Sickness-related benefits

Overview

Main benefits in this group consist of Sickness Benefits and Sickness Benefits - Hardship.

From January 2004, clients receiving a sickness-related benefit have been able to access pilot programmes aimed at helping them to:

• set goals for their future
• develop individual plans addressing their needs, strengths, barriers and key issues.

Clients receiving a sickness-related benefit because of their own incapacity may be required to fulfil the demands of the Personal Development and Employment planning process.

Between October 1998 and September 2007, the spouses or partners of clients receiving a sickness-related benefit were subject to:

• a full-time work test if the couple had no dependent children, or if their youngest dependent child was aged 14 years or over
• a part-time work test if the couple's youngest dependent child was aged 6-13 years
• a requirement to attend a yearly planning meeting with a Work and Income case manager if the couple's youngest dependent child was aged under six years (the aim of this interview was to plan their entry into paid work once their youngest dependent child reached the age of six years).

From September 2007, spouses and partners of recipients of a sickness-related benefit were subject to:

• a full-time work test if they had no dependent children, or if their youngest dependent child was aged 18 or over (unless that child was aged 18 years and engaged in full-time education or training)
• a part-time work test if their youngest child was aged 6-17 years, or was aged 18 years and engaged in full-time education or training.

These partners or spouses don't have work test requirements if the couple's youngest dependent child is aged under six years. However, these partners or spouses are obliged to engage with the Personal Development and Employment planning process if required.

During the 2003/2004 financial year, work-tested clients had Government expectations about meeting the work test made clearer. Other work-test requirements added during the 2003/2004 financial year included a requirement to:

• take pre-employment drug tests if required to by a prospective employer (from October 2003)
• commute to seek and undertake paid work if there is no such work available in their local area (from March 2004).

Several changes to the administration of sickness-related benefits were introduced from September 2007, aimed at ensuring that clients were receiving a benefit most appropriate to their needs. These changes included:

• a requirement for more detailed medical information on medical certificates
• allowing case managers to make the decision about whether clients should receive a sickness-related benefit, Invalid's Benefit or other assistance based on medical information provided, discussion with the client, and where required, advice from Regional Health Advisors and/or Regional Disability Advisors.

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Types of sickness-related benefit

Sickness Benefit

From 1 October 1998, a Sickness Benefit has been available to people who are:

• unable to work full-time through illness, injury or pregnancy
• limited in their capacity to seek work due to illness or injury, or
• in employment but losing earnings through illness or injury.

To receive a Sickness Benefit, clients must be:

• aged 18 years or over, or
• aged 16 years or over, married or in a civil union, and supporting a dependent child.

Income and residency tests apply.

Prior to 1 October 1998, a Sickness Benefit was available to people aged 18 years or over (16 years or over until 1 January 1998) who:

• were temporarily incapacitated for work
• had suffered a loss of earnings
• met an income test.

Sickness Benefit - Hardship

People who don't meet the residency criteria for a Sickness Benefit but who are suffering hardship because of illness or injury may be granted a Sickness Benefit - Hardship. Sixteen or 17 year olds who are unable to support themselves because of pregnancy or who are attending an approved rehabilitation programme may also be eligible for a Sickness Benefit - Hardship. Income and asset tests apply.

Applicants prior to 1 October 1998 who did not meet all eligibility requirements may have been granted an Emergency Benefit because of hardship. An income and asset test applied to this benefit.

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Trends in the number of clients receiving a sickness-related benefit

The number of people receiving a sickness-related benefit has reduced slightly over the year ended June 2008 (see table 3.15), reflecting the impact of operational changes outlined above. Of the working age clients receiving these benefits over this period:

• around 36% were aged 40-54 years, while around 29% were aged 25-39 years (see table 3.15)
• virtually all were receiving a Sickness Benefit (see table 3.16)
• between 37% and 40% had systemic disorders, while the proportion with a psychological or psychiatric condition increased from 35% to 39% (see table 3.17)
• between 66% and 70% had received their current benefit for less than two years (see table 3.18).

Table 3.15 Trends in the ages of clients receiving a sickness-related benefit

Age of client at the end of June	2004 Number	2005 Number	2006 Number	2007 Number	2008 Number
	Working age clients receiving a sickness-related benefit1,2
18-19 years	1,454	1,570	1,852	1,838	2,054
20-24 years	4,032	4,135	4,678	4,925	5,224
25-29 years	4,009	3,860	4,128	4,347	4,249
30-34 years	4,540	4,451	4,518	4,380	4,172
35-39 years	4,652	4,883	5,023	5,108	4,972
40-44 years	5,284	5,327	5,467	5,400	5,192
45-49 years	5,249	5,362	5,673	5,854	5,695
50-54 years	5,552	5,583	5,592	5,744	5,212
55-59 years	5,683	6,099	5,897	5,662	4,979
60-64 years	3,243	3,906	4,244	4,805	4,522
Total working age clients	43,698	45,176	47,072	48,063	46,271
	Other clients receiving a sickness-related benefit1,2
Total other clients	430	470	487	524	439
	All clients receiving a sickness-related benefit1,2
Total	44,128	45,646	47,559	48,587	46,710

Notes

1. Sickness-related benefits comprise Sickness Benefits and Sickness Benefits - Hardship.
2. Numbers of clients recorded in SWIFTT as receiving a sickness-related benefit at the end of June.

Table 3.16 Trends in the types of sickness-related benefit received by working age clients

Type of sickness-related benefit received at the end of June	Working age clients receiving a sickness-related benefit1
	2004 Number	2005 Number	2006 Number	2007 Number	2008 Number
Sickness Benefit	42,651	44,416	46,294	47,356	45,586
Sickness Benefit - Hardship	1,047	760	778	707	685
Total	43,698	45,176	47,072	48,063	46,271

Note

1. Numbers of working age clients recorded in SWIFTT as receiving a sickness-related benefit at the end of June.

Table 3.17 Trends in the incapacities of working age clients receiving a sickness-related benefit

Client incapacity at the end of June	Working age clients receiving a sickness-related benefit1,2
	2004 Number	2005 Number	2006 Number	2007 Number	2008 Number
Accident, trauma, entry of foreign bodies	5,681	5,348	4,862	4,790	3,313
Disease3	270	316	339	349	649
Cancer	754	857	808	819	647
Congenital conditions	137	134	169	148	186
Intellectual disability	211	204	167	158	113
Pregnancy related	1,474	1,304	1,481	1,477	1,428
Psychological or psychiatric conditions	15,138	15,784	16,630	17,274	18,036
Sensory disorders	432	476	488	529	542
Substance abuse	2,410	2,473	3,221	3,479	3,842
Systemic disorders4	17,164	18,249	18,870	19,012	17,242
Unspecified/ill-defined conditions5	27	31	37	28	273
Total	43,698	45,176	47,072	48,063	46,271

Notes

1. Sickness-related benefits comprise Sickness Benefits and Sickness Benefits - Hardship.
2. Number of working age clients recorded in SWIFTT as receiving a sickness-related benefit at the end of June.
3. Encompasses circulatory system diseases, infectious disease and parasitic diseases.
4. Encompasses disorders of physiological systems (eg musculoskeletal systems, metabolic systems).
5. Includes uncoded incapacities and ill-defined conditions.

Table 3.18 Trends in the length of current spells receiving a sickness-related benefit, for working age clients

Length of current spell to the end of June	Working age clients receiving a sickness-related benefit1,2
	2004 Number	2005 Number	2006 Number	2007 Number	2008 Number
Under 6 months	15,158	13,986	14,554	14,928	14,678
6 months-2 years	15,323	17,272	16,971	16,833	16,605
2-4 years	7,031	7,637	8,904	9,372	8,023
Over 4 years	6,186	6,281	6,643	6,930	6,965
Total	43,698	45,176	47,072	48,063	46,271

Notes

1. Sickness-related benefits comprise Sickness Benefits and Sickness Benefits - Hardship.
2. Numbers of working age clients recorded in SWIFTT as receiving a sickness-related benefit at the end of June.

Table 8.1 shows trends since 1940 in the number of people receiving a sickness-related benefit.

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Trends in the proportion of working age people receiving a sickness-related benefit

Each year since 2004, less than 2% of all working age people in the New Zealand population were receiving a sickness-related benefit at the end of June (see figure 3.6). Throughout this period, the likelihood of receiving one of these benefits has increased for 18–24 year olds, while the likelihood of those aged 40 or over receiving one has fluctuated. These changes reflect, in part, the impact of ageing on the incidence of health and disability conditions among older working age people, and on whether those conditions become permanent and severe (and hence covered by an Invalid’s Benefit rather than a sickness-related benefit).

figure 3.6 Trends in the proportion of working age people receiving a sickness-related benefit,¹ by age

Notes

1. Sickness-related benefits comprise Sickness Benefits and Sickness Benefits - Hardship.
2. Proportion shows:
   1. number of clients in age group recorded in SWIFTT as receiving a sickness-related benefit at the end of June, divided by
   2. Statistics New Zealand final estimate of the resident population in age group at the end of June.

See table A3.7 for a summary of the SWIFTT data underlying figure 3.6.

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Trends in sickness-related benefits granted

The number of sickness-related benefits granted has increased slightly over the last two years, after remaining relatively stable for the previous three years (see table 3.19). Thirty percent of the working age clients granted these benefits in 2007/2008 had not received a main benefit in the previous four years, compared with 23% in 2003/2004. A decreasing proportion of these clients have transferred from another benefit or district (22% in 2006/2007, compared with 36% in 2003/2004).

Table 3.19 Trends in the length of periods since clients granted a sickness-related benefit last received any main benefit

Period since client last received any main benefit	2003/2004 Number	2004/2005 Number	2005/2006 Number	2006/2007 Number	2007/2008 Number
	Sickness-related benefits granted to working age clients1,2
None (clients transferring between benefits or districts, or transferring from the same type of benefit)3,4	17,236	14,420	12,513	12,629	10,791
Under 6 months	7,804	8,268	8,698	8,938	9,687
6-12 months	4,317	4,820	4,763	4,763	5,196
12-18 months	2,241	2,583	2,764	2,523	2,810
18 months-2 years	1,596	1,721	1,876	1,823	1,935
2-4 years	3,592	3,783	4,319	4,406	4,440
Had not received a main benefit in previous four years	10,877	11,664	12,584	13,584	14,659
Total granted to working age clients	47,663	47,259	47,517	48,666	49,518
	Sickness-related benefits granted to other clients1,2
Total granted to other clients	692	747	749	823	808
	Sickness-related benefits granted to all clients1,2
Total	48,355	48,006	48,266	49,489	50,326

Notes

1. Sickness-related benefits comprise Sickness Benefits and Sickness Benefits - Hardship.
2. Numbers of successful applications for sickness-related benefits recorded in SWIFTT during years ended June.
3. Includes only a minority of transfers of benefits between districts. Most such transfers are accomplished without cancelling and re-granting benefits.
4. Transfers from the same type of benefit may occur when clients receiving hardship assistance become eligible for statutory benefits (eg a transfer from a Sickness Benefit - Hardship to a Sickness Benefit).

Over this period, the proportion of these clients with a psychological or psychiatric disorder rose from 32% to 37% (see table 3.20). The proportion of these clients with systemic disorders decreased from 34% to 31% between 2006/2007 and 2007/2008.

Table 3.20 Trends in the incapacities of working age clients granted a sickness-related benefit

Client incapacity when benefit granted	Sickness-related benefits granted to working age clients1,2
	2003/2004 Number	2004/2005 Number	2005/2006 Number	2006/2007 Number	2007/2008 Number
Accident, trauma, entry of foreign bodies	6,369	6,304	5,812	5,563	5,407
Diseases3	593	646	606	607	710
Cancer	1,017	1,140	1,064	1,080	937
Congenital conditions	235	202	202	213	211
Intellectual disability	121	116	137	136	64
Pregnancy related	4,942	4,558	4,598	4,525	4,484
Psychological or psychiatric conditions	15,076	15,416	16,011	16,834	18,227
Sensory disorders	475	505	454	444	460
Substance abuse	2,442	2,271	2,540	2,666	3,178
Systemic disorders4	16,179	15,679	15,742	16,308	15,418
Unspecified/ill-defined conditions5	214	422	351	290	422
Total	47,663	47,259	47,517	48,666	49,518

Notes

1. Sickness-related benefits comprise Sickness Benefits and Sickness Benefits - Hardship.
2. Numbers of successful applications from working age clients for sickness-related benefits recorded in SWIFTT during years ended June.
3. Encompasses circulatory system diseases, infectious disease and parasitic diseases.
4. Encompasses disorders of physiological systems (eg musculoskeletal systems, metabolic systems).
5. Includes uncoded incapacities and ill-defined conditions.

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Trends in cancellations of sickness-related benefits

The number of sickness benefits cancelled has increased over the last two years (see table 3.21). Since 2003/2004, the proportion of working age clients cancelling these benefits who transferred to another benefit, pension or district has decreased (from 47% to 39%). Over the same period, between 39% and 44% of these cancelled benefits for reasons other than transfers or entry to paid work. The main "other" reasons for cancellations of sickness benefits were loss of medical coverage (including recovery from their illness or incapacity) and transition into full-time study.

Table 3.21 Trends in reasons for clients cancelling sickness-related benefits

Reason for cancellation
	2003/2004 Number	2004/2005 Number	2005/2006 Number	2006/2007 Number	2007/2008 Number
	Sickness-related benefits cancelled by working age clients1,2
Obtained paid work3	6,192	7,450	7,267	8,619	9,437
Transferred to another benefit, pension or district4,5	19,862	19441	18647	17846	20152
Other3	16,554	18328	18828	20789	21618
Total cancelled by working age clients	42,608	45,219	44,742	47,254	51,207
	Sickness-related benefits cancelled by other clients1,2
Total cancelled by other clients	651	868	875	983	1,139
	Total sickness-related benefits cancelled,2
Total	43,259	46,087	45,617	48,237	52,346

Notes

1. Sickness-related benefits comprise Sickness Benefits and Sickness Benefits - Hardship.
2. Numbers of cancellations of sickness-related benefits recorded in SWIFTT during years ended June.
3. Due to recoding of reasons for cancelling main benefits, these figures may not reconcile with those published in previous years.
4. "Transferred to another benefit [or] pension" includes some transfers from main benefits to New Zealand Superannuation, including those shown previously as "Qualified for New Zealand Superannuation".
5. "Transferred to another … district" represents cancellations undertaken so a client's benefit can be administered from a different Work and Income service centre. These changes may reflect a change of address by the client or an administrative decision by Work and Income. A majority of transfers of benefits between districts are completed without cancelling the client's benefit, and therefore are not included above.

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Trends in expenditure on sickness-related benefits

Increases since 2000/2001 in annual expenditure on sickness-related benefits (see table 3.22) reflect

• increases in the numbers of people receiving these benefits
• cost of living adjustments, and
• increased expenditure on Accommodation Supplements and third-tier assistance paid to people receiving Sickness benefits.

The decrease in expenditure on these benefits between 1998/1999 and 2000/2001 reflects a combination of:

• adjustment of the payment rates of sickness-related benefits to levels similar to rates of unemployment-related benefits
• a temporary fall in numbers receiving these benefits between 1997/1998 and 1999/2000.

Table 3.22 Trends in annual expenditure on sickness-related benefits¹

Year ended June	Expenditure on sickness-related benefits2,3,4 ($m)
1995/1996	394
1996/1997	419
1997/1998	452
1998/1999	429
1999/2000	405
2000/2001	404
2001/2002	432
2002/2003	475
2003/2004	537
2004/2005	596
2005/2006	639
2006/2007	671
2007/2008	689

Notes

1. Sickness-related benefits comprise Sickness Benefits and Sickness Benefits - Hardship. Between 1 October 1998 and 30 June 2001, a Sickness Benefit was known as a Community Wage - Sickness. A Sickness Benefit - Hardship was known as an Emergency Sickness Benefit prior to 1 October 1998, and as a Community Wage - Emergency Sickness between 1 October 1998 and 30 June 2001.
2. Expenditure on sickness-related benefits in years ended June, including expenditure on supplementary benefits provided to recipients of a sickness-related benefit.
3. Expenditure shown is net of taxation, adjusted to payment periods based on a standard 30-day month, and smoothed using a three-month moving average.
4. Expenditure data in this table differs from, and should not be cited as, MSD's official measure of expenditure on financial assistance provided to clients.

Little seasonal variation is evident in monthly expenditure on sickness-related benefits (see figure 3.7).

figure 3.7 Trends in monthly expenditure on sickness-related benefits¹

Notes

1. Sickness-related benefits comprise Sickness Benefits and Sickness Benefits - Hardship.
2. Monthly expenditure on sickness-related benefits, including expenditure on supplementary benefits paid to recipients of a sickness-related benefit.
3. Expenditure shown is net of taxation, adjusted to payment periods based on a standard 30-day month and smoothed using a three-month moving average.
4. Expenditure data in this graph differs from, and should not be cited as, MSD's official measure of expenditure on financial assistance provided to clients.

Table 8.2 shows trends since 1940 in expenditure on sickness-related benefits, including expenditure on supplementary benefits paid to people receiving a sickness-related benefit¹.

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¹From 1996, the expenditure data shown in table 8.2 reflects deductions for debts established and for clients receiving these benefits as well as overseas pensions. The data in table 3.22 and figure 3.7 doesn't doesn't reflect these deductions.

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