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The purpose of this instruction is to advise of changes to Pharmaceutical Benefits and to introduce the new pharmaceutical supplement.  These changes are contained in the Social Welfare (Pharmaceutical Benefits) Amendment Bill 1990, which has not yet received Royal Assent.


2.Currently, those pensioners that hold the following cards are entitled to free pharmaceuticals listed under the Pharmaceutical Benefits Scheme (National Health List):

.Service Pension Benefits Card (SPBC)

.Dependant Treatment Entitlement Card (DTEC)

.Pensioner Health Benefits Card (PHB)

3.Pensioners in receipt of a Specific Treatment Entitlement Card (STEC) receive pharmaceuticals related to their accepted disabilities free of charge under the Repatriation Pharmaceutical Benefits Scheme (RPBS).

4.Pensioners in receipt of a Personal Treatment Entitlement Card (PTEC) receive all pharmaceuticals (listed under the National Health Scheme) through the RPBS free of charge.

5.Pensioners in receipt of a Pharmaceutical Benefits Concession Card (PBC) must pay $2.50 per prescription item under the Pharmaceutical Benefits Scheme.


6.As a result of the changes to the Pharmaceutical Benefits Scheme, (which were developed by the Departments of Community Services and Health, Social Security and Veterans' Affairs) from 1 November 1990, there will be a basic charge of $2.50 for each prescription item.  This will be charged to all service pensioners who use their SPBC or PHB card and to all War Widows and orphans who use their DTEC to obtain pharmaceuticals, as well as to service pensioners who currently pay $2.50 (PBC holders).

7.Pensioners using their STEC and PTEC to obtain pharmaceuticals will still receive these free of charge if obtained under the RPBS.

Pharmaceutical Supplement

8.Commencing on payday 1 November 1990 an allowance, to be known as a Pharmaceutical Supplement, will be paid to:

.Service pensioners who are not a "prescribed person", ie.  who are in receipt of fringe benefits (s.82 of VEA refers);

.War widows (s.86(1) and (2) of VEA refers);

.Orphans (s.86(3) of VEA refers).

9.The pharmaceutical supplement will be paid at the following rates:

.married service pension couple$2.50 pf each

.standard rate veteran$5.00 pf

.unmarried person, eg. wife-widow, separated

or divorced spouse$5.00 pf

.war widow$5.00 pf

.orphan$5.00 pf

.war widow remarried to a service

pension veteran who has fringe$7.50 pf  benefits

($5.00 to her $2.50 to him)

.married service pension couple assessed as

separated medically$5.00 pf each

.war widow with orphan children$5.00 pf + extra

$5.00 for each orphan child

Post 21 March 1991

10.From payday 21 March 1991, the pharmaceutical supplement will be called the pharmaceutical allowance.  It will be paid at the same rates as the supplement and will be indexed.  The first indexation of the allowance will be at the same time as the September Statutory increase.  In addition the payment will be extended to include those service pensioners who were not eligible to receive the supplement.

Safety Net

11.During the period from 1 November 1990 to 31 December 1991 (a period of 14 months), the maximum that any one pensioner or family unit will have to pay for pharmaceuticals is $150 - or the equivalent of 60 prescription items.  Therefore, the 61st and subsequent prescription items will be issued free of charge.

12.In the following calendar year, ie. from 1 January 1992 till 31 December 1992, the maximum amount that any one family unit will have to pay is $130.  This is the equivalent of 52 prescription items, therefore the 53rd and subsequent items will be issued free of charge.

"Chronically ill"

13.This term is a loose expression which has been used to categorise a section of the pensioner population that may require large quantities of pharmaceuticals at one time.  It is intended to assist these people to meet such costs by allowing their pharmaceutical allowance to be paid in advance in the form of several small lump sums instead of a fortnightly amount.

14.The legislation refers to these pensioners as "Advance Pensioner A" and "Advance Pensioner B".

"Advance Pensioner A" - Initial Advance

15.Any pensioner who is an eligible pensioner, ie. a service pensioner in receipt of maximum rate SP or a war widow, as at 1 November 1990, will receive their pharmaceutical supplement in the form of a lump sum.

16.The initial lump sum advance payable on 1 November 1990 will be $25 or $50 (whichever applies), covering the period 10 paydays from 1 November 1990 to and including payday 7 March 1991.  This is equivalent to 10 payments at $2.50 or $5.00 (paragraph 10 of this instruction refers).

"Advance Pensioner A - Further Advances

17.A pensioner may apply to receive a further advance supplement of $17.50 or $35 (depending upon the rate applicable, ie.  single or married rate as per paragraph 10 in this instruction).  To be eligible, the "Advance Pensioner A" must have:

.purchased a minimum of 20 pharmaceutical items (equivalent of one per week) for him/herself, spouse,  or dependants during the period 1 November 1990 to 21 March 1991;

.liquid assets of no more than $1000; and

.income, apart from pension, of no more than  $20 per fortnight.

18.If the "Advance Pensioner A" has purchased a minimum of 14 prescription items for him/herself, spouse, or dependants within 3 months of having applied for the advance mentioned in paragraph 17 and still meets the same income and asset criteria, then the pensioner can apply for a further advance pharmaceutical supplement of $17.50 or $35.

19.Within 3 months of applying for this second $17.50 or $35 advance, if the pensioner still satisfies the criteria listed above, then the pensioner can apply for a final advance of $17.50 or $35.

20.The maximum amount that may be paid as an advance is the same as for those receiving the fortnightly pharmaceutical supplement/allowance.  This actually totals $155 (single) instead of $150 (being the safety net amount).  This is because the safety net limit was set by the Department of Social Security, but DVA has one more payday during the period from 1 November 1990 to 31 December 1991.

21.Comparison of supplement received fortnightly and supplement received in advance is:


- Period 1.11.90 to and including payday 7.03.91 = 10 paydays @ $5.00 pf

$ 50

- Period 21.03.91 to and including payday 26.12.91 = 21 paydays @ $5.00 pf              $105



- Initial advance$50

- Subsequent advances $35




"Advance Pensioner B" - Initial Advance"

22.An "Advance Pensioner B" is a pensioner who becomes eligible for fringe benefits, or is granted a service pension (with fringe benefits), a war widows' pension, or an orphan's pension after 1 November 1990, but before 1 January 1992.  This class of pensioner is not entitled to receive the initial $25 or $50 lump sum pharmaceutical supplement.

23.This pensioner can apply for an advance pharmaceutical supplement of $17.50 or $35.00 (depending on the applicable rate) if he or she has paid for a minimum of 14 prescription items during the 3 months immediately prior to the day on which he or she became an eligible pensioner

"Advance Pensioner B" - Further Advances

24.The criteria for this category of pensioner to receive further advances is exactly the same as for "Advance Pensioner A".  The only difference is in the amount of each advance that the "Advance Pensioner B" can receive.  The initial advance is $17.50 or $35, with a maximum of two subsequent advances of the same amount and a final advance of $22.50 or $45, a total maximum of $150, as opposed to the maximum of $155 paid to "Advance Pensioner A".  This is due to the fact that these pensioners were not eligible on 1 November 1990, but rather, at the earliest from the payday following.  Of course this maximum reduces the later the pensioner becomes eligible e.g. if a single pensioner becomes eligible on payday 24 January 1991, then an initial advance of $35 could be paid, followed by further advances of $35, $35 and $15.

25.Those pensioners classified as "Advance Pensioner A" and "B" are the only ones who may receive their pharmaceutical supplement in the form of a lump sum and only when requested (apart from the initial advance paid to "Advance Pensioner A").  Orphans, and service pensioners who receive pension at less than the maximum rate, but who are eligible for fringe benefits, will be paid their pharmaceutical supplement fortnightly.

Fortnightly Pharmaceutical Supplement, OR Advance Supplement

26.The fortnightly pharmaceutical supplement is not payable during any period covered by a lump sum advance pharmaceutical supplement.  For example:

Single veteran is granted maximum rate service pension payday 29 November 1990 and on that date is paid an advance of $35.  ($35 divided by $5.00 pf = 7 paydays)

This advance therefore covers the period from 29.11.90 to and including payday 21.02.91, during which time, a fortnightly pharmaceutical supplement is not to be paid.

Pensioner close to Safety Net amount

27.Where a pensioner qualifies to receive an advance pharmaceutical supplement, but the amount of the supplement is greater than the amount the pensioner must pay for pharmaceuticals before reaching the safety net limit (ie. no longer having to pay for pharmaceuticals), then the full advance will not be paid.


Single veteran has already purchased, since 1.11.90, a total of 50 prescription items, which cost him $125.

The veteran advises the Department that he requires a further advance as he has "purchased" another 14 prescription items and he satisfies the income and asset criteria.

The veteran will not receive the full $35 advance.  Instead, this will be reduced by the number of prescriptions the veteran would have received free of charge:

maximum annual supplement/allowance$155.00

less amount spent to date$125.00

Available advance$ 30.00

Therefore, the $35 advance is reduced by $5, so only $30 is paid to the veteran as his advance pharmaceutical supplement.

Maximum Benefit

28.The total amount to be paid to an advance pensioner by way of both advance and fortnightly pharmaceutical supplements, before 1 January 1992, is not to exceed $155 if single, or $77.50 if married (paragraph 10 in this instruction refers).

29.Where there is a change in marital status, the amount of advance pharmaceutical supplement to be paid will be the rate applicable at the time of claiming the advance.

30.Any fortnightly pharmaceutical supplement will be altered on the same payday as the pension rate and assessment change.  If an advance at the higher rate when the assessment changes (ie the pensioner gets married just after receiving a $35.00 advance) the "overpayment" is not recoverable.  The married rate pension would be reduced by $2.50 per fortnight for seven paydays.

Other Procedures

31.Procedures will be developed in conjunction with the Pharmacy Guild in relation to the documentation and recording of how many prescription items are purchased by pensioners.  These will be finalised before implementation on 1 November 1990 and staff will be advised in a Departmental Instruction.  This Departmental Instruction will also set out the detailed procedures required by Branch Office staff once the policy is implemented.


32.All pensioners including disability pensioners will receive a letter from the Department advising of these new arrangements and how they affect different groups of pensioners.  These letters are being developed in conjunction with the Health Program and the majority should be received by the pensioners in the week ending 26 October 1990.  Branch Office staff will be given examples of the letters to assist when answering queries from pensioners and for use in new grants and fringe benefit 'ons'.  In addition, suitable automatic payment advices are also being developed.


33.The relevant legislation was passed in the House of Representatives on 20 September 1990, although the Bills will require some minor interpretative changes, which will be made in a subsequent amending Bill.  The Bills passed through the Senate on 18 October 1990 and should receive Royal Assent in early November.


34.The payment run for the lump sum advances to maximum rate service pensioners and war widows, and the fortnightly supplement to less than maximum rate service pensioners with fringe benefits, and orphans was conducted on the 18 & 19 October 1990.  The initial lump sum advances are identified on the Client Record Summary (CR) screen, a new field of PHARM ALLOW ELIG: has been created and a YES in the response field indicates that the lump sum has been paid.  The fortnightly supplement payments will be identified by the 65 category code on the PMF.  In addition, each state will be sent a payment schedule to assist with enquiries.  An example of the schedule format is at Attachment A.

35.Any new grants or fringe benefit 'ons' from the 15 October 1990 will require manual coding on a General Purpose Coding Sheet (D5534).  The Category Code will be 65, pension codes will be as follows;


* Single2900$5.00


Joint Married2902$5.00

Joint2903less than or

equal to $10.00

Joint Child2904less than or

equal to $50.00

* single payment code can be used in married assessments  where the single rate of supplement is being  paid ie; separated medical and service pension  wife widows.

Replacement code book pages will be issued in conjunction with the implementation of Phase 1 of the Pension Payments Rationalisation in November 1990.

35.Where a pensioner has been in receipt of pharmaceutical supplement and pension has been cancelled, the case is to be processed as follows:

(a)if the action being processed is deleting the Payment Master File (PMF) record completely (transfer out of death), the 65 category code will be deleted by the automatic transaction,

(b)if the transaction is not deleting the full PMF record (eg; sp is being cancelled and DP is continuing)  a manual coding sheet must be prepared to remove the 65 category code.

A manual coding sheet must also be prepared to remove the pharmaceutical supplement category from the PMF if an action is processed to remove fringe benefit eligibility for a service pensioner.

36.Phase 2 of the pharmaceutical systems changes will be operational on Monday, 5 November 1990, at the latest.  Phase 2 will include new screens to record the payment of advances and detail the limitation of the fortnightly supplement when an advance has been paid.

37.Phase 3 of the systems changes will be operational before 21 March 1991 and will cover the ongoing payment of the supplement (the General Pension Increase).

38.A Departmental Instruction covering Phase 2, the operation of the pharmaceutical system, access to the system and coding will be issued as soon as development and testing have been completed.  This will be prior to 1 November 1990.