Income Tested Benefits for Seniors
There are many benefits mostly related to seniors that are income tested. The higher your income the less benefit you receive. There are three main ones: Guaranteed Income Supplement, Pharmacare, and Personal Care Home fees.
Guaranteed Income Supplement GIS
This benefit is part of the Old Age Security (OAS) program and provides additional monthly income to low-income seniors.
The most common supplement is for those 65 and older. Generally, individuals who earn less than $21,000 (excluding the actual monthly OAS) will qualify for some payment. Couples need to earn less than $28,000.
There is also a similar benefit for widows and widowers who are 60-65 who have low income, approximately less than $28,500.
And a third program is for couples when one is over 65 and the other is under 65. The income level for this group is about $39,000.
You only need to apply for the Guaranteed Income Supplement once.
Each July, the GIS is recalculated based on the previous year’s net income. Most seniors received a letter in July 2023 advising the new amount that would be paid at the end of July for the next 12 months. The amount stated on the letter is the combination of the basic OAS and the GIS.
Generally, as your income increases, the benefits decrease. But there is an exception to employment income. You can earn up to $5,000 per year with no impact on your GIS payment. And income $5,000 to $15,000 there is some reduction. Once employment (or self-employment) income is over $15,000 it fully impacts the GIS monthly payment.
If you have some savings and earning interest, you would be better off moving some or all of the savings to Tax Free Savings Accounts so your GIS is not affected.
There are times when you can request a reconsideration of the GIS payment. One common one is when a surviving spouse receives the $2,500 CPP death benefit on the death of their spouse. We can request the $2,500 income be removed from the calculation. We help many clients with this request each year.
And if your income has dropped because you stopped working or your pension income stopped or decreased, you can also request an adjustment to the GIS.
Pharmacare
The Manitoba Pharmacare program is another government benefit that is based on net income. Once you reach your calculated deductible, then future prescription costs will be covered by Manitoba Health for most prescriptions.
Once you have applied for Pharmacare (and you only need to apply once), each April you will receive a letter advising you of your new deductible. It is based your individual or family income two years earlier. The Pharmacare year April 2023 to March 2024 is based on your family’s net income from 2021.
If your income has dropped between 2021 to 2023 by more than 10%, you can request the deductible be reduced and based on your lower net family income.
This is also a form we help many clients every year. Often we identify them as we are filing their taxes and notice a drop in their income, and others approach us for help.
Personal Care Home Fees
The Manitoba personal care home fees are also income tested and based on your family income. As your income increases or decreases, so does the personal care home fees.
The fees are recalculated each August based on the individual or family income from the previous calendar year.
Generally, an individual does get to keep about $380 per month for other personal costs like clothing, hair care, foot care, and dental. Most prescriptions are included in the cost you pay for the personal care home services.
Adjustments can be requested if family income has decreased substantially from one year to the next.
For example, say you incurred a large capital gain in 2022 and now your personal care home fees have increased. You can request a reduction.
If one spouse is living in a personal care home and one spouse is still living independently, there are calculations made to ensure the spouse living in the community lives comfortably. But if the family income is low, the spouse living in their own home, may not be able to continue to live there and may need to find new accommodations like subsidized housing.
If you or your family find yourself in a situation where your income has reduced substantially and you need help with any of the above income tested government benefits, please contact our office.
Anni Markmann is a Personal Income Tax Professional and Certified Financial Planner; living, working, and volunteering in our community. Contact Ste Anne Tax Service at 204.422.6631 (phone or text!) or 36 Dawson Road in Ste Anne (near Co-op) or info@sataxes.ca