TAC compensation and Centrelink

Anyone that decides to pursue a TAC claim after transport accident needs to understand how a TAC claim can impact the payment of Centrelink benefits.

Sometimes, people will pursue a TAC claim and receive a lump sum settlement, and then learn that they’re no longer entitled to Centrelink benefits for a period of time.

Impairment claims

If you suffer a permanent impairment as a consequence of a transport accident in Victoria, regardless as to whether someone else was at fault for the accident or not, you are able to pursue an impairment claim.

You can read all about impairment claims here.

The amount of compensation that you can be paid under an impairment claim depends upon your overall whole person impairment rating.

This whole person impairment rating is based on assessments by doctors that assess any injuries that you suffer in the accident.

Any impairment benefit lump sum payment will not have an impact on the payment of Centrelink benefits.

So this means that if you are in receipt of Centrelink benefits, an impairment benefit will not cause those benefits to be terminated or reduced.

Further, you would not be required to repay any money to Centrelink out of the lump sum.

One potential way that an impairment benefit could impact payment of a Centrelink benefit is if the particular Centrelink benefit that you are receiving is means tested and if the TAC payment that you receive puts you over the necessary threshold level required in order to obtain the Centrelink benefit.

Common law payments for pain and suffering only

If you have suffered an injury in a transport accident that was caused by someone else’s negligence, you can potentially pursue a claim for common law damages.

You can read more about these here.

In order to succeed in a claim for common law damages you need to show that you’ve suffered a serious injury as a consequence of the transport accident and that the accident was caused by someone else’s negligence.

You are able to be compensated for two things in a common law claim for damages.

The first is for pain and suffering in the second is for loss of earnings.

Some people that pursue common law claims are only entitled to pursue a claim for pain and suffering and not loss of earnings because they do not have any loss of earnings as a consequence of the accident.

If you resolve a common law claim for damages for pain and suffering only, then like an impairment claim, generally speaking, there should be no impact on any Centrelink benefits.

You should not be precluded from receiving Centrelink benefits as a consequence of resolving a claim for pain and suffering.

As above however, some compensation can still count towards the assets which Centrelink can include when working out a persons entitlement to Centrelink benefits.

To work out whether a pain and suffering lump sum will impact your entitlement to Centrelink because of the assets test, you should insure to contact Centrelink before resolving your matter so you can make the appropriate plans regarding your finance is moving forward.

Another thing to keep in when it comes to pain and suffering only settlements is that there could be a preclusion period where you are not able to receive Centrelink benefits where the pain and suffering settlement is in reality a settlement for pain and suffering and loss of earnings.

If the settlement amount does not match up to the injury, in some instances Centrelink may not accept the settlement as being one for pain and suffering only.

Common law claim for pain and suffering AND loss of earnings

As referred to above, some people who pursue common law damages claims are able to be compensated for both pain and suffering and loss of earnings.

In contrast to the payment of pain and suffering damages only, when a matter is settled that also involves economic loss, this will likely impact your entitlement to Centrelink benefits.

Your entitlement to the payment of Centrelink benefits will likely be precluded for a period of time into the future.

The period that you’ll be precluded from receiving benefits for is worked out using a special formula.

It is dependent upon the amount of compensation that you are awarded.

So generally speaking, the greater the settlement amount that you receive the longer you’ll be precluded from receiving Centrelink benefits.

Depending upon the amount of the settlement, you could be precluded from receiving Centrelink benefits for a number of years.

This is because when you receive a settlement for economic loss damages, this portion of the settlement is considered to be income.

From Centrelink’s perspective, the compensation that the TAC pays you for loss of earnings is likely to have been compensation for the same periods of lost income that Centrelink benefits were being paid.

TAC and the reinstatement of income replacement benefits

If your entitlement to income replacement benefits have been terminated, you’re able to challenge that via internal review, a dispute application or via VCAT.

The outcome of such a review can mean that you resolve your matter for backpay of weekly payments that you would’ve been paid been had your payments not been terminated.

In such a case, if you were receiving Centrelink benefits during the time that your payments were terminated, you’ll need to pay back Centrelink dollar for dollar any money that you received.

So for example, let’s say that the TAC terminated your income benefits and you didn’t get back on income benefits for a period of four months.

During those four months you’re in receipt of Centrelink benefits and not TAC payments.

You would need to pay Centrelink back dollar for dollar, any money that you received from them during this period.

This is usually okay as the injured person on TAC payments will generally receive more on TAC compared to Centrelink benefits.

If this does apply to you and you need to pay money back to Centrelink, the TAC will manage this on your behalf and you will not need to take any action to repay the money.

Further tips:

You should be vigilant about making sure that you are getting paid appropriately.

That is, you should make sure that if you are just entitled to TAC benefits, that you are not also obtaining Centrelink benefits. Mistakes can happen but you just need to be careful not to double dip when it comes to the payment of benefits.

If you are not sure, you should seek legal advice or contact the TAC and/or Centrelink.

If you have been getting paid Centrelink payments whilst you are in receipt of TAC payments, it is possible that Centrelink will seek repayment of any money paid to you, either via the TAC or directly from you.