‘Far too loose’: Calls for crackdown on early access to super scheme after claims of abuse

A scheme designed to help chronically ill Australians pay for medical treatment is increasingly at risk of being abused by “shonky” and “greedy” practitioners, prompting calls from experts for a crackdown.

The compassionate release of superannuation, administered by the Australian Taxation Office, allows eligible patients to withdraw their retirement savings to pay for certain procedures, but there are growing concerns a lack of checks and balances is fuelling potential rorts of the scheme.

Federal independent MP Monique Ryan has called for better checks and balances for the compassionate release of superannuation scheme. Credit: Alex Ellinghausen

“We’re going to have this growing cohort of people who no longer have enough money to retire, and that comes back to impact us all as a society because governments are going to have to pay more for pensions,” said Associate Professor Matt Hopcraft, a public health dental expert at the University of Melbourne, speaking generally.

“The ATO needs to do compliance checks to ensure people are spending money on the [medical] treatment and having clearer guidelines about what constitutes life-threatening and chronic pain conditions.

“My view is the scheme is being misused.”

The number of Australians accessing the scheme for medical reasons has grown more than 50 per cent over the past six years, according to the most recent Tax Office data. Almost 48,000 people withdrew $1 billion in the past financial year, with dental treatments accounting for half of that.

To be approved, patients must provide the ATO with two separate reports from a medical specialist and a practitioner to certify that treatment is necessary to treat a life-threatening illness or injury or to alleviate chronic or acute pain.

Australian Dental Association president Dr Scott Davis said the ATO was failing to check that its rules were being complied with, and there was limited follow-up to ensure the money was being spent appropriately. He said the scheme also failed to ensure that patients understood the implications of withdrawing large amounts of money from their superannuation. He was not referring to any particular practitioner.

“The ATO rules state that there has to be a loss of function (in terms of eating, talking etc) and chronic pain for a dentist to treat a patient using their super money,” he said. “Greater scrutiny and checks and balances need to be applied to ensure these yardsticks are adhered to where super money is used.”

The scheme has become a key source of some practitioners’ business models, according to Consumer Health Forum chief executive Elizabeth Deveny, who accused some unnamed practitioners of bending rules.

One dental clinic advertises that more than 60 per cent of its clients now pay for their treatment using their superannuation.

“I don’t think it’s unreasonable that the government does some form of compliance checking to make sure there’s no abuse here,” Deveny said.

This masthead on Saturday revealed the medical watchdog was investigating claims a different Victorian dental practitioner and a Sydney GP had submitted a false declaration to the ATO that enabled a Melbourne mechanic to withdraw $41,000 from his superannuation for dental veneers and crowns. The patient said this treatment was purely for aesthetic reasons.

Federal independent MP Monique Ryan said the sheer number of Australians accessing the scheme highlighted the need for better regulation to ensure people’s retirement savings were not a “honeypot for shonky plastic surgeons”.

“The government should act to ensure compliance – that the money being withdrawn by individuals is actually being spent on the approved procedure or treatments – and that any person giving advice about such withdrawals holds a financial services licence,” Ryan said.

A 2018 federal review recommended against tightening the scheme’s eligibility criteria but the recent explosion in cases warrants further legislative reform, according to the chief executive of Private Healthcare Australia, Rachel David.

She said the federal government must strengthen the criteria but in the meantime, patients should be required to provide more than one quote, clinicians should be banned from advertising or promoting the scheme, and the Tax Office mandated to check the money was spent on the healthcare as stated in the application.

“The current system is far too loose and it is robbing people of their retirement savings,” David said, speaking generally.

“When you make it this easy to source large amounts of money in a cost-of-living crisis, sharks inevitably get involved.”

Margaret Faux is among a wide range of experts calling for better regulation of the scheme designed to help chronically ill patients.Credit: Janie Barrett

Medical fraud and compliance expert Dr Margaret Faux called on regulators to check patients’ historical medical records to maintain the sanctity of the scheme.

“The most reliable source of truth will be the historical records,” Faux said, adding that most patients would be reluctant to speak out if they were happy with their treatment. “If a patient has chronic pain, that will have been recorded.”

Swinburne University law and corporate governance specialist Helen Bird said: “The ATO should get reports to indicate there’s been a surge in certain applications, and as a matter of risk, they should be looking into those and asking question about what is going on.”

A spokeswoman for Assistant Treasurer Stephen Jones said the government expected funds and medical practitioners to strictly follow the rules, and that professional bodies and regulators must “stamp out any rorts”.

“The super system is designed to ensure Australians have a dignified retirement,” the spokeswoman said. “It’s not designed to be rorted by greedy practitioners.”

The federal opposition said it would strongly oppose any moves – including stricter safeguards – that would make it harder for Australians to use their superannuation for medical procedures.

“Any practitioners acting in bad faith should be referred to the appropriate independent regulators,” shadow treasurer Angus Taylor said, without identifying specific practitioners.

An ATO spokesman said staff reviewed and assessed all applications and ineligible claims were knocked back.

“If anyone is aware of an individual who has inappropriately accessed their superannuation, or a medical practitioner providing false statements, they can make a tip-off to the ATO,” the spokesman said.

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