Permanent Impairment Compensation

Legislative Authority

Military Rehabilitation and Compensation Act 2004
Chapter 4 Part 2
Section 67 (Guide to determining impairment and compensation)
Section 68 (entitlement to compensation for permanent impairment)
Section 71 (additional permanent impairment compensation)
Section 74 (amount of compensation)
Section 75 (interim compensation)
Section 78 (choice to take a lump sum)

Military Rehabilitation and Compensation (Consequential and Transitional Provisions) Act 2004
Section 13 (Bringing across impairment points from a VEA or SRCA injury or disease)

Stated Current Purpose/Intent

Permanent impairment compensation is a tax-free, non-economic loss payment to compensate a member or former member for permanent impairment arising from injury or disease for which liability has been accepted.

It can be paid as a periodic payment (a maximum weekly amount of $324.60), a lump sum payment based on the weekly amount or a combination of the two. Lump sum payments are age-based, that is, for a given level of permanent impairment they are constant up to age 30 for males and age 35 for females and will reduce after those ages according to a formula provided by the Australian Government Actuary. The degree of impairment is assessed using a modified version of GARP V used for VEA claims. The assessment guide specifies different methods for combining the impairment points and lifestyle rating for conditions related to warlike and non-warlike service as opposed to conditions related to peacetime service.

Current Eligibility Criteria

To be eligible a person must have an injury or disease:

which has been accepted as related to service in the ADF rendered on or after 1 July 2004 which results in a permanent impairment; and
the level of impairment for all compensable injuries and is assessed at 10 points or more (or five points for hearing loss, loss of fingers or toes, and loss of taste or smell)

Notes

Interim compensation is payable where the level of permanent impairment cannot be ascertained because the condition has not stabilised. The amount of an interim impairment payment is determined on the best estimate of the final level of impairment and from 1 July 2013 include an imputed lifestyle effects.
Additional permanent impairment compensation is payable where permanent impairment from accepted injury or disease worsens or where liability for another injury or disease resulting in a permanent impairment is accepted. Additional permanent impairment compensation is payable where permanent impairment has increased by 5 points or more.
The above rate of payment is applicable as at 1 July 2014 and is indexed annually on 1 July.

Date of Introduction

1 July 2004

Original Purpose/Intent

The original intention has not changed.

Significant Changes in Criteria or Purpose Since Introduction
2012	Clean energy advance payable for the period 1 July 2012 to 30 June 2013 for eligible recipients.
2013	Clean energy supplement commenced 1 July 2013 for eligible recipients. In response to the Review of Military Compensation Arrangements, from 1 July 2013 several changes were made to permanent impairment compensation: Permanent impairment compensation will be payable for each service injury or disease from date of the liability claim or date the condition met the threshold for payment. Interim PI payments will attract a lifestyle effect. For less than 15 impairment points this will be 1, for greater than 15 points it is the lower of the shaded area. (members who have a higher rating for a previous condition may have a higher interim rating). A new methodology has been introduced to calculate permanent impairment across multiple acts (transitional PI). The main changes to the new methodology are:- no compensation will be payable unless the MRCA condition or group of conditions being claimed contribute at least 5 impairment points to the person’s overall impairment from all their accepted conditions under the VEA, SRCA and MRCA; instead of subtracting the actual amount of disability pension or SRCA permanent impairment payments from the notional amount of MRCA PI payable for all accepted conditions, the amount of MRCA PI that would be payable for the VEA and SRCA conditions alone is subtracted to arrive at a MRCA payment amount The new methodology will be retrospective and will take effect from 1 July 2004. All claims for permanent impairment that are transitional will be reviewed and recalculated using the new methodology. The reviews will commence January 2014 and are expected to take two and a half years to complete. If the retrospective application of the new methodology results in a lower amount of PI payable then the amount payable will remain at the existing level, until a new claim results in a change in the amount payable. Reimbursement for legal advice was made available to clients when making a choice between Permanent Impairment payments and Special Rate Disability Pension. The maximum amount for both financial and legal advice was increased to $2,400.
2014	Clean energy supplement replaced by energy supplement commenced 20 September 2014.

Significant Changes in Criteria or Purpose Since Introduction

2012

Clean energy advance payable for the period 1 July 2012 to 30 June 2013 for eligible recipients.

2013

Clean energy supplement commenced 1 July 2013 for eligible recipients.

In response to the Review of Military Compensation Arrangements, from 1 July 2013 several changes were made to permanent impairment compensation:

Permanent impairment compensation will be payable for each service injury or disease from date of the liability claim or date the condition met the threshold for payment.
Interim PI payments will attract a lifestyle effect. For less than 15 impairment points this will be 1, for greater than 15 points it is the lower of the shaded area. (members who have a higher rating for a previous condition may have a higher interim rating).
A new methodology has been introduced to calculate permanent impairment across multiple acts (transitional PI). The main changes to the new methodology are:-
no compensation will be payable unless the MRCA condition or group of conditions being claimed contribute at least 5 impairment points to the person’s overall impairment from all their accepted conditions under the VEA, SRCA and MRCA;
instead of subtracting the actual amount of disability pension or SRCA permanent impairment payments from the notional amount of MRCA PI payable for all accepted conditions, the amount of MRCA PI that would be payable for the VEA and SRCA conditions alone is subtracted to arrive at a MRCA payment amount
The new methodology will be retrospective and will take effect from 1 July 2004. All claims for permanent impairment that are transitional will be reviewed and recalculated using the new methodology. The reviews will commence January 2014 and are expected to take two and a half years to complete. If the retrospective application of the new methodology results in a lower amount of PI payable then the amount payable will remain at the existing level, until a new claim results in a change in the amount payable.
Reimbursement for legal advice was made available to clients when making a choice between Permanent Impairment payments and Special Rate Disability Pension. The maximum amount for both financial and legal advice was increased to $2,400.

2014

Clean energy supplement replaced by energy supplement commenced 20 September 2014.

Source URL: https://clik.dva.gov.au/compensation-and-support-reference-library/intent-paper/rehabilitation-and-compensation-military-rehabilitation-and-compensation-act-2004-mrca/permanent-impairment-compensation