Compensation Recoveries and Centrelink Preclusion Period

Being in an accident can leave you unable to work and without your usual income.  If you do not have income protection insurance or enough sick leave entitlements you might apply to Centrelink for Income Support Payments to cover the costs of living.  If you get Centrelink Income Support Payments  then those will need to be dealt with at the time of settling your personal injury compensation claim. Because you claim lost wages as part of your settlement, Centrelink will want their payments refunded. In particular when you settle your compensation claim you must keep in mind the Centrelink Compensation Recovery and the Preclusion Period.  Read on:

  1. Centrelink Compensation Recovery

You cannot double dip. If Centrelink pay benefits to you in lieu of wages while you are not earning, and the Insurance Company pay compensation to you which included your lost wages, then effectively you have been paid twice. You must then refund Centrelink. At the time of settlement of your compensation claim the  Insurance Company will check to see if they are paying anything to you for lost wages, and if so, they will notify Centrelink  Centrelink. Centrelink will then calculate how much they are owed and tell the Insurance Company. The Insurance Company will not pay the settlement funds to you until they hear from Centrelink. This process can take a couple of weeks. Once the Insurance Company receives Centrelink’s assessment of the recovery amount, the Insurance Company will deduct that amount from your settlement, pay that amount direct to Centrelink, and pay the balance to  you.

  1. Government Debt Recovery

When the Insurance Company gives notice to Centrelink that you have settled  your claim, Centrelink may also look and see if you owe the government any money. If so, they will add those amounts to the amount that they want out of your compensation.   This can include missed child support payments, ATO Debts, Criminal Injuries Compensation judgements against you, Centrelink over-payments, to name just a few.

  1. Weekly Repayments Recovery

If an insurance company is paying weekly wage payments to you, for example workers compensation weekly payments, then you cannot also get Centrelink payments. That is double dipping. As soon as you start to receive weekly payments you must let Centrelink know.

  1. Your Partners Income or Payments May Be Impacted

Be aware that your partner’s income may impact the amount that you are eligible to receive from Centrelink.  You must speak to Centrelink directly about your situation.

Conversely any lump-sum payments that you receive or if you are receiving ongoing wage payments, this may affect your partners Centrelink payments. Again, speak to Centrelink directly to find out more.

Australian Money in Jar

Ensure you complete your compensation claim properly to avoid owing more than you should.

The Preclusion Period

When you settle an injury compensation claim you will usually receive a lump sum payment.  Receiving a lump sum compensation payment may affect your right to receive ongoing Centrelink payments. At the time of settlement, Centrelink will calculate the effect of the lump sum payment on when you will next be able to access weekly payments this is known as the preclusion period.

What is a Preclusion Period?

The preclusion period is the time during which you are no longer eligible to receive Centrelink income support payments.  If you are on Centrelink payments, and you are about to settle  your claim, you should ask your lawyer to estimate the effect of the settlement on your right to keep getting Centrelink payments.

In workers compensation cases the preclusion period starts from the time when your workers compensation payments stop. In car accident claims and in public liability claims the preclusion period starts from the date of your injury. Centrelink will review the amount of compensation that is going to be paid to you. That amount is divided in half, and then divided by the average wage. The calculation then gives a number. That number is how many weeks you are not entitled to get Centrelink payments. You must look at the preclusion start date, add the number of weeks, and that will tell you when you are next eligible for Centrelink payments.

 How To Calculate Any Preclusion Period?

Centrelink have provided a handy calculator to help you estimate a preclusion period.  It is an estimate only and you should always ring your support payment helpline for more information.

You Need The Following Information To Estimate Your Preclusion Period

  1. The compensation Lump Sum Payment that you are expecting, including all medical expenses, legal fees and other expenses.
  2. The Current Centrelink Divisor amount (for 2022: $1,077.60).
  3. The date of your Injury

Your preclusion period will start at the date of your accident (unless its a workers compensation claim).

So how does it all fit together?

For example, if you are expecting to get $100,000.00 in total compensation for an injury on 12 May 2021. Let’s say that you settled your claim on 12 May 2022, being a year later. And lets say that you received Centrelink income support payments for that whole year.

We go:

      • A. Gross lump sum amount: $100,000 – now divide this by 2.
      • B. Compensation amount (50% of lump sum): $50,000 – use this for our calculation below
      • C. Divisor amount: $1,077.60 (in 2022)

Now we are ready to work out the number of weeks:

      • 50,000 divided by  1,077.60 = 46.39    We round this down to 46 to get the number of weeks
      • Estimated preclusion period (in weeks):      46 weeks
      • Start date:                                                                  12 May 2021
      • Add 46 weeks to get the End date:                    30 Mar 2022.

Your preclusion period would be 12 May 2022 to 30 March 2022.

So in our example because the claim settled after 30 March 2022 you should be able to continue receiving Centrelink support after settlement.  But, always check with Centrelink. But the Insurance Company will check with Centrelink to see if you owe them anything. Centrelink will see that you received support in the period 12 May 2021 to 30 March 2022, and the Insurance Company will need to pay Centrelink out of your lump sum. For example, if you were getting $500/fortnight: $250 week x 46 weeks = $11,500. $11,500 will be deducted from your lump sum.

But the more compensation you get paid, the longer the preclusion period.  Let’s say you get $200,000 as a lump sum compensation. Using the same formula your preclusion period becomes 15 February 2023. That means that you will not get Centrelink payments for over a year from the date when you settled your claim.

Will I have to Pay Centrelink Back?

You can use the preclusion period to see when you will be eligible to claim Centrelink payments again. You can also check your bank statements to estimate how much you owe Centerlink: check if Centrelink paid you anything in your preclusion period. If yes, then add up all the amounts received. That is an estimate of how much Centrelink will want to recover from your lump sum compensation.

When you settle your compensation claim for an injury caused you need to consider whether Centrelink will take money out of your settlement sum, and whether you can continue to get paid Centrelink payments.  Chat to someone with lots of experience for advice on where you stand.  Lian Hall Injury Law have the experience to help you with your compensation claim and ill help you to navigate this complex area of injury compensation law.