1. Purpose

The purpose of this Departmental Instruction is to provide background information and procedural guidelines for the 1996/97 Budget initiative to rationalise income support pensions by transferring responsibility for all child related payments (CRP) to the Commonwealth Services Delivery Agency Centrelink.

2. Effective Date

This initiative is effective from 1 January 1998.

3. History of CRP in DVA

A person who receives service pension (SP) or income support supplement (ISS) and has eligible dependent children was paid CRP as components of SP or ISS.  CRP was usually paid to the veteran or war widow(er).

CRP components relevant to the transfer were:

• dependent child add-on (DCAO);
• guardian allowance (GA); and
• rent assistance (RA).

CRP through DVA equated to the following family payment (FP) through Centrelink:

• above the minimum standard FP rate;
• GA; and
• RA.

In addition to CRP through DVA, pensioners could also receive the ‘minimum FP rate' in respect of eligible dependent children.

• The adaptation of the ‘above the minimum standard FP' to the income support calculation process has created significant administrative complexities.
•  

NOTE:  Remote area allowance does not form any part of the CRP transferred to Centrelink.

4. Rationale for transfer

This initiative is designed to simplify and rationalize the delivery of assistance to families, as veterans and their dependents will no longer be required to apply for these payments from both Veterans' Affairs and Centrelink.

The ‘minimum FP rate' is already being paid through Centrelink.  It is administratively inefficient for two departments to undertake similar annual reviews of child payment eligibility.

Note that the Social Security Act (SSA) states that “ where a person or the person's partner is receiving a periodic payment under a law of the Commonwealth and the law provides for an increase in the rate of payment by reference to the child,” eg DCAO is paid by DVA, only the ‘minimum standard FP rate' is payable.  This means that payments for DCAO must cease to enable transfer to Centrelink.

5. Legislation

Legislation to enable the transfer is contained in the Veterans' Affairs Legislation Amendment (Budget and Simplification Measures) Act 1997 (Number 87 of 1997).

This means that from 1 January 1998, provisions in the Veterans' Entitlements Act 1986 (VEA) enabling DVA to pay CRP are repealed.  Several new definitions are inserted to reflect dependent child meanings as in the SSA.  Refer paragraph 31 for these new definitions.

6.  Pensioners disadvantaged by the transfer

As a result of minor anomalies between the VEA and the SSA, some pensioners will be financially better off after transfer but some will be disadvantaged.

However, to ensure that no pensioner is financially disadvantaged from the transfer, the SP or ISS of those pensioners or recipients who would be disadvantaged will continue to have their CRP included.

As at the transfer date there were 250 cases nationally which have a “saved” status.

7.  Categories of some ‘saved' cases

Outlined below are some categories where there are identified differences between the VEA and SSA.  Pensioners whose payments fit these categories would have been financially disadvantaged if transferred.

• Prescribed >16

There are differences between CRP and the above the minimum standard FP rate for prescribed student children of 16 or 17 years, and for whom GA is paid as part of the CRP and/or for whom an additional rent assistance free area is allowed.  The FP rate equivalents cease once the student child attains 16 years and becomes prescribed.

Note that where there are other dependents and GA is payable, there may be no financial disadvantage as Centrelink would pay GA in respect of the other children.

• Not prescribed > 18

There are differences between CRP and the standard FP rate for an 18-25 year old child, who is not a ‘prescribed student child', ie the child is not receiving a payment from a prescribed education scheme or certain other schemes.  Any FP ceases at 18 years but DVA continues to pay $34.00 pf whilst the child remains eligible.

• Dependent children absent from Australia > 3 years

DVA does not require a dependent child to be living in Australia.  A child that has been absent from Australia for more than 3 years cannot be a FP child.

• ISS War widows receiving CRP only

Different method statements in the rate calculators for ISS and FP enable some war widow/ers with eligible dependent children to receive a greater amount of CRP than they could receive as ‘above the minimum standard FP'.

• Those who will be disadvantaged by loss of treatment benefits

There is a small group of veteran service pensioners who are receiving payment of SP only because of inclusion of CRP in the calculation of the rate of pension and who, as a result of that SP payment, are eligible for medical treatment under section 85(7) of the VEA.  This provision allows eligibility for treatment benefits to veterans who receive disability pension at a rate of 50% or more and any amount of SP.  If transferred, these veterans would lose payability for SP and hence treatment eligibility.

• Veterans paying maintenance and in receipt of DCAO

Refer paragraph 8.

8.  Maintenance Cases

Where the veteran pays child maintenance, receives CRP from DVA because he/she contributes towards the care of the child/ren and the child/ren reside with the separated spouse, the veteran may be considered financially disadvantaged by the transfer.  This is because under the SSA the parent with custody of the child/ren receives FP.

Where these cases occur they are to be ‘saved' and subject to normal reviews.

However, where there is a shared care arrangement, CRP is paid pro-rata between the couple.  This rule applied equally under the VEA and the SSA, therefore no financial disadvantage should occur as a result of transfer.

9.  Savings Provisions

There may be differences between the VEA and SSA in addition to the above list where pensioners would be financially disadvantaged on transfer.

However, savings provisions provide that any service pensioner or income support supplement recipient who would be or is financially disadvantaged by the transfer be ‘saved' and the total CRP paid by DVA.

Note that the ‘saved' CRP components are subject to full CPI increases.

10.  System identification

of saved cases

Where it was possible to determine that pensioners would be financially disadvantaged by transfer, these cases have been identified as ‘saved' and flagged on the system.  This system identification occurred on the weekend 12/13 December 1997.

11.  Pensioners claiming financial disadvantage following transfer

In some circumstances it was not possible prior to the transfer to identify whether a pensioner would be financially disadvantaged.

In these cases, the pensioner may find that he/she receives a lower rate through Centrelink after transferring.  If this happens, the pensioner has 3 months to apply to DVA for CRP to be resumed, ie until 31 March 1998.

Evidence of the amount of the payment, such as a letter from Centrelink, must be provided.  These will become ‘saved' payments.  Refer Attachment A for further processing instructions for these cases.

Any application lodged outside of these dates cannot be accepted.

12.  An example of where CRP can be resumed

Where, following transfer, (ie not because of a variation resulting from the application of the income and assets test), the pensioner is financially disadvantaged, eg the total CRP is greater than the above the ‘minimum standard FP', DVA can resume payment of CRP.

For example, a veteran with 2 dependent children, one aged 15 years and the other aged 18 years and non prescribed, would have the following comparison.

DVA - 1/1/98

Centrelink -1/1/98

$s

$s

DCAO

135.90

Above minimum FP

101.90

GA

36.70

GA

36.70

RA

87.40

RA

87.40

_______

_______

Total

$260.00

Total

$226.00

13.  The comparison

It is important to note that the only comparison used is between the assessed DVA CRP as at 31/12/97 and the assessed Centrelink ‘above the minimum standard FP' amount during the period 1/1/98 until 31/3/98.

14.  Invalid Claims

Any claims of financial disadvantage because of increased bank charges or the payment going to the other member of a couple are not valid claims.

Where it has been established that a ‘dual payment' of DCAO has occurred and a reduction in income is sustained as a result of cancellation of DVA DCAO (to enable transfer to Centrelink), no financial disadvantage has occurred as the reduction is due to a previous incorrect payment.  Refer to Attachment B for appropriate advice letter.

15.  To transfer back to DVA

The pensioner should provide evidence of their lesser Centrelink payment such as their advice of variation to FP.

Centrelink has requested that because the numbers of financially disadvantaged pensioners is expected to be small, DVA staff should contact Trish Foster, Families & Childcare Operations, Centrelink on
(02) 6244 7560 to arrange for pensioners to transfer back to DVA.

Trish Foster will liaise with Centrelink area staff to arrange a cancellation date for the ‘above the minimum standard FP' and also calculation of the total amount of the ‘above the minimum standard FP' rate paid for the adjustment period.  Current procedures apply for the recovery of any overpaid FP.

16.  How long do the savings provisions apply?

The total CRP will be ‘saved' until each child becomes ineligible or until the amount of the ‘above the minimum standard FP' rate potentially payable equals or exceeds the ‘saved' child related component of the dependent children already included in the assessment under VEA at 31 December 1997.

An example is where a new child is granted by Centrelink and the total FP potentially payable would be greater than the ‘saved' component.

17.  New dependent child claims received prior to 1 January 1998

When adding a new child/ren during the period 15 December until 31 December 1997 you will have to determine whether it falls in one of the ‘saved' child categories.

If the dependent child does fall into a ‘saved' category, you will need to set the ‘saved' indicator on the PIPS PC Edit Child Details screen.  Refer Attachment A for further processing instructions.

If the dependent child does not fall into a ‘saved' category refer to paragraph 29 below.

18.  After 1 January 1998

After 1 January 1998, any new dependent child cannot be a ‘saved' child unless the claim was lodged on or before 31 December 1997.

It is possible for a ‘saved' CRP case to also be receiving the ‘above the minimum standard FP' in respect of a new child who became eligible after 1 January 1998.  This is because there is no bar in the SSA which forces the FP for the whole family to be paid by one Department only.  This anomaly requires legislative amendment.

However, there are not expected to be many of these cases and in most circumstances, the pensioner would receive a higher standard FP rate through Centrelink than the ‘saved' CRP and must be advised to transfer.

19.  On going variations

‘Saved' dependent children are assessed under the rules contained in the VEA as at 31 December 1997.  Work practices relevant at that time should continue to be applied to these cases.

Please note again, however, that full CPI increases apply to the CRP components.

20.  What is being transferred?

All CRP, including rent assistance where normally payable, transfer to Centrelink from 1 January 1998.  These payments include:

• DCAO;
• GA; and
• RA.

DVA cannot pay RA as part of SP or ISS whilst the ‘above the minimum standard FP' is received through Centrelink.

21.  Will Family Payment be the same?

FP comprises the ‘minimum standard FP rate' and the ‘above the minimum standard FP rate'.  The total rate payable is the same as the combined amount paid previously by DVA and Centrelink to the family unit.

22.  Transfer date

The last pension payment containing CRP made by DVA is 18 December 1997.  Centrelink commence paying the full ‘standard FP rate' from 1 January 1998.

23.  Timetable

The table below shows the events of the transfer and the actions taken.

Date

Action/Description

11/12

State Offices (SOs) provide listings of names and file numbers of:

• new claims granted

• manual issue of Centrelink claim forms

• changes in circumstances which alter saved/transfer status

• maintenance cases where DCAO received, children with separated spouse.

12/12

National Office (NO) reconcile original mailout list and subsequent changes to ensure continuation of payments.

13-14/12

System run done by NO to cancel CRP for transfer cases.

15/12

A listing of CRP cases which require manual action such as maintenance cases issued to SOs for action.

18/12

Last payment made by DVA transfer cases.

19/12

Automatic advices for saved or transferred cases arrive in SOs  for enveloping and despatch

Manual advices required where SP reduced to NIL on transfer.

Attachment B contains copies of the advices:

• ‘saved' cases

• transfer cases

• SP reduced to NIL (manual advice).

Advices are not to be sent before 18 December 1997 being the last payment date.

24.  Children still remain in DVA pension assessment

The $24 pf (or $12 pw) income reduction for each eligible child is still included in the pension assessment whilst the child continues to be a dependent child within the meaning of the VEA.  Please note that these definitions are changed to mirror the provisions for a dependent child in the SSA.

25.  Additional threshold for DVA treatment eligibility

Income eligibility limits for Gold Card treatment benefits continue to include a $52 pf income reduction component for each dependent child.

However, within the new meaning of dependent child, the age cut-off for eligibility is 22 years instead of 25 years (excluding those ‘saved' dependent children remaining in payment with DVA).

26.  Rent Assistance

DVA pays RA as part of the income support payment.  Where the ‘above the minimum standard FP' is payable, it is incorporated into that FP payment.

Where a pensioner notifies DVA that FP ceases to be payable, payment of RA is resumed by DVA to the income support recipient.

The system does this automatically where examiner action is taken to terminate a FP child from the assessment.

27.  Differences in RA between the VEA and SSA

The rules in the VEA and SSA in regard to RA are similar except that DP is not taxable income and therefore not assessable for the purposes of the FP income test.

This means some disability pensioners receive an increase in RA on transfer.

It should be noted that when transferring back to DVA, these pensioners may receive a reduction in the amount of RA payable.

28.  Pensioner Concession Cards

Dependent children continue to be included on the DVA Pensioner Concession Card (PCC).

Again, with the new meaning of dependent child, the age cut-off for eligibility is 22 years instead of 25 years (excluding those ‘saved' dependent children remaining in payment with DVA).

If as a result of the transfer no SP is payable, ie CRP was the only component payable, there is no ongoing entitlement to a PCC.

Low income earners who are FP recipients and who are not receiving an income support pension can apply subject to an income test for a Health Care Card through Centrelink.

With the exception of ‘saved' cases, no dependent child can be put into payment after 11 December 1997.  Paragraph 17, -‘New dependent child claims received prior to 1 January 1998' deals with ‘saved' cases.

In all other cases, where a claim for a dependent child was received during the period 11 December to 31 December 1997, the child related information must be recorded on the system to ensure the additional thresholds for dependent children are received.

The following action should also be taken:

• any CRP arrears should be paid up 31 December 1998; and
• DVA staff should contact Trish Foster, Families & Childcare Operations, Centrelink on (02) 6244 7560 to arrange transfer details. This is because of the small number of cases expected in this category.

30.  New claim for a dependent child lodged after 1 January

No new dependent child can be put in payment after 1 January 1998.

Again, it will still be necessary to record dependent child details on the system for pension assessment purposes.

Income support new claimants or current income support recipients who lodge a claim for a new dependent child should immediately be referred to Centrelink to receive their full ‘standard FP rate' free of the income and asset test.

This should be explained from the outset in the new claim process to ensure the earliest possible increase or grant of FP.  The new claim form will shortly be amended to reflect this information.

Also, a paragraph is shortly to be added to the daily advices (new grants) to remind pensioners with dependent children to contact Centrelink with their new grant letter.  This will enable Centrelink to re assess their FP from the earliest date possible.

31.  Changes to dependent child definitions

From 1 January 1998, definitions relating to dependent children in the VEA [see sections 5F(1) to (3)] change to mirror the definitions in the SSA.  In summary:

dependant child and FP child have the same meaning as in the Social Security Act.

a person becomes a dependent child at the time when the person would become a dependent child for the purposes of the Social Security Act if that Act applied in respect of that person.

a person becomes a FP child at the time when the person becomes an FP child for the purposes of the Social Security Act.

When processing a case with a dependent child in the assessment (where the ‘above the minimum standard FP' is paid through Centrelink) care must be taken to apply the new definitions, eg a dependent child ceases to be eligible from 22 — nd birthday.

It should be noted that where eligibility for partner service pension is contingent on a dependent child in the assessment when the claim is made, there is no eligibility where a dependent is aged 22 years and over.

The DSS online policy and legislation system (OPAL) is an essential reference tool to aid processing.  Attachment C refers.

32.  A comparison of VEA/SSA rules

Attachment D provides an overview of the major differences and similarities between DVA ‘saved' CRP and FP through Centrelink.

33.  Advices & automatic student review forms

The integrated advices system obligation paragraphs relevant to dependent children and the student review forms have been updated to reflect the changed definitions for the transferred cases.

Note that different age and income levels apply in respect to ‘saved' children.

34.  Obligations

There is no automatic notification by Centrelink to DVA of changes in FP recipient circumstances.  Pensioners continue to be obliged to notify DVA of changes in their circumstances to ensure receipt of their correct entitlement.

35.  Delegations

There are no changes to delegations as a result of this initiative.

36.  Attachments

Attachments are as follows:

A - SYSTEM CHANGES

B - AUTOMATIC AND MANUAL ADVICES RE TRANSFER

C - GUIDE TO OPAL

D - DVA AND CENTRELINK COMPARISON

37.  Contact officers

Any questions regarding this instruction should be directed to:

Robyn Del Casale — Assistant Director — Phone: (08) 8290 0321

FAX: (08) 8290 0498

(LAN: Del Casale Robyn)

Jenny Beath — Project Officer — Phone: (02) 9213 7330

(LAN: Beath Jenny)

1. Recording of Dependants

The system has been altered to allow for the two different categories of dependent children:

• child payment saved 1/1/98; and
• non saved children who are only recorded for assessment purposes.

2. Saved/Not Saved Indicator

A new field called "Child Payment Saved 1/1/98"on the PIPS/PC Child Details screen has been added.  It indicates YES if ‘saved' and NO if not.

3. Changing the Saved/Not Saved Indicator

On Edit Child Details screen, a new check box called “Child Payments Saved 1/1/98” has been added. I — t checks if a child is ‘saved' but is blank if not.

To save a child just click in the box next to “child payment saved 1/1/98”, and the eligibility field can now be edited.

Eligibility is defaulted but can be changed by selecting appropriate

eligibility item from the drop box; and clicking OK.

4. Simulated Assessment and What If? - Children screens

The new ‘saved' field is also be displayed on the Simulated Assessment and What If? screens.  Example as follows:

5. New Field on Trial (PP.TR)

Child components on the trial screen are not be available from 15 December 1997 because of the complexity of the changes required.

It is expected that this facility will be available sometime next year as system resources become available.  Until then, “trial” cannot be used if a child is displayed.  All child data must be deleted to produce a trial assessment (this of course would not include any children in the assessment).

However, in the meantime, the “What if? - Children” and “Simulated Assessment - Children” screens have been changed to cater for ‘saved' children processing and ‘what if' assessments.

A new field “98SAVED” has been added to the trial screen to indicate the number of dependent children ‘saved'.

6. Calculate Pension

If the child is 22 years or over not saved or 25 years over and saved as of the effective date, an error message will appear to terminate from assessment.

If there are no ‘saved' children in the assessment and the Child Payment box is checked on spouse an edit message will appear “Child Payment must be set on principal client at Adult Details”

7.  Death processing system

The death processing system (DPS) has been changed to cater for the new ‘saved' indicator for children.

8.  Reports

The following reports have changed to include the new ‘saved' indicator:

1. the monthly run to report children turning 16 years; and

2. the fortnightly run to report:

• SP children turning 13 years;
• SP children turning 16 years;
• SP children, prescribed, turning 18 years;
• SP children, 25 years and over; and
• SP children, non saved, 22 years and over (new report).

DPS has been changed to cater for the new Saved Indicator for children.

TOTAL FORTNIGHTLY PAYMENT

$XXX.xx

This is made up of :-

-   Service pension

XXX.xx

-   Pharmaceutical allowance

X.xx