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9.10.3 Compensation Offsetting and Disability Pension

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Last amended: 5 March 2013

What does a disability pension compensate for?

A disability pension is compensation for incapacity from a condition or conditions that have been accepted under the VEA as being related to a veteran's eligible service. Disability pensions are paid in respect of incapacity, not for the underlying disease or injuryAbove General Rate (AGR) disability pensions (special rate, temporary special rate, intermediate rate) are paid for the incapacity from conditions, as well as the impact on the veteran's ability to earn their normal income.

Differing medical diagnosis for the same incapacity

If a veteran does receive an award of compensation or damages from another source for the same incapacity from that, or any other injury or disease, that disability pension is paid for, there must be a corresponding reduction or offset to the amount of disability pension, to preclude double compensation.  There are also situations where compensation may be paid for a condition that is labelled differently, but has the same incapacity as the condition accepted under the VEA.  In circumstances such as this, the incapacity that it being compensated is the critical issue.  If both payments of compensation are for the same incapacity, then the offsetting provisions will apply.

In addition, if an already accepted condition is aggravated in a later unrelated event and lump sum compensation is paid from another source for the same incapacity, offsetting will still apply.  Although this is not related to the initial injury, because the compensation is paid for the same incapacity, the offsetting provisions are relevant.  In most cases where a lump sum is received, compensation offsetting will affect a disability pension for life.

Effect of compensation lump sum payments

When a lump sum is received, a fortnightly equivalent offset is calculated.  The fortnightly equivalent pension calculated from a lump sum is deemed to start from the same time as a disability pension under the VEA.  Future payments of disability pension are reduced and retrospectively some or all of the disability pension already paid may become not payable.  This constitutes an overpayment that must be recovered.  Where DVA is aware of other compensation claims, recovery by a deduction from the lump sum is normally arranged through the veteran's solicitor or from the payment made under the SRCA if administered by DVA.

Effect of periodic compensation payments

If other compensation is paid on a regular basis (for example, weekly or fortnightly), disability pension is offset on a dollar for dollar basis by the amount of periodic payment paid in respect of the same incapacity. Disability pension cannot be reduced to below zero, so if the other compensation is more than the pension, then there is no pension payable.

Above General Rate (AGR) pensions

Special rate, temporary special rate and intermediate rate disability pensions include a component for economic loss as a result of a veteran being incapacitated for work due to their accepted conditions.  Once an AGR pension has been granted a person cannot subsequently be compensated for their loss of earning capacity as a result of additional condition/s as they have already satisfied the criteria of being incapacitated for work at the time their AGR pension was granted.  Therefore a person cannot receive special rate, temporary sspecial rate or intermediate rate under the VEA for one condition, and compensation for loss of capacity to work by a different condition from another source.

Where a person has dual eligibility it is important to ascertain if any incapacity payments are being received, as these are also paid in respect of loss of earnings.  Incapacity payments are usually paid in respect of one condition, although several conditions may contribute to a person's incapacity to work.  It is important to verify what condition first incapacitates a person for work for which economic loss compensation is paid.  A person may be eligible for compensation for incapacity to work from another source for the same condition, however the AGR pension is offset accordingly.

All applications that are lodged on or after 1 July 2004, that result in the payment of special rate, temporary special rate or intermediate rate will be reduced if any lump sum permanent impairment compensation has been received under the Safety, Rehabilitation and Compensation Act 1988 (SRCA). This situation does not require the other compensation to be for the same incapacity for offsetting to occur.  Therefore this applies to lump sum compensation for any incapacity, irrespective of whether the incapacity is included in the assessment of the disability pension. The lump sum compensation is expressed  as a fortnightly equivalent, based on instructions prepared by the Australian Government Actuary. The above pensions are offset by this fortnightly equivalent, which is adjusted at the same time as the disability pension and by the CPI inflation factor.  The authority for this offsetting is contained in section 25A VEA.

Compensation offsetting and allowances

Veterans supplement payable to disability pensioners not receiving an income support payment is not a component of disability pension, and is not offset.

Clean energy supplement payable to disability pensioners is also not offset.

All applications that are lodged on or after 1 July 2004 that result in the payment of loss of earnings allowance will be reduced if any lump sum permanent impairment compensation has been received under the SRCA. This applies to lump sum compensation for any incapacity, irrespective of whether the incapacity is included in the assessment of the allowance. The same method described above in the AGR section is applied.

Compensation offsetting and veteran treatment entitlements

Compensation offsetting does not affect treatment entitlements. However, under separate provisions, the Repatriation Commission may recover the cost of treatment provided through a veteran's Gold Card or White Card.     

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Repatriation Health Cards

Section 7.1.2

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Compensation offsetting and service pension

Any periodic compensation payment offset against a disability pension is not counted again for service pension under either the compensation recovery provisions or the income test unless there is a residual amount of periodic compensation after the disability pension has been offset. Any other compensation or damages may also affect service pension payments.

Where a lump sum compensation amount is received and results in an offset against disability pension, there is no legislative provision to allow an equivalent reduction in a person's assessable asset value for service pension purposes.  The continuing compensation offset amount is intended to represent the fortnightly return that the pensioner could reasonably expect to receive by investing the lump sum payment.

Lump sum compensation payments are subject to the deeming provisions for service pension purpose if this money is invested.


Disability pension, for the purposes of service pension and income support supplement, means:

  • a pension paid for incapacity from war caused conditions, or peacetime, peacekeeping or hazardous service caused conditions (other than a war widow's or orphan's pension); or
  • temporary incapacity allowance; or
  • any other payment in respect of incapacity or death resulting from war or war-like operations in which the Crown has been engaged [usually paid by another Commonwealth country].

According to subsection 5D(2), incapacity from a war or defence-caused disease or injury is a reference to the effects of that injury or disease, and not a reference to the injury or disease itself.

According to subsection 5D(1), disease means:

  • any physical or mental ailment, disorder, defect or morbid condition (whether of sudden onset or gradual development), or
  • the recurrence of such an ailment, disorder, defect or morbid condition,

but does not include:

  • the aggravation of such an ailment, disorder, defect or morbid condition, or
  • a temporary departure from:

the normal physiological state, or

the accepted ranges of physiological or biochemical measures,

that results from normal physiological stress (for example, the effect of exercise on blood pressure) or the temporary effect of extraneous agents (for example, alcohol on blood cholesterol levels).

According to subsection 5D(1), an injury means any physical or mental injury (including the recurrence of a physical or mental injury) but does not include:

  • a disease, or
  • the aggravation of a physical or mental injury.

Above general rate disability pensions, which include T&PI, TTI, Intermediate Rate or EDA .

 

 

A payment to make amends for loss or injury to a person or property, or as a recompense for some deprivation (such as compensation to the owner for compulsory acquisition of their property).

Damages is the economic value of something lost or withheld. For compensation purposes, damages is the sum awarded for any loss or injury that has been sustained.

The general principle of compensation offsetting holds that a person should not be compensated twice for the same incapacity.

The consumer price index (CPI) provides the official measure of inflation in Australia. The CPI measures quarterly changes in the price of a 'basket' of goods and services which account for a high proportion of expenditure by the CPI population group (i.e. metropolitan households).

The veterans supplement was introduced on 20 September 2009 as part of the Government's Secure and Sustainable Pension Reform package. It is a fortnightly payment that replaces pharmaceutical allowance and/or telephone allowance for compensation recipients who are not in receipt of an income support supplement. There are two rates, the veterans supplement low rate and the veterans supplement high rate. The low rate replaces one of the allowances and the high rate replaces both. The low rate is indexed every January to the Consumer Price Index (CPI). The high rate is always twice the amount of the low rate.

 

 

The energy supplement is an ongoing, regular payment designed to help recipients meet the cost of living impact of the carbon price.

 

 

Safety, Rehabilitation and Compensation Act 1988

According to Section 179 of the VEA, the Commission is a body corporate under the name of Repatriation Commission.

 

 

The Repatriation Health Card - For All Conditions is gold in colour and frequently referred to simply as the “Gold Card”.  The card entitles its holder to obtain health care and related services for all the person's identified health care needs, whether they are war-caused or not.

The Repatriation Health Card - For Specific Conditions (White Card) entitles its holder to treatment of 'accepted' disabilities, ie injuries, illnesses or diseases accepted by the Repatriation Commission as caused by war or other forms of eligible service. A disability pension is also payable depending on the degree of incapacity.

Depending on eligibility, Australian veterans may also be entitled to treatment of:

  • pulmonary tuberculosis (whether war caused or not) ;
  • malignant cancer (neoplasia) (whether war caused or not); and
  • any mental health condition (whether war caused or not);

where DVA has accepted a claim for treatment for those conditions.

Once the application for treatment only is approved by the Repatriation Commission a White Card is issued indicating that the Commission has accepted responsibility for the treatment of these conditions.  No disability pension is payable for conditions that are covered for treatment only.

Treatment, but not disability pension, for any unidentified condition that arises within 15 years of an eligible period of service is available to all veterans, members of the Defence Force, or peacekeepers with an eligible period of service.  The treatment is available once the application is approved by the Repatriation Commission and a White Card is issued. Treatment coverage continues until the condition is diagnosed and a decision is then made as to whether the now identified condition is service related or not.  Disability pension is then paid and treatment continued for those identified conditions accepted as service related.  Treatment ceases for those rejected as service related.

 

 

A payment to make amends for loss or injury to a person or property, or as a recompense for some deprivation (such as compensation to the owner for compulsory acquisition of their property).

Disability pension, for the purposes of service pension and income support supplement, means:

  • a pension paid for incapacity from war caused conditions, or peacetime, peacekeeping or hazardous service caused conditions (other than a war widow's or orphan's pension); or
  • temporary incapacity allowance; or
  • any other payment in respect of incapacity or death resulting from war or war-like operations in which the Crown has been engaged [usually paid by another Commonwealth country].

Damages is the economic value of something lost or withheld. For compensation purposes, damages is the sum awarded for any loss or injury that has been sustained.