EXPLANATORY STATEMENT
Veterans’ Entitlements Income (Exempt Lump Sum – Manchester Unity and HCF Merger Payments) Determination
Instrument No. R7/2009
Paragraph 5H(12)(c) of the Veterans’ Entitlements Act 1986
The Purpose and Operation of the Attached Instrument
A payment is deemed not to be ordinary income for means-testing under the Veterans’ Entitlements Act 1986 (VEA) once it is stated to be an exempt lump sum by a determination under paragraph 5H(12)(c) of the VEA. The amount specified in the attached Determination at Part 2 of the Schedule as an exempt lump sum is an exempt lump sum for the purposes of the definition of ‘ordinary income’ in subsection 5H(1) of the VEA.
The attached instrument provides for the exemption of these payments from the income assessment of the person’s or the person’s partner’s service pension or income support supplement.
Background
On 19 December 2008 the Federal Court approved the merger of Manchester Unity and the Hospitals Contribution Fund of Australia (HCF). The merger is effective as of 24 December 2008.
As a result of the merger of Manchester Unity and HCF, eligible Manchester Unity members will receive an entitlement in the form of a cash payment. An eligible member is a person who held, or had applied for, a health insurance or friendly society policy on or before 27 August 2008. Payments will be made in January 2009.
The cash payment to Manchester Unity members will be made in consideration for the cancellation of their Manchester Unity membership. The entitlement of a Manchester Unity member will be calculated by reference to the type and style of policy held by the member and the time they have held their membership.
Members may also receive an adjustment to their entitlement. After all requests for reviews of entitlements have been dealt with, the balance of the merger consideration will be distributed as part of a member’s entitlement.
It is expected that the eligible Manchester Unity health fund members will receive a cash payment in respect of their health fund policy ranging from a minimum of $250 up to a maximum of $7,640, with the majority in the range of up to $3,000.
The effect of the attached instrument is that people who are in receipt of an income support pension under the VEA will not have their income support payment reduced because of receiving a one-off cash payment as a result of the merger of Manchester Unity with HCF because the cash payment will not be regarded as income for the purposes of the VEA income test.
Commencement
The Instrument is taken to have commenced on 5 January 2009. For the purposes of section 12 of the Legislative Instruments Act 2003 (prohibition on certain legislative instruments commencing before registration) the Instrument does not disadvantage any person nor impose any liabilities on any person (other than the Commonwealth).
Consultation
The Department has consulted with the Department of Families, Housing, Community Services and Indigenous Affairs (FaHCSIA) regarding this exemption. FaHCSIA has confirmed that it will also be exempting a cash payment as a result of the merger of Manchester Unity with HCF.
The attached instrument is beneficial to eligible Department of Veterans’ Affairs income support recipients because it exempts a cash payment as a result of the merger of Manchester Unity with HCF from the VEA income test. Public consultation was therefore seen as unnecessary.
Overview
The Veterans’ Entitlements Income (Exempt Lump Sum – Manchester Unity and HCF Merger Payments) Determination 2009, introduced to address the financial implications of the merger between Manchester Unity and the Hospitals Contribution Fund of Australia (HCF), was enacted to ensure that eligible veterans and their partners receiving service pensions or income support supplements under the Veterans’ Entitlements Act 1986 (VEA) would not have their payments adversely affected by lump sum cash payments received due to the merger. This instrument was introduced by the Department of Veterans’ Affairs in consultation with the Department of Families, Housing, Community Services and Indigenous Affairs (FaHCSIA) and aims to exempt these payments from the income assessment process under the VEA, thereby safeguarding the income support payments of eligible veterans. The determination ensures that the one-off cash payments, which range from a minimum of $250 to a maximum of $7,640, are not considered as ordinary income for the purposes of the VEA income test.
Scope and Application
The Veterans’ Entitlements Income (Exempt Lump Sum – Manchester Unity and HCF Merger Payments) Determination 2009 applies to eligible members of Manchester Unity who are receiving a service pension or income support supplement under the Veterans’ Entitlements Act 1986 (VEA). This legislation specifically targets individuals who held or had applied for a health insurance or friendly society policy with Manchester Unity prior to 27 August 2008, ensuring that the lump sum payments received from the merger with HCF are exempt from ordinary income for the purposes of means-testing under the VEA. The exemption ensures that these payments do not affect the income support payments of eligible veterans. The Act's jurisdictional reach is federal, impacting those who are subject to the VEA across Australia. The instrument does not disadvantage any person nor impose any liabilities on any person other than the Commonwealth, as per the Legislative Instruments Act 2003. This Determination complements the work of the Department of Families, Housing, Community Services and Indigenous Affairs, which has also agreed to exempt such payments under its jurisdiction.
Key Provisions
The Veterans' Entitlements Income (Exempt Lump Sum – Manchester Unity and HCF Merger Payments) Determination 2009 specifies the conditions under which certain payments resulting from the merger of Manchester Unity and HCF are exempt from being considered ordinary income for the purposes of means-testing under the Veterans’ Entitlements Act 1986 (VEA) (sections 1 and 2). Specifically, the determination outlines that eligible Manchester Unity members will receive a cash payment as a result of the merger, and this payment will not be counted towards the income assessment of any service pension or income support supplement provided under the VEA. This exemption is applicable to payments made in January 2009 to members who held or had applied for a health insurance or friendly society policy on or before 27 August 2008.
The obligations under this Act are primarily directed at the Department of Veterans’ Affairs and eligible members. The Department of Veterans' Affairs is responsible for ensuring that the payments made under the terms of this determination are correctly identified as exempt lump sums and that they do not affect the income assessments of eligible pensioners. Eligible members, on the other hand, need to ensure they meet the eligibility criteria, such as holding a relevant policy by the specified date, to qualify for the payment. Both parties must adhere to the calculation methodology specified in the determination, which is based on the type and duration of the policy held by the member.
Failure to comply with the provisions of the Veterans’ Entitlements Act 1986 or the determination could result in legal consequences. Although the explanatory statement does not explicitly detail offences or penalties, breaches of the VEA typically lead to civil or criminal penalties, depending on the nature and severity of the breach. Civil penalties can include fines, while criminal penalties may involve imprisonment, reflecting the seriousness of non-compliance with legislative requirements designed to protect the rights and entitlements of veterans and their families. The exact penalties are determined by the relevant sections of the VEA and applicable laws governing administrative penalties.