12.7.2.6 Step 6

At Step 6 the delegate is deciding whether the amount of compensation already received for all accepted conditions exceeds the maximum weekly permanent impairment (PI) compensation amount payable under the MRCA.

Step 6 asks the delegate to add the following amounts together:

• the amount worked out at Step 4 plus,
• the amount worked out by using the VEA percentage to calculate the notional equivalent amount of the disability compensation payment under Part II or IV of the VEA payable using the General Rate payable at the date of the determination plus,
• the weekly equivalent of PI lump sums paid under the DRCA for the DRCA accepted conditions referred to at Step 1.

If the total of these amounts:

• exceeds the maximum weekly PI compensation amount payable under MRCA, the delegate must proceed to Step 7, or
• is less than the maximum weekly PI compensation amount payable under MRCA, the amount payable is the amount worked out at Step 4.

Note: Please see Payment Rates in the Compensation and Support Reference Library for more information.

Note: Please see the Compensation Claims Procedures manual for more information about the procedural aspects of Step 6.

Conversion of DRCA lump sums

The DRCA amounts are converted to a current lump sum value (by multiplying by the ratio of the current value for maximum DRCA section 24 payment to the value when the lump sum payment was made) and each lump sum converted to a periodic payment by dividing by an age-based number provided by the Australian Government Actuary for this purpose. The age to be used in applying this age-based number is the age that the person would have been on their next birthday at the time the DRCA lump sum was paid.  The converted amount is indexed annually (on 1 July) using the indexation factor calculated under section 404 of the MRCA.

• The Military Rehabilitation and Compensation (Consequential and Transitional Provisions) Regulations 2020 provides the methodology for converting a DRCA lump sum to a weekly amount.

• The Actuary Tables used for Age Adjusting Lump Sum Payments provide the relevant age-based number for the conversion.
• You may also find the methodology for converting a DRCA lump sum to a weekly amount at the end of the steps in Chapter 25 of GARP M.

Conversion of VEA DCP

At this step, delegates must use the percentage rate of DCP at the date the client lodged their MRCA PI claim, however use the current rate of payment applicable at the date of MRCA PI determination. This is to take into consideration any rate increases to the DCP percentage that have occurred between the time of MRCA PI claim and MRCA PI determination. It is important to note that at this step the delegate is not taking into consideration any increase in DCP percentage as a result of a new claim or an Application for Increase (AFI) under VEA occurring after the MRCA PI claim date. As DCP is a fortnightly amount, the delegate will halve the DCP to find the weekly equivalent rate.

Example: A veteran lodges a MRCA PI claim on 1/01/2022. At that date, the veteran is receiving DCP at 30% of the General Rate under VEA. On 01/03/2022, the veteran lodges an Application for Increase under VEA and their DCP is increased to 40% of the General Rate on 01/05/2022, with effect from 1/02/2022. At the date of determination of MRCA PI on 01/10/2022 and at Step 6, the delegate is taking into consideration the DCP percentage payable at the date of MRCA PI claim, that is, 30% DCP. However, the dollar amount taken into consideration is 30% DCP at the rate payable at the date of MRCA PI determination, on 01/10/2022.

Relevant definitions

MRCA determination means: ‘in relation to a person, means the determination by the Commission of the degree of impairment suffered by the person as a result of a compensable condition under the Act’.

DRCA accepted condition means: ‘in relation to a person, means the person’s injury for which there is liability to pay compensation under the DRCA’.

• Note that the definition of injury includes disease under DRCA

VEA percentage means: 'the amount of disability pension payable under the VEA for the conditions referred to in Step 1 as at the date of the MRCA claim expressed as a percentage of the General Rate at that date’.