means of support must be adequately addressed. If there is any doubt, the relevant CCPU should be contacted to establish if a Centrelink payment record exists.  Clearances should also be sent for War Widow's Pension (WWP) granted through Death Processing System where there is no DVA income support payment.

Clearance Requests (continued)

For grants of income support payment where the DVA rate is less than the Centrelink rate, (ie. DVA arrears will not be sufficient to cover the Centrelink adjustment), contact the CCPU concerned to arrange a “cut-off” for the Centrelink payment to be cancelled, such that there is no overlapping entitlement period and no interruption to payment. *

Minor differences in pension rates could arise due to investment updates but significant differences may suggest that the previous entitlements were incorrect.  The CCPU should be furnished with the relevant details so that Centrelink can determine if any further investigation is required.

*An EATERS action should be undertaken to record the correct dates where additional treatment eligibility is gained from the grant of the income support payment.

Clearance Data

Pending development of clearance requests for electronic transfer, State Offices should ensure that the clearance forms currently used contain the key fields for each client that requires a clearance.

Part A (DVA's request):

• Full Name (including any other name the client is known by)
• Date of birth
• Address
• DVA and Centrelink reference numbers
• Date of grant/variation
• Payment type/s and rate/s (eg. Disability Pension 10%)
• Fortnightly payment amount/s

Part B (Centrelink's response):

• The additional phrase for Centrelink to specify that the adjustment amount is a recoverable debt under s.1223(1) of the Social Security Act 1991 (SSA),

• Include a request for residential, income and asset details in the case of War Widows' Pension (WWP) grants, to facilitate assessment of Income Support Supplement (ISS) on the basis of details held by Centrelink.

Part C (DVA's acknowledgment):

• Include the options of DVA recovery or referred back to Centrelink

A clearance request sample is shown in Attachment A

War Widow's Pension and ISS

Procedures for the combined WWP/ISS claim form are outlined in DI C18/2000.  Once ISS eligibility is established, Centrelink should be requested via the clearance to provide an itemised income and assets statement.

Given the high income and asset limits for ISS, most war widow/ers who were in receipt of age pension from Centrelink will receive the maximum rate of ISS.  If necessary, contact the war widow/er by telephone to clarify any details about the income and asset assessment, or any other aspect of the case.  Where the income and/or asset levels are close to the limits, or, are sufficient to generate a reduced rate of ISS, an income and asset statement should be sent to the war widow/er after the grant of ISS to verify the details.

If the existing payment from Centrelink was paid at a higher rate than WWP (eg. maximum rate age pension and rent assistance), the case should be referred to Income Support without delay for ISS eligibility to be investigated.

Bereavement Payment

It should be noted that it is Centrelink policy that once the lump sum bereavement payment (LBP) is calculated and paid, it is NOT adjusted.  For partnered assessments, the survivor is paid an ongoing rate.  Variations can be made to the ongoing rate of pension, even during the bereavement period.

Where WWP is granted and a clearance is sent by DVA, Centrelink will cancel the social security payment with effect from date of grant of WWP.

Centrelink then requests recovery of the overpaid amount back to date of cancellation, but no re-calculation of the LBP is performed.  DVA will adjust the pension arrears and assess eligibility and payability of ISS based on information provided by Centrelink.

Agreed response times

DVA is to provide a clearance request within 2 days of processing a payment grant/variation.  The agreed turnaround time is 5 working days from either agency to undertake the required action.

If the standard interval is insufficient due to difficulties in retrieving data or pending action that will affect the arrears amount/recovery outcome, then the respective liaison officer should be advised about the potential delay.

Centrelink overpayments

Overpayments of social security pension or benefit to DVA pensioners can arise in the following circumstances:-

• Multiple entitlement exclusions exist in the SSA precluding payment of certain social security entitlements when a service pension (SP) or WWP becomes payable to the person.  That is, the Centrelink payment ceases to be payable from the date of grant of SP or WWP, and any amount of Centrelink payment paid since that date is an overpayment.

• When a retrospective grant or increase of DP is made to a Centrelink pensioner, any amount of income support which would not have been payable during the period had the DP been in payment, is an overpayment.

If Centrelink makes a social security payment and a person who obtains the benefit of the payment was not entitled for any reason to obtain that benefit, the amount of the payment is a debt to the Commonwealth by the person who obtained the benefit of the payment.  Subsection 1223(1) of the SSA defines debts that are recoverable.

Recovery of these overpayments is authorised under s.205 and 205AA of the VEA.  These can be applied to recover the overpaid amounts from the person, either in a lump sum or by instalments from the new pension.

Recovery of excess payment to Partners

If the veteran has a partner who has been receiving a social security pension or benefit, the calculation of arrears as set out in s.27 (A) allows for the reduction of excess income support paid to the veteran's partner.

This section applies when:

• Arrears of disability pension become payable;
• The veteran has been a member of a couple during the arrears period;
• The veteran's partner has been receiving an income support payment; and
• The rate of that income support is retrospectively reduced because of the disability pension arrears.

The amount of arrears payable to a veteran may also be affected by section 205 or 205AA and should be adjusted first.  The balance is then compared against any excess recovery for the partner.

If the excess payment is less than the balance of arrears, the amount payable to the veteran in respect of the arrears period is reduced by the excess payment of income support to the veteran's partner.  If the partner's excess income support payment is equal to or greater than the balance of arrears, the pension payable to the veteran in respect of the arrears period is reduced to zero and no lump sum is payable.

Example

John and his partner Mary are both in receipt of Newstart Allowance.  John applies for an increase in disability pension, which is subsequently increased to 70% of the General Rate as from 10 June 2002.  A clearance request with this information is sent to Centrelink

Because disability pension is income for Centrelink payments, the Newstart Allowance payments that John and Mary receive will need to be adjusted from the date of grant of the increase.  Centrelink advises DVA the adjustment amount for each recipient.

The adjustment amount for John is recovered from his arrears first.

If John's arrears are sufficient to cover his adjustment amount, then Mary's overpayment can be considered.  The balance of John's arrears can be used to offset Mary's overpayment but this balance can only be reduced to zero (ie. no lump sum payable).  Any further excess for Mary will need to be referred back to Centrelink, as Mary has no ongoing payment at DVA.

If John's arrears are not sufficient to cover his adjustment amount, then the outstanding amount for John can be recovered from his ongoing payments as per s.250AA.  However, there is no authority for DVA to apply deductions in respect of Mary's adjustment amount, therefore, her overpayment must be referred back to Centrelink for any recovery action.

DVA arrears

It is the responsibility of DVA to ensure that arrears are not released during the agreed response interval, prior to receipt of relevant clearances.

Upon receipt of Centrelink's clearance response, DVA will calculate and release the balance of arrears to the pensioner or to the Centrelink Overpayment Recovery destination through Integrated Payment System (IPS) as required.

As per Centrelink's waiver of small debts policy, debt accounts of less than $50 are waived and no action should be required by DVA.

In the majority of cases, if the existing payment is varied/cancelled within the agreed response time, then the adjustment amount should not exceed the arrears.  Queries about the adjustment amount should be referred to the Centrelink Liaison officer.

Where the arrears are insufficient to cover that person's adjustment amount, DVA will initiate recovery from ongoing pension payments on behalf of Centrelink.  Extra care should be taken if such a case relates to a grant of WWP and ISS eligibility should be investigated before starting the recovery plan.

Where there is an overpayment to the partner that cannot be recovered from the veteran's DP arrears, the outstanding amount must be referred back to Centrelink.

Recording Centrelink Debts on DMRS

Centrelink clearance debts being recovered by DVA should be recorded on the DMRS as overpayment, “Other Department DSS”.  This allows for an audit trail with the corresponding Centrelink Overpayment destination in the Outward Payments tab in VIEW.

Only the outstanding adjustment amount should be entered as a debt.  The DMRS business rules will initiate the appropriate recovery plan.

Add “clearance received dd MMM yy” or similar notation in the comment column for reference.  These debts should not be included in the DVA total of outstanding debts for Annual Reports or any other similar publication.

An extract from the DMRS guide is provided in Attachment B and the full guide is available via the following link:

http://sharepoint/programsandprojects/systemguides/view/dmrs/Documents/DMRSProceduralGuidePartsABCD.doc

Adjustment Outcome

A response is not required for cases where Centrelink has no current payment record, or no adjustment was requested.  For all other cases, Centrelink must be notified about the outcome of the adjustment.

The final part of the clearance form should be completed with details of the amount recovered.  If there is an outstanding balance, it must be clearly indicated whether DVA has initiated debt recovery, or if the case is referred back to Centrelink for their action.

Debt Reporting

As DVA undertakes debt recovery on behalf of Centrelink, the agency should be advised of the status of each debt at monthly* intervals.  This includes debt initiated by DVA following clearance adjustments as well as requests for ongoing deductions from Centrelink.  All debts recovered in the reporting period need to be recorded in the report even if the debt is $0 at the end of the reporting period, so that they can be clearly identified as fully recovered.

The debt reports should be sent to the Area Recovery Teams at Centrelink.  A listing of contacts for these Teams is available from the Centrelink Information folder in CLIK.

*System changes are being investigated to produce the scheduled DMRS report, “Outstanding Debts – other Department” monthly to facilitate this exchange of information.

Pensioner Notification

DVA is responsible for advising the pensioner of the outcome of the arrears adjustment.  Two new standard letters have been developed for notifying the pensioner of overpayment recovery following clearance processing.

Available on:

IS Standard Letters, Pay Admn, Recovery post-clearance debt grant.dot

IS Standard Letters, Pay Admn, Recovery post-clearance debt increase.dot

(See Attachments C and D)

The name and telephone number of the Centrelink contact is maintained in DMRS if the debtor wishes to discuss the recovery or seeks a review of the calculations.

For portion recovery, an automatic letter will be generated when the debt has been repaid advising the client of the date pension will be restored to the level of full entitlement.  If the debt is repaid in a lump sum, a letter should be sent to the client to acknowledge the payment once it has been processed.

DVA will need to notify Centrelink immediately if ongoing payments cease before the debt is fully recovered.  It is then Centrelink's responsibility to renegotiate repayment arrangements with the debtor.