C36/2002 AUTOMATION OF DEATH PROCESSING CASES

Purpose

The purpose of this Departmental Instruction is to provide information about two changes to the Death Processing System (DPS) which took place on 27 July 2002:

1. the first change will automate processing of Single DSS Age Pensioners;
2. the second change will correct the way DPS processes home entry contributions.

Background

The Department is required to process Age Pensioners under FACS rules as defined in the Social Security Act rather than in accordance with the Veterans' Entitlements Act 1986 (VEA).  These rules have proven too complex to easily program and consequently all Age Pension deaths have been processed as “manuals” since the introduction of DOE in April 2000.

A recent reinterpretation of how these rules are put into practical operation by Centrelink has simplified the programming and it is now possible for DPS to process these cases automatically.

Two phases

The changes relating to DSS Aged Pensioners will occur over two phases.

Phase 1 - will automate the processing of Single Age Pensioners who have a Method of Assessment of:

32 – Single DSS Age Pensioner and

33 – Single DSS Age Pens Sps, Widow/Sep.

Phase 2 -will automate the processing of Married Age Pensioners and Illness Separated couples.

Impact

Information gathered indicates that half of the manual cases produced and reported by DPS are related to DSS Age Pensioner cases.  There are some 5000 DSS Age Pension assessments of which approximately 1/3 are MOA 32 and MOA 33's. This equates to 17% of manual cases being addressed in Phase 1 and approximately 50% of manual cases being eliminated on the introduction of phase 2, with consequent reduction of work for staff in those areas.

Phase 1 – Single Aged pensioners

There are an estimated 1750 Single DSS Age Pensioners currently paid by DVA.  It is expected that all deaths for these clients will be automatically processed by DPS, outside of existing requirements that cause a case to be reported for manual action (e.g. death notified greater than 99 days after death).  DPS will continue to turn off the deceased's eligibility for treatment.

Phase 2 – Married Age Pensioners and Illness Separated couples

The implementation of this phase will mean 95% of Age Pension Assessments will be automated.  There is no delivery date as yet for the second part of Age Pension automation.  However, the business rules have been specified and as soon as programmer resources are available the work will be undertaken in the first quarter of this financial year.

DPS prior to the change.

Prior to this enhancement, DPS identified if the deceased was a single DSS Age Pensioner and if so turned off their eligibility for treatment and reported the case for manual termination and manual calculation.  State Office staff were then required to process the case through PIPS.  Payment action may also involve using IPS for lump sum payment.

SSA Rule

The SSA Rule 91(1) states:

When a single age pensioner dies, then the installment for the entitlement period in which the person died is payable (i.e. one further pension installment is paid to the estate for all the days in the entitlement period for which they die).

Centrelink Interpretat-ion

Centrelink has advised that it interprets the above rule as following for the payment of pension:

The pensioner is entitled to only those days from the day after death until the end of the entitlement period (death period).

That is:

•     If the pensioner dies on day 4 of a period then his estate is entitled to 10 days.

•     If he dies on day 9 then the estate is paid on 5 days. 

•     If he dies on day 14 then no estate payment is made.

DVA Manual Action Required to process

Should a death relating to a single DSS Age Pensioner require manual action the following rules should be followed:

• Cancel the deceased's assessment and payments from day after death

• Cancel deceased's entitlements to fringe benefits from day after death

• Identify if date of processing is during period of death

If processing is during period of death:

• Calculate the number of days remaining from the day after death to last day of entitlement period (period in which the person dies)

• Calculate that number of days x daily rate of Age Pension as the SEP (Single Estate Payment)

• Pay the SEP as lump sum amount to default bank account using the payability type of Bereavement Payment (450)

If processing is after the period in which death occurred:

• Calculate number of days released since date of death (A)
• If only one payment has been made, and that is for the period in which death occurred, then no SEP is payable.
• If more than one payment (the one for the death period) has been released then calculate how many days in total have been released (B).  Subtract the number of days released from day after death until the end of pension period that death occurred in (B-A).  The amount derived is now the amount overpaid and is recoverable.

Note:  If a single DSS Age Pensioner dies on day 14 of a pension period there is no SEP payable.

Disability Pension

There are no changes to the calculations for bereavement in relation to Disability Pension.  That is - There is no Disability Pension payable for the period in which the death occurred.

Commence-ment date

The changes for Phase 1 above were implemented on 25 July 2002.

The changes for Phase 2 have commenced but implementation has not yet been scheduled.  This change will be the subject of a separate DI.

Background

The Death Processing System has been incorrectly handling any Entry Contribution recorded in a Service Pension assessment when:

1. a member of a couple dies; and
2. a member of an illness separated couple dies. 

This problem can result in the wrong rate of Service Pension being paid to the survivor.  It can also cause problems when cases are later processed through PIPS/PC, again resulting in the wrong rate of pension being paid to a client.

What has changed?

Several changes were incorporated in the current release of DPS that have corrected the problems associated with a) above, including:

• when a member of a couple dies the total of the Entry Contributions recorded as paid by the couple will be recorded against the survivor.

Further changes will be made in the next release of DPS which will cater for scenario b) above.  Appropriate notification to State Offices will be given when these changes take effect.

Entry Contribution in an assessment policy

For service pension purposes if an entry contribution is in the assessment for either a veteran, spouse or defacto and

• Homeowner - Basic Assessment rules apply (low asset test):

any Entry Contribution recorded is an exempt (non-assessable) asset.

• Non-Homeowner – Basic Assessment Rules apply (high asset test):

any Entry Contribution recorded is an assessable asset.

AP and ISS assessments

For income support supplement (ISS) and age pension (AP) assessment purposes, EC are treated the same as for Service Pension as above.

How the Entry Contribution is affected when a Member of a couple dies

When a member of a couple dies the policy states:

• The total of the Entry Contributions recorded as paid by the couple should be recorded against the survivor. 
• The asset limit that applied to the married assessment will also apply to the survivor's assessment.

If the asset limit of the survivor's assessment is:

• Low (Homeowner's Basic Assessment rules applies) - the entry contribution remains a non-assessable asset

• High (Non-homeowner's Basic Assessment rules apply) – the entry contribution remains an assessable asset

Old DPS Rules for Entry Contribution

The entry contribution of the deceased was deleted by DPS, and the survivor's Entry Contribution continued to be held.

If the asset limit of the survivor's assessment was:

• Homeowner's - Basis Assessment rules applied (low asset test), the Entry Contribution was held incorrectly as an assessable asset
• Non-homeowner – Basic Assessment Rules applied (high asset test), the survivor's Entry Contribution remained an assessable asset

Any home contents recorded were being incorrectly deleted if the veteran that dies is the member of a couple.

New DPS Rules for Entry Contribution

The entry contribution of the deceased will be deleted by DPS, and the survivor's Entry Contribution will be updated to the total of the Entry Contribution.

If the asset limit of the survivor's assessment is:

• Homeowner's - Basis Assessment rules apply (low asset test), the Entry Contribution will remain as an non- assessable asset;

• Non-homeowner – Basic Assessment Rules apply (high asset test), the Entry Contribution will remain as an assessable asset.

Any home contents recorded will continue to be maintained for the survivor.

Example 1 – married couple when low asset test applies

Married assessment with low asset limit - if a couple had paid $180,000 as an Entry Contribution to enter a retirement village and no home contents are recorded.  An Entry Contribution of $90,000 each will be recorded in their married SP assessment.

When DPS processes this case, it will delete the $90,000 Entry Contribution for the deceased and update the survivor's Entry Contribution from $90,000 to $180,000.  The 'new' entry contribution remains a non-assessable asset.

Note: the asset limit that applies to the assessment will not be changed by DPS processing.

Example 2 – married couple when high asset test applies

Married assessment with high asset limit – if a couple paid $80,000 to enter a retirement village as an Entry Contribution.  Home contents of $2000 recorded.  An Entry Contribution of $40,000 each will be recorded in their married SP assessment.  The home contents will be recorded against the veteran.

When DPS processes this case, it will delete the $40,000 Entry Contribution for the deceased and update the survivor's Entry Contribution from $40,000 to $80,000.  The home contents will continue to be recorded against the veteran if he is the survivor.  If the veteran is deceased, the home contents will now be recorded against the survivor.

Note: the asset limit that applies to the assessment will not be changed by DPS processing.

Commence-ment date

The changes relating to home entry contributions were implemented on 26 July 2002.

Contact

Contact officer for enquiries relating to this topic is Steve Claypole on 02 6289 6792.