Both you (and your partner) might owe Centrelink more than you think after you receive compensation.
Seeking compensation for an injury you’ve suffered is natural enough right – you’ve lost income, you have medical bills, you’ve been struggling with making ends meet. At some point along the way, you applied for Centrelink because the cost of the injury is becoming hard to afford.
Now you’ve reached the point where you might be about to get compensation for your time off work – that’s great news! Then you get sent a hefty bill from Centrelink.
Barry is earning about $40,000.00 per year, but gets injured at work and has to take time off. His employer disputes that the injury is work-related, and Barry receives no money. For a while Barry is preoccupied with his recovery and treatment, but realises he will need income and so applies for Centrelink. He begins to receive $290.00 per week, and manages to scrape by for the next 12 months. Eventually Barry realises his injury is not improving so he consults a lawyer. The lawyer makes a successful claim for workers compensation, 12 months after Barry’s original injury at work.
Barry is back paid 12 months’ worth of lost income, which is about $32,000.00. Barry is overjoyed with this result and after repaying some long standing bank loans decides to invest the rest of the money. Barry then realises he needs to tell Centrelink that he no longer requires their payments as he will continue to get weekly payment of workers compensation, and contacts them.
Centrelink doesn’t just stop his payments – they also send Barry a bill for $15,080.00, which Barry no longer has on hand.
Most Centrelink benefits are calculated on the basis of income and assets tests – if you have received compensation to replace lost income for a specific week, even years later, that is counted as “income” for that period, and Centrelink may need to be repaid. Many areas of compensation include payment for lost wages, or “economic loss” so if you have been compensated for a period during which you received a Centrelink Benefit, you will need to contact Centrelink to ensure you not owe any money.
Perhaps Barry shouldn’t have made a claim?
Compensation will generally be greater than Centrelink benefits, so it is generally worth making a claim for compensation. Some compensation can include a “non-economic” component, which does not affect Centrelink payments. In the above case study, Barry was only earning a small amount from Centrelink. Barry could have paid back Centrelink and still received about $16,000.00 for the past year, in addition to continuing to receive weekly payments of some $600.00 per week for the foreseeable future. Barry got into trouble because he used all his money before consulting with Centrelink about what he owed. Ideally, Barry would have alerted Centrelink before receiving his settlement and Centrelink would have taken a portion out of the compensation money before it even got to Barry. Barry would then be free to use the remaining amount however he chose.
I’m seeking compensation and I’m on Centrelink – what do I do?
Tell your lawyer you are on Centrelink. Your lawyer can assist you in filling out the proper forms and ensuring that any settlement of compensation you receive will not be subject to any additional debts or repayments. If it always worth checking to see what kinds of compensation you may be entitled to. Call Peter Moore, Compensation Lawyer now on 4324 7699 to find out where you stand.