If you make a claim for compensation for injuries sustained in a motor vehicle, workplace accident, or in a public place, any damages received in settlement of your claim may affect your Centrelink payments – even if you were receiving these payments before you were injured.

When making a claim for personal injuries, economic loss is often the largest part of the claim. Economic loss is the compensation an injured person receives for any reduction in their past or future earning capacity, as a result of their accident related injuries. Because your lost income is part of your compensation, you will have to refund some or all of the Centrelink payments received since your accident – regardless of whether you accessed these benefits as a result of your injuries. Depending on the size of your settlement, you may also be precluded from receiving Centrelink benefits in the future.

Compensation Recovery

The principle behind refunding a portion of your compensation to Centrelink is the idea that you cannot ‘double dip’: if Centrelink has made payments to you while you are unable to work, and you then receive compensation which includes compensation for loss of income, you have essentially been paid twice. A refund is therefore payable to Centrelink.

Upon settlement of your claim, the insurer will inform Centrelink of the compensation paid and will not transfer this money to you until Centrelink has confirmed the amount of any refund payable. Of course, if you have not been compensated for economic loss or have not received Centrelink benefits since your accident, there will be no refund payable.

What Payments are Affected?

The full list of Centrelink “compensation affected payments” can be found at section 17 of the Social Security Act 1991. However, the most commonly affected payments include, but are not limited to:-

  • a disability support pension;
  • an age pension;
  • a parenting payment (single or partnered);
  • a carer payment;
  • Jobseeker, Youth Allowance or Austudy;
  • Various other allowances and supplements.

In addition, if you owe any other government debts at the time of settlement – such as ATO debts, missed child support payments, or Centrelink overpayments, these may also be added to the amount refundable from your compensation.

Will Future Centrelink Payments be Affected?

The amount of your Centrelink refund is calculated by applying a formula to the amount of compensation you receive. By applying this formula, you will know the number of weeks of Centrelink payments you will need to refund from the date of your accident, or the date you stopped receiving weekly benefits, such as workers’ compensation payments. This is referred to as the ‘preclusion period’.

In addition to having to refund payments received from Centrelink from the date of your accident, your preclusion period may run into the future. If this is the case, your right to receive ongoing Centrelink payments will be affected. Whether or not a preclusion period applies to your Centrelink payments depends on the amount of compensation you have received.

When making a claim for compensation it is essential to consider the impact of a claim on your Centrelink benefits. For advice from an experienced personal injury lawyer on these complex issues, please contact Gail Blaber for a free chat.

Like? Share it with your friends.