Defense Base Act (DBA) is a form of Workers’ Compensation insurance that provides benefits to workers performing work overseas under contracts for the U.S. Government. Benefits under DBA include loss of wages, medical expenses, medical evacuation, rehabilitation services, and repatriation of mortal remains and funeral expenses.
Loss of Wages
In the event of an injury to an employee working OCONUS, a formula is used to determine the dollar amount the employee receives to recover their lost wages while unable to work. The formula is 66-2/3% of the average weekly wage for the 12 month period prior to the injury. However, if the loss of wage benefit payments do not meet the prior financial needs of the injured worker, the DBA carrier will often pay a partial benefit to the worker, using another formula, to yield an amount closer to their regular earnings. All total earnings are subject to a weekly wage cap, currently set at $1346.68. The loss of wage benefit is paid tax-free, is not combinable with any other benefit, and is paid to the employee until the time he or she is released to return to work with the exception of the following:
Permanent Total Disability – If the injured worker is deemed permanently unable to return to work, the loss of wage benefits are paid for life to the injured worker. As the U.S. Department of Labor increases the weekly wage cap to adjust for cost of living increases, loss of wage benefit amounts are simultaneously increased.
Death – If a worker is killed in the course of their employment resulting in a compensable claim, a death benefit is paid to his or her survivors. For surviving spouses only, a death benefit of 50% of the average weekly wage is paid for the life of the surviving spouse, or until he/she remarries, at which time a lump sum benefit equaling two years of benefit payment is made to the spouse. The death benefit amount increases to 66-2/3% of the average weekly wage if there are one or more minor children. The minor children receive benefits until age 18 (age 23 if a full-time student). If there are only surviving children (no surviving spouse), the children will split the total amount of the benefit equally. The total amount paid to all survivors will not exceed the weekly wage cap as set by the U.S. Department of Labor. Death benefits also increase annually to accommodate a cost of living adjustment.
Medical expenses that are attributable to a compensable claim are paid by the DBA Insurance carrier until the claim is closed. While an injured worker is entitled to choose their treating physician once they’ve returned to the U.S., they are dependent on whatever medical facilities are available in their location. However, the DBA Insurance carrier has the right to request an independent medical examination by a physician of their choice as a second opinion.
In addition, the DBA Insurance carrier will oftentimes assign a Nurse Case Manager to assist in the coordination of care for the injured worker. This is common in cases where an injury is severe or it appears recovery time will be lengthy, and is done not only as a cost-control measure for the insurance carrier, but as an assurance that the injured worker receives the best possible care.
In cases where an injury is severe and the local medical facilities are unequipped to provide the necessary medical treatment, a medical evacuation will be authorized by the treating physician in the country where the injury occurred so the injured worker can be transported to his or her country of citizenship. The DBA Insurance carrier will coordinate the actual medical evacuation and make payment for the related costs.
However, if the injured worker is able to be transported on a commercial airline, the DBA carrier will not pay for the cost of the evacuation. In cases where an injured person is able to fly on a commercial airline, but requires expanded space (such as what’s offered in first-class seating), the DBA carrier will pay the difference in the price for the upgraded ticket.
If an injury forces a covered employee out of the type of work he or she is accustomed to doing (such as the work they were performing overseas), rehabilitation services are coordinated by the U.S. Department of Labor to train the injured employee in a new occupation. These services are only available for U.S. nationals residing in the U.S.
Repatriation of Mortal Remains
The DBA Insurance carrier will pay for the return of mortal remains of a deceased worker to their country and city of residence. A funeral benefit of $3,000 is also afforded under DBA policy.
Just as U.S. employers are required to provide Workers’ Compensation benefits to their employees, affording benefits to workers going overseas for employment is a vital part of doing contract work for the U.S. Government, and is required under Federal Law. Employees and their families can feel confident that the risks of working in remote parts of the world are covered by DBA benefits.
The LATITUDE DBA Insurance Program, the DBA Insurance broker for Allied World Assurance, is a great source for DBA Insurance. Our team has a deep understanding of the complexities and unique business needs associated with government contracts. Contact LATITUDE DBA Insurance today―we’re here to assist you in creating an insurance plan that protects your business and its employees against all your overseas exposures.