Over 70s medical cards means test -interest on savings

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The Ghoul

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I have some relatives aged over 70 whose income from pensions and deposit interest is close to the limit for a medical card and they are slightly worried having read about a clampdown in today's papers.

The limit for a married couple is 1400 per week gross income. And the quote below describes how depost interest is treated

Savings or similar investments of €36,000 for a single person and €72,000 for a couple are disregarded. A notional rate of interest will be applied to the balance.
  • The notional rate will be set by the HSE quarterly, by taking an average of the current deposit interest rates of a number of the major Irish banks and building societies on 1 January, April, July and October.
  • Alternatively where the applicant wishes he/she can have the actual rate applied if he/she provides a certificate of interest paid on savings in the last full calendar year and the HSE will apply this method of assessment.
  • In the case of fixed term or long term savings products, where the interest is only applied at the end of a fixed period, if you wish, the HSE will only take account of the interest earned on the date the investment matures. The calculation of interest includes Deposit Interest Retention Tax. Again, the HSE can apply the notional rate if the applicant wishes.
In essence, only the interest or income earned on savings and similar investments will be counted as income, not the total value of the savings or investments themselves.
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I have a couple of questions on this.

1) I presume that moving savings from a deposit account to a current account to reduce interest income is a perfectly acceptable way of reducing one's income for the means test?

2) How are State Savings certs and bonds treated? I presume that as no DIRT or other tax is payable on these, the "net" interest rate is what would be used for the calculation, not some theoretical "grossed up" rate?

3) How are prize bonds treated - they don't pay interest. Would any prizes won count as income for the means test?
 
On basic reading of their calculation it seems they will apply a notional rate to savings as the default unless you want the actual interest to be used. I doubt the moving of the money to a non-interest bearing account would work to reduce income as it would be fairly obvious that was the reason.
 
wbbs said:
I doubt the moving of the money to a non-interest bearing account would work to reduce income as it would be fairly obvious that was the reason.
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A person is not hiding anything by moving money to an account which pays little or no interest, they are forgoing income and income is the only thing that matters for the over 70s medical card means test.

Similarly a person could own numerous properties but if they are not bringing in rent then they are not relevant for this means test.

Thinking more on this the State Savings products that are not liable for DIRT are attractive for this means test. Someone with 100k in certs would have average interest of of around 3500 p.a over the term. Assuming that the average is used, 3500 would be the income for the means test.

Whereas someone who opens a bank account and who isn't DIRT exempt would have to get 5.04% AER to get 3500 net in interest. Yet for the means test the figure used would be the gross interest figure i.e. 5040.
 
I find the simplest way of doing this is to send in copies of statements of all savings and let them calculate the interest. They have been using a rate of around 3% overall, so you may win some or loose some depending on the rate you are actually getting.

I would attach a covering letter listing the enclosures and their Account numbers and keep copies.
 
There has been speculation that the threshold for the over 70s medical card for a married couple will be reduced from 72,000 to 60,000 (yesterday's Indo) or 52,000 (Sunday papers). Personally I believe that a change in the threshold in Budget 2013 is very likely.

As a result I am revisiting this thread and was wondering if anyone has any further thoughts on whether prize bond prizes count as "income" for the medical card means test (or for means tests generally)

In my experience many older people are unaware that gross deposit interest is income and could put them over the limit for the over 70s medical card.
 
It's the kind of attitude displayed here that means that all benefits to older people should be looked at properly.

Is it really fair that people with very significant income get free medical cards?

I'd rather younger people with children (neither of which applies to me) get free medical care rather than people who likely have no mortgage payments and huge disposable income get it.
 
Do your friends have major medical expenses that they are finding it difficult to cover. If so they should include them in any review.

There does not appear to be any mention on their site on how Prize Bonds are calculated if at all. However I would be surprised if they ignored them.
 
Black Sheep said:
Do your friends have major medical expenses that they are finding it difficult to cover. If so they should include them in any review.
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Yes, major expenses, but they should be fairly ok without the medical card or with a GP only card as long as the Drug Payment Scheme continues as is.

One individual is in a public nursing home and paying around 30k per year under the Fair Deal scheme. If they lose the medical card and are under the Drug Payment Scheme then it looks like it'll be another 132 per month assuming all medicines, dressings (expensive) etc. are covered by the DPS. They also need regular physiotherapy so that may be an additional expense.
 
With that level of medical expenses their savings are possibly dropping pretty fast so perhaps the budget may not affect them.

All will be revealed to morrow.
 
Are you sure you have done the calculations for the medical card fully.

With the new ceiling announced to day a couple can still have (for example) a pension of 50,000 and almost 500,000 in savings and still be entitled.

Obviously if the pension is greater than the above the allowance for savings will be smaller.

If the pension is smaller the allowance for savings will be greater.
 
100% sure on the calcs. The sample figures you have posted for pension and savings are very close to the actual figures in one case.
 
Can anybody confirm that the notional interest rate being used for savings and investments is still 3%? do they publish the rate ?
pjq
 
I am hoping to renew my medical card. I am 60. Our savings and investments are just within the limits except for an amount my wife was paid by the Cotter McDermott decision. She had to give an undertaking not to discuss the matter. Now to obtain the card she may be forced to reveal the settlement, the amount and may have to resort to legal action. Any advice.
 
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I was under impression that the state contributory pension was taken into account for income purposes when looking for a medical card, listening to radio this morning on the topic of pensions it did not mention that the state pension is taken as income. I am a it confused!
 
I think what confused me was that in the income guidelines it is stated that Social welfare payments are not taken into account and a list of such payments are detailed. However on the Application form there is a box for Social welfare payments which included State pension. I think people of a certain vintage regard the state pension as a social welfare payment and hence the confusion
 
As you are renewing your medical card are you therefore stating that your wife's award has been received recently (since your last renewal).

There is no reason why she must state where she got this money, just that it now appears in her bank account or perhaps she may even have spent some of it.

As I have no idea how much she received would she still be entitled to a GP card
 
Have been in touch with the HSE and they tell me the rate of interest they are using at the moment is 2.3% but perhaps if I phoned to morrow I may not get the same answer, I never trust phone calls from public bodies.
The website still says 3%
 
"3) How are prize bonds treated - they don't pay interest. Would any prizes won count as income for the means test?"

Does anybody have any updated information on treatment of prize bonds?
 
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