Persons over 65 - Leaflet 21

Contents

• Where YOU fit in
• Allowance
• Making an application
• How and when must I pay?
• Payment by Direct Debit
• Periods out of the Island
• What if I work?
• How much do I pay?
• How do I apply to pay contributions based on my income
• Retiring at 65
• For further information or advice
• Investment company income
• Appendix
• How we collect and use information

Where YOU fit in

The Social Security Department operates a specialist health and long term care scheme which covers residents of Guernsey, Alderney, Herm and Jethou.

If you are over the age of 65 you do not have to pay social insurance contributions but you do have to pay health insurance and long term care contributions towards the specialist health and long term care scheme. These contributions are payable by people over age 65 and are based on personal income.

This leaflet is only concerned with persons over age 65 and their liability to pay health insurance and long term care contributions. Entitlement under the scheme is described in leaflet 2 - Specialist Health Insurance and long term care Scheme.

Allowance

From 1 January 2010 an allowance has been introduced for non-employed contributors with income equal to or above the lower income limit. If you have made an income related claim, the value of the allowance will be deducted from the income figure provided by the Income Tax Department and your rate of contribution will be calculated based on the balance. If your income is less than the lower income limit you will not have to pay a contribution (see leaflet 50 for details of the allowance along with current annual income limits and percentage rate).

Social Security will not be able to decide if you must pay at all or if you can pay at a rate less than the maximum until details of your income are received from the Income Tax Department.

Making an application

Persons who do not make an application to pay on the basis of their actual income will be charged at the full weekly contribution rate.

If you are married and both partners want to pay income-related contributions at less than the maximum rate you must make separate income-related applications, even if as a married couple you declare your income to Income Tax on the same form. In these cases Income Tax will tell us the amount of income of each spouse.

It is therefore very important that you complete an application form if you want your contributions to be based upon your income or if you believe your income to be below the lower income limit and wish to be excused from payment. The application form will also authorise the Income Tax Office to disclose to Social Security the amount of your assessable income for the current and future years.

This information is only used for the assessment of how much you will have to pay for health insurance and for no other reason.

How and when must I pay?

Payment of contributions is by quarterly invoice which is sent to you on or around the 16th of the month following the end of each quarter. You then have 28 days in which to make payment e.g. the invoice for the first 13 weeks will be sent to you on or around the 16th April and payment should be made by no later than 14th May.

Payment by Direct Debit

If you decide to pay your contributions by Direct Debit you will not be issued with an invoice. Instead, payment will be sent to us automatically by your bank or building society.

You will be able to choose between quarterly and monthly payments, which will take place on the last day of the month following the quarter (or the last day of the following month if you have chosen to pay monthly). You will always be notified in advance of the amount and date of each debit from your account and you will always be able to cancel your Direct Debit instruction at any time.

In addition to making payments by cheque or Direct Debit, payments can also be made using the following Debit Cards in the office or over the telephone:

Maestro, Mastercard or Visa

Pay by debit/credit card by telephoning 732502 or log on to www.gov.gg.

Periods out of the Island

You do not have to pay health insurance and long term care contributions for periods in which you are out of the island for 13 weeks or more. You should inform Social Security of the dates so that your liability can be adjusted accordingly.

What if I work?

If you work for an employer or carry out self-employed work, you will still be liable to pay a health insurance contribution based upon your total personal income.

If you work for an employer and earn more than the Lower Earnings Limit, you should obtain and pass to your employer an orange registration card. Although you will not have to pay an employee's contribution, your employer will still be required to pay an employers contribution, which will be at the same percentage rate as that payable for employees who are not yet 65.

How much do I pay?

The maximum rate of health insurance and long term care contribution payable is calculated by deducting the allowance from the annual upper Income Limit, dividing it by 52 and multiplying it by the percentage rate set for the year (see leaflet 50 for details of the allowance along with the current annual Upper Income Limit and percentage rate).

If you have made an income related claim and your income is equal to or above the lower income limit, the value of the allowance will be deducted from the income figure provided by the Income Tax Office from 2 years previous (see appendix). Your rate of contribution will be calculated based on the balance (please see above for calculation method). If your income before the deduction of the allowance is less than the Lower Income Limit you will not have to pay contributions.

How do I apply to pay contributions based on my income?

Simply fill in an application form obtainable from the Social Security Department or Alderney States Office. The form contains an authorisation to the Director of Income Tax to disclose to the Administrator of the Social Security Department the amount of your assessable income in the relevant Year of Charge. You will be issued annually with a notification showing your income and the weekly rate of contribution for the year.

Your health and long term care contributions must be paid within 28 days of the quarterly invoice being issued to you or by direct debit. If however your assessable income is not available from Income Tax we will estimate a figure. This figure will be based upon your previous year's assessment and increased by a percentage to be decided by the Department each year. A refund or account will be issued when your actual weekly liability is established.

We will not provide an estimated figure for more than 3 years and where no assessment is available for a fourth consecutive year you will be charged at the maximum rate for that year. You are advised to submit your income tax returns as early as possible so that the information needed to accurately assess your rate of contribution is available in good time.

Retiring at 65

In this case, there is likely to be a delay before your Income Tax assessments reflect your new circumstances. The Social Security Department will therefore use estimates of your income for up to first three years.

Your contribution rate will be revised as soon as your actual income has been established - and if your income as assessed by the Income Tax Department exceeds the estimate of your income you will be required to make up the amount of contributions underpaid. On the other hand, you will receive a refund if your actual income is less than your estimate.

For further information or advice

Leaflet 50 sets out the current contribution rates. It also details the upper and lower income limits.

If you are unsure of the meaning of any particular point in this leaflet or require any additional help, please phone or call in at the Social Security Office, or the Alderney States Office, where we will be pleased to assist you. Copies of any other leaflets mentioned may be obtained from these offices.

Investment company income

Where a person has a beneficial interest in an investment company, the Department will include the appropriate income of that company as well. If total income is below the annual upper earnings limit and you wish to pay income related contributions, the name of the investment company (or companies) and the extent of that beneficial interest will need to be provided. You will need to complete a release form allowing Income Tax to disclose the relevant details of the investment company.

Appendix

Income:-

For the purposes of income-related contributions income means total personal income as assessed by the Income Tax Department for the previous year of charge before any deductions of tax allowances.

Where a contributor retires at age 65, special rules will apply from the year of retirement and the next two following years.

Other than the people newly non-employed (where the rules set out in the previous table will apply) we use income from the 2 years previous to establish your rate of contribution for the current year.

How we collect and use information

The Social Security Department collects personal information for social security purposes in accordance with the six laws which it administers. The information collected will depend on your business with us, but will be no more than is required for that purpose, and will not be further disclosed except as permitted by law. The Department complies with its legal duty under the Data Protection (Bailwick of Guernsey) Law, and is the Data Controller for the purposes of that law. If you wish to know more about the way we use it, you can ask at the Social Security Department.

Complaints

If you are unhappy with the service that the Department has provided, please put your complaint in writing to:

The Administrator

Social Security Department

Edward T. Wheadon House

Le Truchot

St Peter Port

GY1 3WH