No. 19 Bereavement Compensation Payments under the Military Rehabilitation and Compensation Act 2004

Purpose

The purpose of this instruction is to provide delegates with policy advice regarding the making of bereavement compensation payments after the death of an eligible member or former member of the Australian Defence Force (ADF) under the Military Rehabilitation and Compensation Act 2004 (the MRCA).

Background

Chapter 5 of the MRCA makes provision for the payment of compensation to the dependants of certain deceased members and former members.  Divisions 4 of both Parts 2 & 3 of Chapter 5 allow for the making of bereavement payments to a wholly dependent partner (WDP) or dependent eligible young person (EYP) after the death of a member or former member who has been in receipt of periodic permanent impairment (PI) payments (including interim payments), periodic incapacity payments and the Special Rate Disability Pension (SRDP).

Policy related to these provisions was issued previously in Chapter 7 of the MRCA policy manual and this policy instruction is issued to supplement that material.

Basic Requirements that must be met for there to be any bereavement payments

Before consideration is given to whether bereavement compensation is payable to an individual, the delegate must satisfy themselves that the deceased member or former member was in receipt of periodic PI payments, periodic incapacity payments or SRDP payments for the week before the week of their death, or, if they had not been so paid, one or more of those payments needs to have been payable during that week.

No bereavement payment is payable if:

• the member or former member was either not in payment or not payable during that week because payment was suspended due to non-compliance (e.g. for refusal to undertake a rehabilitation program); or

• the member had converted their PI or small amounts of incapacity payments compensation to a lump sum.

Once the basic eligibility criteria have been met,  sections 242 and 255 of the MRCA require that a section 319 claim must have been made in respect of the WDP or EYP's eligibility to receive the bereavement payments.  Although this requirement is central to determining eligibility for these payments, it has the potential to delay payment and undermine the ultimate intention of the bereavement payment.

Intention of bereavement payment

Bereavement payments were included in the MRCA to continue the support offered to a War Widow under the Veterans' Entitlements Act 1986 (the VEA) and were extended to include EYPs for situations where there is no eligible WDP.  Under the VEA this payment is automatically paid to the widow(er) upon the death of an eligible veteran.  However, under the MRCA there is no automatic payment, as the WDP or EYP is required to claim for the payment.

The intention of the WDP bereavement payment (as expressed in the MRCA's Explanatory Memorandum) is to:

“...assist wholly dependent partners to adjust to the new financial situation after the deceased member's death and to defray the costs caused by the bereavement”.

Provision for bereavement payments to EYPs was included in the MRCA for the same reason.

There is a potential for this intention to remain unfulfilled in individual cases because of the onus being placed on the bereaved to claim and the delays that can result from this process.

What can be done to ensure that the intention of bereavement payments is fulfilled?

While the delegate must be reasonably satisfied  that a person is entitled to bereavement payments before making a decision, every effort should be made

to fulfil the intention of the legislation by providing ongoing support to dependants of deceased members or former members in the form of  bereavement payments.

The delegate must be mindful of the circumstances of each claim.  In some cases a delegate will be aware that a MRCA client has passed away.  If this is the case the delegate may already have evidence that has or can be used to establish the WDP or EYP status of any dependants.

In this situation the delegate is to contact the person as soon as is practicable, with appropriate consideration to the traumatic time and the nature of evidence available, to encourage the submission of a claim.

The claim form that exists for dependant claims (D2053) could be used to claim bereavement payments.  However, given that expediency is desired, any form of claim with adequate supporting evidence should be accepted.  This could include a signed letter with appropriate evidence (e.g. marriage certificate and proof that the couple were living together immediately before the death) or a statutory declaration.

Evidence that can be considered satisfactory is to be determined through agreement between the delegate, their manager and the Military Compensation Policy section if necessary.

Payments

The amount of compensation to be paid to an eligible WDP or EYP is prescribed by sections 243 and 256.

For both WDP and EYP bereavement payments the formula for calculating the payment is the same.  This formula requires:

1. the calculation of the total amount of SRDP, periodic permanent impairment and  incapacity compensation that the deceased was paid in the week before the week in which they died, or, if not paid, the amount that was payable;
2. multiplied by 12 (being the net payment if calculating continuing incapacity payments); and
3. the distribution of the calculated amount to any eligible people (if more than one).

The calculated total is the overall amount that can be paid related to that bereavement.  If there is more than one WDP or EYP, that total is to be distributed between them according to the loss of financial support suffered by the respective recipients as a result of the death.  Quantification of the loss is to be determined by the delegate based on available financial evidence or on evidence gathered at the time of the claim.

NB.  The bereavement payment is to be paid to the WDP themselves.  In the case of an EYP, if they are over the age of 18 the compensation is to be paid to them, otherwise the compensation should be paid to the person that has the responsibility for the daily care of the EYP.

Section 432 sets out special rules for payment if a trustee is required to be appointed for either a WDP or EYP.

The actual payment of the bereavement compensation to the recipient is to be considered in light of the circumstances.  For example, if an incapacity compensation recipient dies and their payments were being paid into a joint bank account, there is no requirement to make the WDP provide a solo bank account for the purposes of payment.

Items 13 and 15 of Section 11 of Schedule 4 of Part 2 of the Military Rehabilitation and Compensation (Consequential and Transitional Provisions) Act 2004 provides that the tax status of bereavement payments is identical to the tax status of the payments on which they are based.  Thus PI and SRDP payments are exempt from taxation for the purposes of calculating bereavement payments, while bereavement payments based on incapacity payments are taxable.  This means that the amount of the bereavement payment is exactly the same as the amount of SRDP, PI or incapacity payments paid or payable in the week before the week of the death.

Time factors

Given the trauma and stress that can surround the death of a member, notification of the bereavement and the claim for payment can often be delayed for some time after the date of death.

This may result in the continued payment of SRDP, incapacity payments or PI periodicals after the eligible recipient has passed away.

Overpayments

If periodic payments of PI, SRDP or incap have continued after the date of death of the eligible member the delegate must take into account the following:

1. whether the payments have continued past the 12 week point after death; and
2. the circumstances surrounding the bereavement and the reasonableness of the failure to inform the MRCC of the death and/or the lateness of the claim.  The reasonable nature of the failure can help determine any write-off or waiver possibilities.

If the payments have continued past the 12 week mark, the person receiving the payments has received more than the entitlement under sections 243 and 256.

In this situation an overpayment will have to be raised to recover the excess payment amount.  If the WDP or EYP is yet to receive any other forms of monetary death compensation, this overpayment can be offset against this payment.

Procedures for Payments and Overpayments

For information on the procedures to be followed when making a bereavement payment or seeking recovery for an overpayment of bereavement monies, please contact the:

Director, Business Support, Military Rehabilitation and Compensation, Service Delivery Division.