LawTalk Blog

What do Medicare and Centrelink have to do with my compensation claim?

can centrelink take my compensation

Where an injured person pursues a claim for compensation arising out of an accident there may be a right of recovery by Centrelink and Medicare for any monies paid to the injured person relating to the injuries and consequent incapacity resulting from the accident.  The insurer for the negligent party cannot release any settlement funds until a discharge has been received from Centrelink and Medicare and this is a statutory obligation under the Health and Other Services Compensation Act 1995 and the Social Securities Act 1991.

Some weeks ago you may have seen our blog "Centrelink want to take some of my injury compensation", which talked a lot about how much money Centrelink might take from your settlement monies.  Today we're concentrating on the process that's followed by Medicare and Centrelink to recover monies from and injured person receiving a compensation settlement.

Right of Recovery by Medicare

During the course of an injured person's claim a request will be made from Medicare for a History Statement which will identify all of the treatment paid for by Medicare since the date of the accident.  The claimant will then need to identify the treatment items that are relevant to the accident and swear a Statutory Declaration to that effect and return it to Medicare.

Medicare will then determine its Charge which is the amount it is owed in accordance with the items identified by the claimant.  This amount is then added to the claimant's overall claim for compensation and forms part of the claim for special damages.  The Notice of Charge is valid for six months and needs to be updated every six months until resolution of the claim.  Should a valid Notice of Charge not be in existence at the time of settlement 10% of the settlement monies will be forwarded to Medicare and once Medicare determines its Charge the balance of the settlement monies will be forwarded to the claimant.

Right of Recovery by Centrelink

If a claimant has been in receipt of Centrelink payments as a result of incapacity to work following an accident, Centrelink will have a right of recovery for those payments should the claimant seek and obtain compensation for economic loss as part of the compensation claim.

The process for calculating any amount you may need to repay to Centrelink can be complex. If you feel the amount being requested by Centrelink is incorrect, you should seek legal advice.  Depending on the size of any compensation settlement sum, a claimant may only be required to make a repayment to Centrelink or alternatively, it could preclude the claimant from receiving any social security payments for a period of time into the future.

Centrelink will only assess a recovery if the compensation settlement amount included an amount for past or future economic loss.  So for example, if the settlement amount was only for the permanent impairment as a result of the injury, and no loss of wages, there would be no requirement to pay Centrelink back, however although not necessarily subject to the 50% rule, a lump sum payment will most likely affect an injured person's entitlement to ongoing social security payments and there is an obligation to advise Centrelink of any compensation payment received.

As we've previously advised, Centrelink and Medicare repayments can be complex.  It's important that you seek experienced legal advice if you receive settlement monies and either of these agencies is seeking reimbursement of payments they have made to you.

The intention of this legislation was to ensure that injured persons did not "double dip", both from the compensation payer and from Centrelink, and be compensated twice for their inability to earn income.


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Get in touch with today's blog writer:
Suzanne Pinyon

Partner in Personal Injury

Please note, this Blog is posted in Adelaide, South Australia by Andersons Solicitors. It relates to Australian Federal legislation. Andersons Solicitors is a medium sized law firm servicing metropolitan Adelaide and regional South Australia across all areas of law for individuals and businesses.

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