8/23/2010 1

EXPLAINING DEFENSE BASE ACT INSURANCE BENEFITS

FOR EXPATRIATE AND COOPERATING COUNTRY

NATIONAL EMPLOYEES UNDER USAID CONTRACTS AND GRANT

Prepared for Lost in Regulation Blogusaidtrainer@gmail.com

WHAT IS DBA?

The DBA is an extension of the Longshore and Harbor Workers’

Compensation Act

(LHWCA) which provides disability compensation and medical benefits to employees and death benefits to eligible survivors of employees of U.S. government contractors who perform work overseas. With a few exceptions, the DBA incorporates the provisions of the LHWCA.

WHO IS COVERED BY DBA?

Mandatory: All Direct Employees of Contractors under USAID Contracts, including Local Hires and Third Country Nationals

If elected (Allowable Cost): All Direct Employees of prime recipients under USAID Grants and Cooperative Agreements, including Local Hires and Third Country Nationals

Applies regardless of length of employment or type of employment agreement.

Applies to Home Office personnel traveling on TDY under covered Contracts or Grants.

WHEN DOES THE COVERAGE APPLY?

When you become an employee by signing your employment contract HQ Staff - the day you leave CONUS on TDYCover applies to all employees under covered USAID contracts and grantsThere is no exclusion for directors or officersThere is no exclusion for companies with a minimum number of employeesIndependent contractors may well be coveredDBA is the employer’s exclusive liability and the employee’s exclusive remedy

DBA AND SUBCONTRACTORS

UNDER PRIME CONTRACTS WITH USAID

All Subcontractors under Prime USAID Contracts must obtain DBA coverage for their employees and present proof of policy to Prime ContractorApplies to foreign companies hiring third county nationalsApplies to contracts where the administrator and employees are all foreign nationalsCannot be waived on grounds of costCannot be waived on grounds of country of origin of workerIf Subcontractor does not procure coverage, the Prime Contractor is responsible and may be sued by subcontractor employees

DBA AND SUBCONTRACTORS

UNDER GRANTS AND COOPERATIVE AGREEMENTS WITH USAID

Under Vendor Services Contracts (not POs or Contracts for supplies, goods, commodities), DBA must be obtained by Vendors/Subcontractors (22CFR226 Appendix A)Prime can assist getting the policy and paying the premium but vendor contractor must administer claims for its employeesOnly applies to the first tier vendor contractors and their direct employeesApplies to foreign companies hiring third county nationalsCannot be waived on grounds of costCannot be waived on grounds of country of origin of workerIf vendor does not have coverage, the Prime may be responsible for vendor’s injured or deceased employees

WHO ADMINISTERS DBA BENEFITS?

The U. S. Department of Labor, Office of Workers’

Compensation Programs (OWCP), Division of Longshore and Harbor Workers’Compensation (DLHWC), administers the DBA through eleven district offices located throughout the United States

WHAT TO DO IN CASE OF INJURY OR DEATH

HR Coordinators

The employer must report a claim within ten (10) days from the date of injury or death or from the date the employer first has knowledge of an injury or death

Submit a report of injury or death by completing LS-202 “Employer’s First Report of Injury or Occupational Illness” to the Insurance Provider and Department of Labor.

Provide additional documentation as requested Insurance Provider promptly

WHAT INFORMATION IS NEEDED ?FIRST REPORT

Description of the accident Description of the injuries or illnessLocation, date and time of the occurrenceInjured employee’s:

NameNationality (U.S. National, 3rd Country National, Local National)Address, Phone numberCountry in which he/she worksDescription of the employee’s current ability to work

The name, phone number and fax number of the person to contact for issues involving this claim (if other than you)

WHAT INFORMATION IS NEEDED ?REPORT OF DEATH

Exact date of birth Copy of Death CertificateExact address of the deceased Address of the doctors and hospital which provided treatment if any First information report, about the accident, filed with PoliceAddresses and income certificate from the employer. (Form LS-200 – shows average weekly pay for the last 52 week prior to death)Information on all dependents, including contact information (address and phone), and dates of birthMarriage Certificate for spouse, if anyBirth Certificates for any dependent children Contact information for witnesses, if any

WHAT HAPPENS NEXT…..INJURY/DISABILITY

You must authorize medical treatment immediately.

Once report is submitted to the Insurance Provider, you will receive:Acknowledgement of claim, including:Claim numberAdjuster name, address and phone numberFurther instructions/actions to takeThorough investigation – Completed within 14 daysReturn-to-work assistance – Adjuster will work with you, the employee and the physician to optimize medical care and facilitate a healthy return to work

DEATHOnce report is submitted to Insurance Provider, you will receive:

Acknowledgement of claim, including:Copy of the LS-202Claim numberAdjuster name, address and phone numberFurther instructions/actions to takeThe Adjuster will keep you updated Phone calls returned within one day by Insurance AdjusterWritten communication responded to within five daysThorough investigation – Completed within 14 daysAll claims are paid within 3 days of the final resolution

WHAT HAPPENS NEXT…..

BENEFITS UNDER DBA

Medical Treatment

Disability Compensation

Death Benefits

Vocational Rehabilitation

BENEFITS UNDER DBA

Medical Benefits

Medical Treatment by a physician of the employee’s choice

Medical care must be related to the employment injury or illness

Medical treatment is payable for as long as the injury or illness requires

BENEFITS UNDER DBADisability Benefits

Temporary Total (TTD)Temporary Partial (TPD)Permanent Total with annual increases (PTD)Permanent Partial (PPD)Based upon wage loss (unscheduled)Based upon percent of loss of use of specified body part (scheduled)Compensation is Determined by Average Weekly Wage (AWW)Temporary Total (TTD): 2/3 of the AWWTemporary Partial (TPD): 2/3 of employee’s loss of wagesPermanent Total (PTD): 2/3 of the AWWPermanent Partial (PPD):2/3 of loss of earning capacity (unscheduled PPD) or,TTD for a defined number of weeks for a % of permanent impairment of a scheduled body part (scheduled PPD)

BENEFITS UNDER DBA

Maximum & Minimum

Compensation is subject to a Maximum Compensation Rate, which is adjusted annually.

Current Maximum 10/01/2009 - 09/30/2010 = $1,224.66 per week. Next increase is on 10/01/2010

There is no Minimum Compensation Rate under the DBA.

BENEFITS UNDER DBA

Example 1: An engineer earning $37,700/year w/injuries to back and right arm

AWW: $37,700 ÷

52 = $725TTD: 2/3 x $725 = $483PTD: 2/3 x $725 = $483PPD Unscheduled wage loss:2/3 x ($725 –

300) = $283

PPD Scheduled body part:50% x 312 weeks x $725 = $113,100

BENEFITS UNDER DBA

Example 2: Same engineer earning $95,000/yr in Afghanistan

AWW: $95,000 ÷

52 = $1,826.92TTD: 2/3 x $1,826.92 = capped at $1,224.66 (max)PTD: 2/3 x $1,826.92 = capped at $1,224.66(max)PPD unscheduled wage loss:2/3 x ($1,826.92 –

$300) = $1,145.19

PPD scheduled body part:50% x 312 weeks x $1,224.66 = $191,046.96

BENEFITS UNDER DBADeath Benefits

Burial Expenses of up to $3,000 (must present receipts)50% of Average Weekly Wage (AWW) for the surviving spouse, or if no spouse, for one surviving child16⅔ of AWW for one or more surviving children, shared equally. If no surviving spouse, all children will get 66.75 % of AWW shared equally between them.Child benefit is paid up to age 18, student benefit through age 23 if in school fulltimeIf no surviving spouse or children, other dependents may qualify for 20%-25% of the AWW (siblings, parents, grandparents)For non-US citizens whose dependents reside in foreign country, only widow, children or dependent parents will qualifyIf there are no surviving depends, a death payment of $5,000 is made to the Special Fund at US Treasury

BENEFITS UNDER DBA

Lifetime Disability Payments

Permanent disability is payable as long as disability continues.

A 40 year old earning $1,500/week will receive permanent total disability benefits over his 35 year life expectancy:

@ $1,000 (2/3 of AWW) x 52 weeks x 35 years = $1,820,000, not including cost of living adjustments.

BENEFITS UNDER DBALifetime Death Benefits

If the same employee had been killed, his 30 year old widow and 2 infant children will receive over the life of the claim almost$2,000,000, not including annual adjustments.

Widow @ $750 (50% of $1,500) x 52 weeks x 45 years = $1,755,000

Children @ $250 (16 2/3 of $1,500) x 52 x 18 years = $234,000

If the widow re-marries, benefits will cease, but DBA will pay out a one time lump sum payment equal to 2 years of benefits to the widow ($78,000 in the case above). However, children will continue receiving monthly benefit till the age of 18 (or 23 for students).

BENEFITS UNDER DBACommutation for non-US nationals

Permanent disability and death benefits payable to aliens and non-US citizens residing outside the US may be commuted – normally after a few years.

Commuted benefit is equal to one half of the present value of future compensation, paid in one lump sum.

BENEFITS UNDER DBAFor example

If an Afghan employee, earning $200 per week had been killed, his 30 year old widow and 2 infant children will receive over the life of the claim in excess of $250,000

Widow @ $100 (50% of $200) x 52 weeks x 45 years = $234,000Children @ $33.20 (16 2/3 of $200) x 52 x 18 years = $31,075

If the widow re-marries, benefits will cease, but DBA will pay out a one time lump sum payment equal to 2 years of benefits to the widow ($10,400 in the case above). However, children will continue receiving monthly benefit till the age of 18 (or 23 for students).

BENEFITS UNDER DBAIf after several years (let’s say after 5 years), DBA provider

feels that the widow will not remarry, they will commute the benefit as follows:

Estimated Present Value of Benefits for Widow @ $100 (50% of $200) x 52 weeks x 40 years = $208,000

Commuted Pay out to the widow = $104,000

All payments will only be made to the widow’s own bank account.

RESOURCES

US Department of Labor Division of Longshore and Harbor Workers' Compensation (DLHWC) DBA Page

http://www.dol.gov/owcp/dlhwc/lsdba.htm