C07/2003 DEATH PROCESSING SYSTEM - AUTOMATION OF PARTNERED AND ILLNESS SEPARATED SOCIAL SECURITY AGE PENSIONERS

Introduction

This is an amended version of  DI C53/2002.

The amendments relate to the use of inaccurate terminology relating to the Social Security legislation by replacing the term Centrelink Rules with the more accurate term Social Security Law.

Purpose

The purpose of this Departmental Instruction is to provide information about system changes to automate the processing of partnered and illness separated Age Pensioners through the Death Processing System (DPS).

This change automates the processing, bereavement payment calculations and making of payment to the survivor of the deceased.

Structure of document

This document contains the following sections:

1. Background.
2. The application of the Social Security Law applying to bereavement payments for married couples.
3. The application of the Social Security Law applying to bereavement payments for illness separated couples.
4. The application of the Social Security Law applying to new single rate – surviving partner.
5. Examples of cases processed using the Social Security Law.
6. Scenarios demonstrating how the new arrangements apply regardless of when the case is processed.

Start date

The changes were implemented for the DPS run on the evening of Friday 22 November 2002.

Reason for change

Automatic processing of Age Pensioners has been an issue since Date of Effect legislation was introduced.  The Department is required to process Age Pensioners under rules defined in the Social Security Act rather than in accordance with the Veterans' Entitlements Act 1986 (VEA).  Given the complexity of the Social Security Law, all Age Pension deaths have in the past been processed as “manuals”.  However, a recent reinterpretation of the Social Security Law has meant that it is now possible to program DPS to process these cases automatically.

Summary of Old System

Prior to this enhancement DPS identified if the deceased was a Social Security Age Pensioner and if so turned off the deceased's eligibility for treatment.  It then reported the case for manual termination and calculation of bereavement payment.

Related changes

The automation of Age Pension cases has been divided into a two part enhancement:

The first change affected Single Age Pensioners and was implemented on 27 July 2002 (DI C36/2002 refers).

The second change (covered in this DI) deals with the automation of Age Pensioners who are married or illness separated couples.

Which cases are affected?

The method of assessment (MOA) types affected by this change are :

•     Married Age Pensioner, Spouse eligible as a Dependant (MOA 34) and
•     Married Age Pensioner, Illness Separated, Spouse eligible as a Dependant (MOA 38)

This will mean 95% of Age Pension Assessments will now be automated.

Expected savings

Based on the information available through AIS2000 it is expected that more than 95% of Age pension assessments will be automated by the enhancement of single, married and illness separated Age pensioner death processing.  The table below provides a breakdown of the case types affected by this change and indicates which will now be automated.

Overview

This Section contains a description of the Social Security Law relating to the calculation of bereavement payments for married aged pensioners and the application of these rules to partnered and illness separated aged pensioner couples within DVA.

Interpretation

Centrelink has advised that they interpret the above rule as follows:

The surviving partner of an Age Pensioner is entitled to receive as a lump sum a bereavement payment equivalent to the combined married rate of pension less the survivors new rate of pension, from the date of death to the end of the period that death occurred plus 6 fortnights (84 days) and also to be reassessed at the single rate from the date of death.

Centrelink Rule

Bereavement Payment for married couples - a surviving partner can claim a bereavement payment until the end of the 'bereavement period' (ie 98 days from date of death).

The Bereavement Payment is calculated using the following formula:

LBP = (7 minus NEPED) multiplied by (CMR minus NSR)
            (except where NEPED equals zero.  See Exception Rule below)

Where:

LBP is the lump sum bereavement payment.

NEPED is the number of entitlement period end days for which the deceased customer was paid after and including the date of death. If NEPED equals zero see exception below.

CMR is the combined fortnightly married rate. That is, the combined fortnightly amount that would have been payable to the couple if not for the death.

NSR is the new single fortnightly rate paid to the surviving customer.

Exception rule  -  NEPED equals zero

LBP Exception:  Calculation of the lump sum when NEPED equals zero

Where death is notified and actioned during the entitlement period in which the person died, NEPED equals zero. In this instance the following formula applies:

LBP = (6 multiplied by (CMR minus NSR)) plus (NDEP multiplied by
            (CMR minus NSR) then divided by 14).

Where:

NDEP is the number of days from and including the date of death until and including the end of the entitlement period.

Note:There are Age Pension notification Rules that require the notification of death to be within 28 days of death.  If the notification is outside the 28 days then the reassessment of the survivor could be from a different date.  The BP is still calculated the same however.

DVA Manual Action Required to process

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

1. Cancel the deceased's assessment and payments from day of death (or day after death if the survivor becomes a war widow)
2. Cancel deceased's entitlements to fringe benefits from day after death
3. Identify if date of processing is during the pension period in which death occurred (see following paragraphs)

Processing during period of death

If processing is during the pension period in which death occurred:

1. Calculate the number of days remaining from the day of death to last day of entitlement period (period in which the person dies)
2. Calculate the number of fortnights remaining in the Bereavement period (if processing in the death period then the number of fortnights will be 6 or 84 days)
3. Add that number of days remaining in the death period to the number of fortnights remaining and total as a number of days.
4. Identify the combined married rate of payment immediately prior to the death
5. Identify the new survivors rate of Age pension
6. Subtract the survivors' rate of pension from the combined rate.  Divide by 14 to get a daily rate and multiply by the number of days previously calculated.  ie. 87 x CMR – NSR =  87 x  (450-385)/14.  This is the lump sum bereavement payment (LBP).
7. Pay the LBP as lump sum amount to survivor's default bank account using the payability type of Age Pension Bereavement Payment.

Processing after the period in which death occurred

If processing is after the pension period in which death occurred:

1. Calculate number of pension periods since date of death (A).  It is easiest to count the number of the end days of each pension period that have gone by.  Ie the Monday before the payday.
2. Subtract the number of pension periods paid from 7 (B)
3. Identify the combined married rate of payment immediately prior to the death
4. Identify the new survivors rate of Age pension

Subtract the survivors' rate of pension from the combined rate. Multiply this by the number of pension periods remaining (B)     ie. (7 – 1)  x CMR – NSR =  6 x  (450-385).  This is the lump sum bereavement payment (LBP).

Disability Pension for Age Pensioners

There is no requirement to change any existing Rules for the calculation of Bereavement Payment for the Disability Pension component as a result of the death.  eg:

• There continues to be a LBP of 6 x Veterans DP rate capped at 100%.
• No DP is payable for and after the pension period in which the death occurs.
• Pay the LBP as lump sum amount to the survivor's default bank account using the payability type of Disability Pension Bereavement Payment.
• Where WW and Domestic Allowance is granted automatically, the grant is made on a daily basis with any spouse's dependant DP being cancelled on a daily entitlement as well.

Differences between SP and AP

To assist in identifying the differences in how to treat a Service Pensioner and an Age Pensioner see below:

Married Service Pensioner

Married Age Pensioner

Bereavement notification period

98 days

28 days

LBP Calculation

98 x CMR – NSR

7 – NEPED x CMR – NSR

or

(6 x CMR – NSR) + (NDEP x CMR – NSR/14)

War Widow Grant

97 x CMR – NSR

7 – NEPED x CMR – NSR

or

(6 x CMR-NSR)  +  [(NDEP – 1)  x  (CMR-NSR)/14]

Illness separated and respite care couples

If the members of a couple were being paid at the single rate because they were an illness separated or respite care couple, bereavement payments are worked out as if they were living together.

In this case, an adjustment to the LBP is required using the following formula:

LBP = [(7 - NEPED) x (CMR - NSR)] - {[(combined single rates - CMR)
           x NEPED] - [(combined single rates - CMR) ÷ 14 x (14 - NDEP*)]}

*  For war widow grants the calculation must replace NDEP with (NDEP-1)

Where:

LBP is the lump sum bereavement payment.

NEPED is the number of entitlement period end days that elapse before conversion to the new single rate.

NSR is the survivor's new single rate after conversion.

CMR is the combined married rate. That is, the sum of the amounts that would have been payable to the couple if not for the death.

NDEP is the number of days from and including the date of death until and including the end of the entitlement period.

The LBP exception rule

If NEPED equals 0 then the same calculation used for ordinary married couples should be used (ie. “The  LBP Exception Rule described above**”) as there has not been any monies released at the incorrect rate.

** For war widow grants the calculation must replace NDEP with (NDEP-1)

Explanation: The amount subtracted at the end of the formula represents the 'overpaid' difference between the combined illness separated couple rates and the combined partnered rate.

Overview

This Section contains a description of the Social Security Law relating to the calculation of the new single rate for the surviving partner of aged pensioners and the application of these rules to partnered and illness separated aged pensioner couples within DVA.

Staff in the past have had difficulty manually calculating the bereavement payment and new rate for the surviving aged pension partner.  Since in future it will be rare for staff to manually process an aged pension case, for the benefit of staff a restatement of the rules is provided in this Section.

Social Security Law

Social Security Law -  New single rate - surviving partner (as described in Social Security Guide 3.1.5.30)

Following notification of the partner's death, the survivor's rate is immediately adjusted to the single rate from the LATER of the following, if the customer and their partner were in receipt of a benefit or pension:

• The day of the partner's death, OR
• The day after the date paid to, of the combined married rate, OR

if the customer's partner was NEITHER a long term social security recipient or a pensioner:

• the payday on or after the death, provided the department was notified of the death within 4 weeks of the day after the person died, OR
• the date of notification if the department was notified outside the 4 week period.

Application of Social Security Law

Given the complexities of Assessment Histories and the provision of Treatment Benefits, it has been determined that DVA will always reassess the survivor's rate from the day of the partner's death (or the day after death for War Widow grants).  Therefore, the date of death (or day after death) will always be used for the creation of the death Assessment History.

Note 1:As a continuation of existing DPS practices, any overpayment or arrears amounts will be taken into account in the final payment made as the LBP and passed as DPS Bereavement Payment to IPS.  (ie IPS will not calculate any overpayments or arrears as a result of DPS processing.)

Note 2:It is still possible that batch processing will identify a client who was in a valid assessment after the date of death and action it according to its own rules, possibly reinstating payment to the deceased.  However, the new IPS enhancement to prevent payment of recurring payments to someone who has a date of death recorded will identify these cases for subsequent action.

Future assessment history cases

A decision was made previously on how DPS should handle cases with future assessment histories where the pension rate changed on a date after the date of death.  These future assessment history cases were processed prior to the date of death being recorded.  (eg. A reduction that had a date of effect as 14 days after notification.)

With SP clients, DPS takes any payments that have been made after the date of death into account in the calculation of bereavement payment and arrears paid to the survivor.  The reassessment of the survivor from date of death then also follows through and the new single assessment is updated with the change effective after the date of death.

AP to adopt SP rules for future assessment history cases.

It has been determined that AP should take into account any changes in pension paid after death in the BP calculation.  DPS will therefore apply the above SP rule for Age Pension cases.

This decision is believed to impact on only a very small number of cases.  The majority of deaths are notified within 3-5 days of death.

Note:  this issue is only about cases processed prior to the date of death being recorded.  It is not related to any cases processed after the Department has been notified of death.  Social Security Law states “If the Lump Sum Bereavement Payment has already been made, it(the survivors assessment) is NOT adjusted for subsequent changes in income and assets.”  See also DI 21/99 relating to the Retrospective Reassessment of Age Pension.

Contact

Any enquiries relating to this topic should be directed in the first instance to Steve Claypole, System Delivery, on 02 6289 6792.

Example 1

Veteran dies Day 1

Processed in pension period #1

Veteran on $280 pf Age Pension

$140 pf Disability Pension

Spouse on $280 pf Age Pension    NR = $400pf Age Pension

Veteran reduced to 0 on day of death

Spouse increased to $400 on day of death

Exception rule applies

6  x  (CMR – NR)  + 14  x  (CMR – NR/14)

6  x  160  +  14  x  (560 – 400/14)

6  x  160  +  14  x  11.428571

= 960  +  160

= 1120

Veteran gets 0 on payday #1

Spouse gets $400 on payday #1

Example 2

Veteran dies on Day 9

Processed in pp#1

Veteran reduced to 0.00 on day of death

Spouse increased to $400 on day of death

Exception rule applies

6. x  (CMR – NR)  + 6  x  (CMR – NR/14)

6. x  (560 – 400)  +  6  x  (560 – 400/14)

6  x  160  +  6  x  11.428571

= 960  +  68.57

= 1028.57

Veteran gets $160  on payday #1  (8 days @ 280pf)

Spouse gets $331.42 on payday #1 (8 days @ 280pf and 6 days @ 400pf)

Example 3

Veteran dies on day 6 of PP #1

Processed in PP #2

Veteran was paid $280pf on payday #1

Spouse was paid $280pf on payday #1

7 – NEPED  x  (CMR – NR)

= 7 – 1 — x  (560 – 400)

= 6 — x — 160

= 960

Example 4

Veteran dies on day 6 of PP #1

Processed in PP #5

Veteran was paid $280pf on payday #1, 2, 3, and 4

Spouse was paid $280pf on payday #1, 2, 3, and 4

7 – NEPED  x  (CMR – NR)

= 7 – 4 — x  (560 – 400)

= 3 — x — 160

= 480

Note:   if the notification of death is greater than 28 days after the actual death then specific rules apply to the reassessment of the survivor and the date of effect of that reassessment.

Example 5

WAR WIDOW GRANT

Veteran dies on day 6 of PP #1

Processed in PP #2

Veteran was paid $280pf on payday #1

Spouse was paid $280pf on payday #1

Spouse eligible for ISS of 124.90

7 – NEPED  x  (CMR – NR)

= 7 – 1 — x  (560 – 124.90)

= 6 — x — 435.10

= 2610.60

DP

WW Arrears of 8 days x 446.80pf

Veteran DP o/p of 14 days at the DP rate

Dependent DP o/p of 8 days at the DP rate

LBP of 6 x 100%(capped)DP rate

Example 6

WAR WIDOW GRANT

Veteran dies on day 14 of PP #1

Processed in PP #2

Veteran was paid $280pf on payday #1

Spouse was paid $280pf on payday #1

Spouse eligible for ISS of 124.90

7 – NEPED  x  (CMR – NR)

= 7 – 1 — x  (560 – 124.90)

= 6 — x — 435.10

= 2610.60

DP

No WW Arrears

DP o/p of 14 days at the DP rate

No Dependent DP o/p

Example 7

WAR WIDOW GRANT

Veteran dies on day 6 of PP #1

Processed in PP #1

CMR-NR)  +  [(NDEP – 1)  x  (CMR-NR)/14]

= 6 — x  (560 – 124.90)  + [(9 – 1) x (560 – 124.90)/14

= 6 — x — 435.10  +  (8 x 31.08)

= 2610.60  +  248.64

= 2859.24

DP

No WW Arrears

No Veteran DP o/p

No Dependent DP o/p

LBP of 6 x 100% (capped) DP rate

Example 1

Veteran on 416.30 (max single rate)

Spouse on 416.30

Spouse New Rate 416.30

Veteran dies day 6 and processed in period #2

Veteran received on pday#1 — 14 days @ 29.7357  416.30

Spouse received on pday#1 — 14 days @ 29.7357  416.30

Spouse receives next 6 pays — 6 x 416.30 — 2497.80

[7 – NEPED x (CMR – NR)]  -  {[(CSR – CMR)  x  NEPED] –
[(CSR – CMR)/14 x (14 – NDEP)}

=6 x 274.70-(141.60 – 50.57)

=1648.20- 91.03=1557.17

Total paid for 7 fortnights 4887.57

Example 2

Veteran on 416.30

Spouse on 416.30

Spouse New Rate 416.30

Veteran dies day 6 and processed in period #3

Veteran received on pday#1,2 — 28 days @ 29.7357  832.60

Spouse received on pday#1,2 — 28 days @ 29.7357  832.60

Spouse receives next 5 pays — 5 x 416.30 — 2081.50

[7 – NEPED x (CMR – NR)]  -   {[(CSR – CMR)  x  NEPED] – [(CSR – CMR)/14 x (14 – NDEP)}

=5 x 274.70- (283.20 – 50.57)

=1373.50-232.63=1140.87

Total paid for 7 fortnights 4887.57

Example 3

Veteran on 421.80 (max single rate)

Spouse on 421.80

Spouse New Rate 124.90 (War Widow and ISS)

Veteran dies day 12 and processed in period #2

Veteran received on pday#1 — 14 days @ 30.1286  421.80

Spouse received on pday#1 — 14 days @ 30.1286  421.80

Spouse receives next 6 pays — 6 x 124.90   749.40

[7 – NEPED x (CMR – NR)]  -   {[(CSR – CMR)  x  NEPED] – [(CSR – CMR)/14 x (14 – NDEP-1)}

=6 x 579.30-(139.40 – 119.49)

=3475.80-19.91=3455.89

Total paid for 7 fortnights 5048.89

Example 4

Veteran on 421.80 (max single rate)

Spouse on 421.80

Spouse New Rate 124.90 (War Widow and ISS)

Veteran dies day 12 and processed in period #1

Use War Widow Exception rule

6 x CMR – NR + {(NDEP-1) x CMR – NR/14}

=  6 x 704.20 – 124.90  +  2 x 41.38

=  6 x 579.30  +  82.76

=  3558.56

Veteran paid 12 days @ 30.1286  361.54

Spouse paid 12 days @ 30.1286  361.54

Spouse (WW) paid 2 days @ 8.9214    17.84

Spouse gets 6 payments @ 124.90  749.40

LBP3558.56

TOTAL paid over 7 pays5048.88

Overview

The following scenarios demonstrate how the rules apply regardless of when the case is processed.

For each scenario the total of all payments (not including DP) made for the Bereavement period is the same.

For all following scenarios the veteran and spouse were on 266.55 AP and 2.90 PA.  The reassessed rate for spouse is 300.70 AP and 5.80 PA

Clarification – weeks vs days

Note that the Centrelink legislation talks in terms of weeks while in DVA we use days and days are the figure included in the reports.

6 weeks equals 84 days.

The scenario calculations follow the Social Security Law and use weeks.

Scenario 1

Veteran dies day 3 of pp#1.  Processed in pp#1.

Veterans AP is stopped from day of death and spouse is reassessed from day 3.  Payments are passed to RECORD and CRASS with no arrears calculated.

Veteran receives on pday#1 — 2 days @ 19.2464    38.50

Spouse receives on pday#1 — 2 days @ 19.2464    38.50

Spouse receives on pday#1 — 12 days @ 21.8928  262.71

Spouse receives next 6 pays — 6 x 306.501839.00

              2178.71

BP=6 x CMR – NR**

=12 x (CMR-NR)/14 — 6 x 232.40=  1394.40

=12 x 232.40/14=  199.20

              1593.60

Total paid for 7 fortnights 3772.30

(266.55 + 2.90) x 2 x 7 = 3772.30

Display on Processing Report

Scenario 2

Veteran dies day 3 of pp#1.  Processed in pp#2.

Veterans AP is terminated from day of death and spouse is reassessed from day 3.  Payments are passed to RECORD and CRASS with no arrears or overpayment calculated by CRASS.

Veteran received on pday#1 — 14 days @ 19.2464  269.45

Spouse received on pday#1 — 14 days @ 19.2464  269.45

Spouse receives next 6 pays — 6 x 306.501839.00

              2377.90

BP =6  x CMR – NR**

=6  x 232.40 — 1394.40

Total paid for 7 fortnights 3772.30

Display on Processing Report

Scenario 3

Veteran dies day 3 of pp#1.  Processed in pp#4

Veterans AP is terminated from day of death and spouse is reassessed from day 3.  Payments are passed to RECORD and CRASS with no arrears or overpayment calculated by CRASS.

Veteran received on pday#1,#2 & #3 — 42 days @ 19.2464  808.35

Spouse received on pday#1,#2, & #3 — 42 days @ 19.2464  808.35

Spouse receives next 4 pays — 4 x 306.501226.00

                                                        2842.70

BP = 4 x CMR – NR

=4 x 232.40                                929.60

Total paid for 7 fortnights 3772.30

Display on Processing Report

Scenario 4

Auto WW grant.  Veteran dies day 3 of pp#1.  Processed in pp#2.

Veterans AP is terminated from day after death and spouse is reassessed as WW and ISS from day 4.  Payments are passed to RECORD and CRASS with no arrears or overpayment calculated by CRASS.

Veteran received on pday#1 — 14 days @ 19.2464  269.45

Spouse received on pday#1 — 14 days @ 19.2464  269.45

Spouse receives next 6 pays — 6 x 124.90  749.40

BP = 6 x CMR – NR**

=6 x 414.00 — 2484.00

Total paid for 7 fortnights 3772.30

Display on Processing Report