Can I access my super to pay for a medical treatment?

Your super is all about setting money aside for when you retire.
It’s a nest egg of funds that hopefully should grow over your working life and support you for later on.

Usually, you can’t touch this money until you retire. However, sometimes things don’t go to plan, and you might need to access some of your super sooner. There are specific scenarios and rules around when you may get early access to your super – typically when you are facing severe financial hardship or on compassionate grounds.

Accessing your super in Australia:

Australians cannot access superannuation until they reach preservation age between 55 and 60. However, there are exceptional circumstances in which the ATO will assess and possibly approve early access, and paying for medical treatment is one of them. This is the category that plastic surgery may fall into, known as ‘compassionate grounds.’ The official category is set to include medical procedures to treat life-threatening illnesses and acute or chronic pain.

The ATO website offers a range of information on gaining early access to your super on compassionate grounds.

To be eligible to withdraw money from a superannuation fund to pay for medical treatment (medical treatment can be medicine, surgery or psychotherapy), the following conditions must be met:

Your (or your dependant’s) medical treatment is required to:

• Treat a life-threatening illness or injury; or
• alleviate acute or chronic pain; or
• alleviate acute or chronic mental illness.

The medical treatment you (or your dependants) need is not readily available through the public health system, and you must have no other means of paying for the surgery.

(Notably, the medical treatment can be for you or for a dependant like a child or spouse/partner.)

If you want to apply to withdraw super to pay for medical expenses, you will need to provide evidence in the form of a quote (no more than 6 months old) or invoice (no more than 30 days old), plus medical reports. One from a registered medical specialist who is a specialist in the area that you’re applying to have medical treatment for and one from either a registered medical practitioner or another registered medical specialist. Alternatively, detailed information regarding your pain or mental illness may be required, however the ATO website can provide up-to-the moment information on these requisites.

Generally, you can only withdraw super to pay for treatment by a registered medical practitioner.

Factors that determine your approval:

Your financial situation is one of the most significant determining factors when it comes to early super withdrawal. The following points will also be relevant as part of your application:

• Your condition must meet specific criteria for compassionate release of funds eligibility.
• The procedure must be medically necessary.
• Your super fund will have the final say of early release.

The application can take several weeks to be approved, and some super funds will not allow this option at all. Your first step should be to make sure your health fund will allow an early release based on compassionate grounds.

Which procedures can be covered?

Early release of super is a possibility for any surgery that is medical in nature i.e. procedures that attract a Medicare item number. If your surgical procedure meets these criteria, then the Medicare item numbers will be listed on the estimate of fees provided by VPS once your treatment plan is confirmed.

How do I apply for an early withdrawal of my super?

If you are considering an early withdrawal of your super, this is done through the ATO via your ‘MyGov’ account or on the ATO website. It is important to note there is no guarantee that you will be approved, and you must consider the rules and regulations around super withdrawal can change at any moment.

The surgeon you consult with will determine if your procedure is deemed ‘medically necessary’ under the current definitions. If this is the case – and you indicate that you are considering applying for an early withdrawal of your super – the surgeon may be able to complete the surgical details and formally sign the ATO’s application form to assist with your application. We ask that you provide this form (with the personal details pre-filled) at your earliest convenience.  Once you have all the necessary documentation as outlined on the ATO website, you may submit it to the ATO.

It is important to note that Valley Plastic Surgery (and the surgeons practicing at VPS) can NOT give you advice on whether to access your superannuation to pay for medical treatment, nor assist in filling out non-surgical details or submitting your application.

Once your claim has been assessed, the ATO will notify you of the outcome. If your claim is approved, you’ll receive an approval letter from the ATO. You can then complete a withdrawal form with your superannuation fund. Make sure your approval letter from the ATO is attached to your super fund’s withdrawal form as they will need this to process your claim. It is important to note that VPS have no control or insight into the ATO’s or super fund’s decision process, nor are with privy to any notifications they may make.

Things to consider when weighing up whether to withdraw from your super for medical or financial purposes:

Investment group AMP highlight three critical areas that should be considered when deciding an early withdrawal of your super, namely the impact on compounding interest, the application of tax to any amount withdrawn and lastly, the insurance policies that may be attached to your superannuation account.

Compounding Interest:

AMP advises people to consider the long-term implication that an early withdrawal from your superannuation fund will have on the effect of compounding interest. “While compound interest is very powerful when it’s working to build your super balance, it can be equally powerful in magnifying the impact of a withdrawal on your super balance over the longer term,” says AMP.

Taxation:

The tax treatment applying to payments from your super under early release provisions depend on the payment type, your age and the tax components of your payment and it’s important you discuss your circumstances with your financial adviser or tax adviser.

Your insurance (ie life cover, income protection and TPD:

Before applying to access your super under early release provisions, it’s important to consider any insurance you may have inside super as a withdrawal could trigger a situation where your insurance coverage lapses or is cancelled.

The bottom line:

You should consider the information above when deciding whether to withdraw from your super. You should also seek financial advice to understand how an early withdrawal will affect your super account and insurance.

Disclaimer: The purpose of this article is purely informative. Every individual’s condition and financial situation is unique, and you should carefully consider and seek professional advice before deciding to fund your surgery by using your Superannuation. This article has no intent to replace financial advice and we are not in any way encouraging you to use your Super for funding surgeries for cosmetic reasons.