B03/1991 ADVANCE PAYMENTS OF THE PHARMACEUTICAL ALLOWANCE

DATE OF ISSUE:  17 JANUARY 1991

ADVANCE PAYMENTS OF THE PHARMACEUTICAL ALLOWANCE

INTRODUCTION

This instruction is to advise staff of the changes to the system and the procedures for applying for and paying advances of the pharmaceutical allowance.

BACKGROUND

2.From 1 November 1990, service pensioners who have fringe benefits, war widows and orphans will be paid a pharmaceutical supplement of $5.00 per fortnight per family unit.  War widows and service pensioners in receipt of maximum rate pension received a lump sum payment of the supplement on 1 November 1990.  This was $50.00 each to single service pensioners and war widows and $25.00 each to couples.  The lump sum  payment will cover the period 1 November 1990 to 20 March 1991.  Note: couples who are separated indefinitely on medical grounds are treated as single.  Further, permanently separated wives and service pension widows are also treated as single.

3.On 21 March 1991, the pharmaceutical supplement will be replaced by the pharmaceutical allowance.  The pharmaceutical allowance will be paid to all service pensioners, including those who did not receive the pharmaceutical supplement, war widows and orphans.  The allowance will initially be paid at the same rate as the supplement.  However, the allowance will be annually indexed, commencing September 1991.

ADVANCES

4.Pensioners who use a large number of Pharmaceutical Benefits Scheme (PBS) drug items can apply to have the pharmaceutical allowance paid in advance.  Three advances of the allowance are available to the pensioner.  The advances will each be a maximum of $35.00 ($17.50 each for couples).  The total annual amount of the allowance, either in the form of advances or fortnightly payment or a combination of both must not exceed the limit of $155.00 in the period ending 31 December 1991, or $130.00 in subsequent years.

"ADVANCE PENSIONERS A"

FIRST ADVANCE

5."Advance Pensioners A" are those pensioners (maximum rate service pension and war widows) who received the initial lump sum payment of the pharmaceutical supplement on 1 November 1990.  To be eligible for the first advance of the pharmaceutical allowance the pensioner must:

.apply before 21 March 1991,

.have used at least 20 prescription items in the period 1 November 1990 to 20 March 1991,

.have liquid assets of no more than $1000 if single or $2000 combined if a couple, and

.have income other than pension of no more than $20.00 per fortnight if single or $40.00 combined per fortnight if a couple.

6.The amount of the first advance is $35.00, which is to be paid to a couple as $17.50 each.

7.The application form for the advance is at attachment A.

SUBSEQUENT ADVANCES

8.Two additional advances may be paid if the pensioner meets the following conditions;

.have used at least 14 prescription items in the three months immediately following the application for the previous advance,

.have liquid assets of no more than $1000 if single or $2000 combined if a couple, and

.have income other than pension of no more than $20.00 per fortnight if single or $40.00 combined per fortnight if a couple.

9.The second advance will be $35.00 or $17.50 each for couples.  The final advance will be no more than $35.00 ($17.50 each to couples), representing the balance of the annual supplement/allowance payable.  This will ensure that no pensioner will receive more than the maximum annual amount of combined supplement/allowance, $155.00 in the first year.

10.This flexibility in the amount of the final advance is necessary to ensure that where a pensioner has been paid a fortnightly allowance and advances, they do not receive any advantage over pensioners who have only received a fortnightly payment.  The following example illustrated this concept.

On 19 March 1991, the pensioner applies for an advance of the allowance.  On 21 March 1991, a fortnightly allowance payment of $5.00 is paid.  The application for advance is processed on 22 March 1991 and the system produces a cheque that night.  The fortnightly payment is limited on system from the next payday, 4 April 1991.  If $35.00 is paid for the final advance the pensioner would receive a total of $160.00 in combined pharmaceutical supplement/allowance.  In this case the final advance should be adjusted to $30.00 ensuring that the annual total is $155.00.

"ADVANCE PENSIONER B"

FIRST ADVANCE

11."Advance Pensioners B" are those service pensioners and war widows who became eligible for pension or have been increased to maximum rate service pension after 1 November 1990.  To be eligible to receive this advance the pensioner must:

.have used at least 14 prescription items in the three months immediately prior to the day on which he or she became eligible for payment of maximum rate service pension or war widows pension,

.have liquid assets of no more the $1000 if single and $2000 combined if a couple, and

.have income other than pension of no more than $20.00 per fortnight if single or $40.00 combined per fortnight if a couple.

12.The amount of the first advance payment to "Advance Pensioners B" will be $35.00 or $17.50 each if a couple.

SUBSEQUENT ADVANCES

13.An "Advance Pensioner B" may apply for up to three advances of the pharmaceutical allowance if they meet the following criteria:

.have used at least 14 prescription items in the three months immediately following the application for the previous advance,

.have liquid assets of no more than $1000 if single or $2000 combined if a couple, and

.have income other than pension of no more than $20.00 per fortnight if single or $40.00 combined per fortnight if a couple.

14.The second and third advances will be $35.00 or $17.50 each, unless it is the final advance for 1991.  The final advance will be no more than $45.00 ($22.50 each to couples)representing the balance of the annual supplement/allowance payable.  Flexibility has been built into the amount of the final advance to ensure that no pensioner receives any additional financial advantage, paragraph 10 refers.

15.The amount of the final advance paid to "Advance Pensioners B" will be determined from the payday they became eligible to receive the pharmaceutical supplement - the later the pensioner becomes eligible the smaller the final advance payment.  For each payday since 1 November 1990 the pensioner is not eligible to receive payment of supplement or allowance, the final advance is reduced by $5.00.

For example, a single pensioner becomes eligible on 7 February 1991.  As he has not been eligible for seven paydays, the final advance amount will be $10.00

($45.00 - (7 * $5) = $10).

APPLICATION FORMS

16.An application form has been developed to assist both clients and examiners in determining eligibility for advances.  A sample of the form is at Attachment A.

17.The form places the onus on the pensioner.  This is done through a simple declaration that the pensioner meets the conditions described on the form.

18.Once the form is received in the Department is should be passed to the 'advance' examiner for recording on system and payment.

19.If at the time the client requests the form, the clients circumstances are known, it would be of assistance if examiners and counter staff strike out the two boxes that do not apply.

20.If an "Advance Pensioner A" completes the form without striking out the boxes that do not apply, and the claim is lodged before 21 March 1991,  the examiner can verify the details on system and pay the advance.  However, if an "Advance Pensioner B" fails to delete the boxes that do not apply on the application for the initial advance, the examiner should contact the client to check that they are applying for the first advance and understand the conditions.

SYSTEMS

21.The screens for the payment of pharmaceutical advances can be accessed through the PIPS System Menu (PP.SM), or by using the screen name PY.LP (Attachment B).  This will automatically display the List (LP) screen, (Attachment C).

PAYING ADVANCES

22.Once the LP screen has been accessed, either a 'Y' for yes or 'S' for select should be placed in the ADVANCE ADD field.  When this is entered, the system will automatically default to the ADD (AP) screen, (Attachment D).  The system will default all the required information.  The ADVANCE AMOUNT field will default either $35.00 for single assessments or $17.50 each for couples.  These amounts can be overridden in the case of the final advance payment, which could be less than $35.00 or $17.50 in the case of an Advance Pensioner A or $45.00 or $22.50 for an Advance Pensioner B, paragraphs 9 & 16 refer.

23.If while using this screen the examiner wants to escape the screen and not pay the advance, at that time, the RETURN TO LIST field can be used by placing a 'Y' or 'S' in the field.  This will not pay the advance.

TRANSFERS IN

24.The transferring State should include a copy of the LIST (LP) screen with the supporting documents for the transfer.

25.Details of any advances paid in the previous State should be recorded on the ADD (AP) screen by first placing a 'Y' or 'S' in the TRANSFER IN fields on the LIST (LP) screen.  All details will default on the ADD (AP) screen.  However, particular attention should be paid to the ADVANCE PENSIONER TYPE A field as this will always default to 'N'.  The LIST screen from the previous State should be checked and the field corrected if the lump sum was paid on 1 November 1990.The ADVANCE DATE will default the action date, the date(s) that advances were paid in the previous State should be used in this field.

26.Any further advances can be paid by following the instruction in paragraph 25.

CANCELLATIONS, TRANSFER OUTS AND DEATHS

27.As with other transactions on the Pharmaceutical Advance screens, access to the CANCEL (CP) screen must be gained through the LIST (LP) screen.  Placing a 'Y' or 'S' in the cancel field on this screen will default to the CANCEL (CP) screen.  All information on this screen will be defaulted, except for the CANCEL REASON, the examiner will be required to complete this field.  Reason types CANCEL, TRANSFER and DEATH will be accepted, and must be typed in full.

STOPPING APPROVED PAYMENTS

28.If after an advance transaction has been completed the payment needs to be stopped or cancelled the DELETE DATE on the LIST (LP) screen should be used.  DELETE DATE will only delete on the same day that the original transaction has taken place.

PAYMENT

29.Payment will be made by a manual cheque, that will be raised at the National Computer Centre on the night of the transaction.  All cheques will be returned to the appropriate Branch for dispatch with that days 'dailies'.

TAXATION

30.The supplement and later allowance will not be included in the pension payment, and as such will not be taxable income.  This will ensure that the allowance maintains real value to the pensioner.

RECOVERY

31.There will be no recovery of overpaid pharmaceutical supplement or allowance.  It is not to be included in the assessment of bereavement payments.  If a client dies or pension is cancelled before a limitation of advance has been finalised, the balance of that limitation should be disregarded.

PENSION REDUCED TO NIL

32.Pharmaceutical supplement/allowance is not a reducible amount like Rent Assistance or APC and, as such, should be paid as the whole amount until entitlement is lost.  Until 20 March 1991, if a service pension is reduced below the fringe benefit threshold then the fortnightly supplement should be cancelled.  If the pensioner was paid a lump sum or has received any advance payments, there will be no recovery.

33.From 21 March 1991, pharmaceutical allowance will be paid to all service pensioners.  The allowance should only be cancelled if the pensioner is reduced to nil rate or dies.  If an advance has been paid there will be no recovery.

PETER HAWKER

NATIONAL PROGRAM DIRECTOR

BENEFITS

JANUARY 1991