Hot! Support for seniors

FinancialPost.com – Opinion – As part of an ongoing series on seniors and debt, Jonathan Chevreau looks at some provincial benefit programs for low-income seniors.
Saturday, Jul. 31, 2010.   Jonathan Chevreau, Financial Post

While the lion’s share of support for low-income seniors comes from federal programs, most provinces have top-up programs to provide extra support to those receiving the Guaranteed Income Supplement (GIS).

The provincial benefits kick in automatically through the tax system, except in Alberta and New Brunswick, where you must apply. Manitoba is unique in offering supplements to those as young as 55.

The benefits are usually automatic to those receiving the Old Age Security (OAS) Allowance as well, which goes to the spouse or common-law partner (aged 60 to 64) of a 65-plus senior receiving OAS and GIS.

No central source pulls this information together, so finding the various provincial programs was a bit of a hunt. The accompanying chart shows the programs I could dig up, with a little help from the folks at Canadian Association of Retired Persons (CARP).

Even in provinces that don’t augment the GIS, there may be programs to help seniors defer property taxes or help with dental, medical or drug expenses. Alberta, for example, provides low-income seniors with both dental and optical assistance.

Susan Eng, vice-president of advocacy for CARP, says provincial topups help the 4.4% of Canadian seniors living under the low-income cutoff, a measure of “abject poverty.” For those living in Toronto, the cut-off is $18,000; it can be less in rural areas.

Ms. Eng says those with income as high as $15,672 may qualify for GIS and some of these top-ups. The formula is complicated: Take income from all sources, including the Canada Pension Plan, but excluding Old Age Security. Subtract that from $15,672, then divide it in half. The result is how much you should get in GIS benefits.

As of July 1, the monthly maximum OAS payment became $518.51 for a single person and $1,037.02 for a couple. The maximum GIS benefit is $654.47 for a single and $864.38 for a couple. OAS and GIS maximums rose only 0.3% this year.

The Canadian Labour Congress’ senior economist, Sylvain Schetagne, argues GIS needs to be boosted by 15%, and there needs to be a doubling of CPP benefits.

Provincial top-ups are usually linked to federal ones. In some provinces, the availability of drug plans depends on also receiving GIS, so those not getting GIS to which they are entitled are getting hurt twice. In others, the income threshold for topups is higher than for GIS. The cutoff for Newfoundland’s Low Income Seniors Benefit for couples is now up to $26,165. But in Manitoba, to get the maximum, you can’t make more than $8,930 and nothing is paid out if you make over $9,722.

Alberta’s appears the most generous: A maximum yearly benefit of $3,360 for single homeowners or renters, or $5,040 for couples. Those in long-term care or assisted living get up to $10,080 and $13,440 respectively. However, Ms. Eng says Alberta is stingier with other programs. “Drugs are covered but co-payments are income-tested.”

Ontario’s Guaranteed Annual Income System (GAINS) ensures single pensioners have at least an annual income of $15,071.76, virtually all of it tax-free. “If you’re on OAS and poor enough for GIS, you have to be even poorer to get GAINS,” says Maureen Fair, executive director of St. Christopher’s House, a Toronto-based community organization.

Even modest amounts of CPP income cancel some or all of GIS and GAINs payments. Assuming a senior gets OAS/GIS, it takes only an additional $2,000 of income from CPP (or a small pension or RRIF withdrawals) to become ineligible for GAINS, says Miryam Zeballos, co-ordinator of financial advocacy for St. Christopher’s.

In all provinces, the first $500 of other income won’t affect GIS. In 2008, Ottawa amended the Old Age Security Act so GIS recipients can earn up to $3,5000 a year in employment income that’s exempted from GIS calculations. “So, if a person has the possibility of working and making $300 a month, they can improve their financial situation a bit,” Ms. Zeballos says.

jchevreau@nationalpost.com

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