If you have brought a claim for weekly compensation arising from a physical or psychological injury sustained in the course of your employment or you have made a work injury damages claim against your employer, you will need to know about Centrelink and how they are involved in your claim. So let’s dive in!
When does Centrelink become involved?
Centrelink becomes involved in your personal injury claim if you are receiving or have previously received income support payments from Centrelink (since the date of your injury), and you receive a lump sum or an arrears of periodic compensation payment that includes a component for lost earnings or loss of earning capacity (as the lawyer’s like to call it, a claim for weekly payments or an economic loss claim).
What type of income support payments are affected by a settlement?
Income support payments and concession cards which are affected by a compensation settlement include:
- Age pension
- Austudy
- Carer payment
- Disability Support Pension
- Farm Household Allowance
- JobSeeker Payment
- Parenting Payment
- Special Benefit
- Youth Allowance
- Low Income Health Care Card
If you received payments such as a Carer Allowance, Mobility Allowance, Family Tax Benefit and other family assistance payments then they are not affected, and you can continue to receive these benefits if you are eligible.
What do I do if this is me?
If this is you, the insurer and/or your lawyer will need to notify Centrelink of your lump sum or periodic compensation payment shortly after a settlement agreement has been reached.
What is a lump sum compensation payment:
A lump sum payment can be made up of medical expenses, economic loss, non-economic loss or general damages, solicitor’s costs, pain and suffering and impairment.
If the lump sum compensation payment includes a component for lost earnings or loss of earning capacity, then there may be a preclusion period and charge from Centrelink. The Insurer is unable to release the settlement sum to you until they have received a Centrelink Clearance about any applicable payback. This can take a couple of months to sort out, so settlement monies will not be paid straight away.
What is a periodic compensation payment:
A periodic compensation payment is typically considered a weekly benefit or weekly payment of compensation from the Insurer for lost earnings. If you receive a lump sum payment for periodic compensation in arrears (i.e. you received a lump sum from a successful weeklies back pay claim), then you will be required to either repay some or all of the income support payments you received from Centrelink for the same period. The pay back for periodic payments are generally determined as a dollar-for-dollar reduction to your income support payment.
What is a Centrelink Clearance?
A Centrelink Clearance is a notice setting out the length of time you are unable to receive income support payments from Centrelink, as well what amount you are required to repay Centrelink, if any, out of your settlement sum.
If there is a Centrelink charge, then the Insurer will not pay your settlement monies until Centrelink has issued a Clearance and advised of any applicable preclusion period. The process can take a couple of months and can occasionally be fast tracked in limited circumstances such as if you are experiencing financial hardship. It is not always guaranteed that the Clearance will be processed faster, and you will need to speak with Centrelink directly.
If your compensation payment does not include a component for lost earnings or you have not received any income support payments from Centrelink, then Centrelink has no interest in the compensation payment and will not need to issue a Clearance.
What is a preclusion period?
As mentioned above, the preclusion period is the period where you are not eligible to receive income support payments or concessions from Centrelink because you have received a settlement amount to compensate you for your lost earnings or loss of earning capacity.
The preclusion period can affect your past and/or future eligibility for income support payments and concessions depending on how long the preclusion period is. A compensation payment may also have an impact on your partner’s eligibility to receive income support benefits from Centrelink, so it is important that you speak with a personal injury lawyer who deals with these types of claims on a regular basis.
If you received income support payments during the preclusion period, then Centrelink will recover the amount paid to you over that period from your settlement sum. Let’s use a hypothetical scenario as an example. Say Ember suffered a work injury on 17 May 2021. She sued her employer for negligence in a work injury damages claim which settled for $400,000. She received Centrelink payments for a period after she suffered her injury. Centrelink calculated her preclusion period to be from 17 May 2021 to 1 July 2024.
Because in the above hypothetical scenario the parties were able to reach an agreement on settling the matter rather than going to hearing before a Judge, Ember’s economic loss component is deemed to be half of the total settlement sum. If Ember’s matter went to hearing before a Judge, her economic loss component is the amount awarded by the Judge. The economic loss component ($200,000) is then divided by the threshold limit for a single rate pension (at the time of writing this blog the threshold limit is $1,222.30). This calculation will give the number of weeks that Ember is precluded from receiving Centrelink payments which, as noted above, is from the date of her injury to 1 July 2024. All income support payments that Ember received from Centrelink in the preclusion period are added together to determine the payback. If Ember only got a couple of payments from Centrelink in that period, then her payback won’t be very big. But if she received a lot of payments from Centrelink then her payback will be higher depending on how much she received from Centrelink over that preclusion period. The Insurer then pays out of settlement monies the amount which Ember owes to Centrelink before the balance of the settlement sum is paid to her.
What should you do?
The Centrelink process can be confusing, so it is important you contact a personal injury lawyer that has experience in workers compensation claims. If you have any queries regarding bringing a claim for weekly compensation or work injury damages, or Centrelink’s involvement in your claim, give us a call on 1300 026 875 or contact us via our website – www.bourkelegal.com.