Centrelink compensation information for lawyers and insurers
You need to tell us if you’re handling a compensation case for someone that gets a Centrelink payment from us.
Who it applies to
You need to tell us about a compensation case you’re handling if the person gets a Centrelink payment from us and you’re either:
- a lawyer
- an insurance company, or
- someone paying compensation.
Why you need to tell us
Compensation can affect the amount of Centrelink payment someone or their partner gets from us. If you give someone that gets a Centrelink payment a compensation payment, we may have to adjust their payment.
If you don’t tell us about the compensation, we may pay them too much and have to stop their payments.
How it affects payments
A compensation payment can affect a Centrelink payment. The affect on the payment depends on the type of compensation payment they get.
If they get a periodic compensation payment such as weekly workers compensation, it will reduce a Centrelink payment dollar for dollar. This could also affect their partners’ Centrelink payment.
Arrears of a periodic payment
If they got a lump sum amount of arrears for a periodic compensation payment and a Centrelink payment for the same period, they have to pay the money back. They’ll need to pay back the difference between both the total amount of the Centrelink payment:
- they or their partner got
- we would have made had the periodic compensation payments been made throughout that period.
Doug got $1,250 in Centrelink income support payments while he was waiting for his regular compensation payments to begin. When Doug’s regular compensation payments started he was also owed a compensation arrears payment of $2,000 for the same period he got the Centrelink income support payments. Doug’s insurer had to repay $1,250 of the compensation to us because of the dollar for dollar rate reduction and Doug got to keep the remaining $750.
Lump sum payment
If they get a lump sum compensation payment, they can’t get a Centrelink payment.
If they get more than 1 lump sum payment for the same compensation event and any of the lump sums have an economic loss part, we’ll treat them as a single payment. We’ll then use the combined total to calculate the preclusion period.
If they get a lump sum by consent as settlement of a claim that relates to lost earnings or lost capacity to earn, 50% of the gross lump sum payment will be the compensation part. We’ll then use this to calculate the preclusion period.
If a court or tribunal awards compensation after a full and contested hearing, we’ll use the court’s ruling of the lost earnings or lost capacity to earn to determine the compensation part of the lump sum.
They can’t get a Centrelink payment until the end of the preclusion period.
We calculate the number of weeks in a preclusion period by dividing the compensation part of the lump sum payment (in most cases this will be 50% of the lump sum) by the cut off limit for a single rate pension under the income test that applies at the date of settlement.
What to tell us
Tell us if you’re handling a compensation case for someone that gets a Centrelink payment from us. If their compensation case is for any of the following:
- a work related illness
- an injury from a car accident
- an injury from slipping or tripping
- an injury because of the negligence or fault of someone else
- getting less sickness or accident policy payments because of payments from us.
It covers lost income in Australia and overseas.
You don’t need to tell us if the compensation case is for any of the following:
- statutory criminal injury compensation payments
- payments to dependants for the death of a person
- unlawful dismissal payments
- anti-discrimination payments
- payments they get if they’re affected by a natural disaster.
How to tell us
Compensation payers or insurers can tell us by completing either:
- Advice of lump sum compensation payments form for lump sum payments
- Advice of periodic compensation payments form for periodic payments.
If you’re paying periodic payment arrears with a lump sum, use the advice of periodic compensation payments form.
You can estimate the impact of a pending compensation claim for someone who gets a Centrelink payment from us using the compensation estimator.
We have legislation that relates to compensation for people that get Centrelink payments from us.
Read the Social Security Act 1991 - Section 17, Part 3.14: Compensation Recovery on the Department of Social Services website.
Organisational Nominee Online Services
You can use our online services to do your business with us. You can also do business with us for someone you act as a nominee for. This can be either a payment nominee or a correspondence nominee.
Read more about the Organisational Nominee Online Services.
Page last updated: 28 October 2019
This information was printed 4 July 2020 from https://www.servicesaustralia.gov.au/organisations/business/services/centrelink/centrelink-compensation-information-lawyers-and-insurers. It may not include all of the relevant information on this topic. Please consider any relevant site notices at https://www.servicesaustralia.gov.au/individuals/site-notices when using this material.