1. EXPLAINING DEFENSE BASE ACT
INSURANCE BENEFITS
FOR EXPATRIATE AND
COOPERATING COUNTRY
NATIONAL EMPLOYEES UNDER
USAID CONTRACTS AND GRANT
Prepared for Lost in Regulation Blog
usaidtrainer@gmail.com
8/23/2010 1
2. 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.
3. 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.
4. WHEN DOES THE COVERAGE APPLY?
When you become an employee by signing your employment
contract
HQ Staff - the day you leave CONUS on TDY
Cover applies to all employees under covered USAID contracts
and grants
There is no exclusion for directors or officers
There is no exclusion for companies with a minimum number of
employees
Independent contractors may well be covered
DBA is the employer’s exclusive liability and the employee’s
exclusive remedy
5. 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 Contractor
Applies to foreign companies hiring third county nationals
Applies to contracts where the administrator and employees are
all foreign nationals
Cannot be waived on grounds of cost
Cannot be waived on grounds of country of origin of worker
If Subcontractor does not procure coverage, the Prime
Contractor is responsible and may be sued by subcontractor
employees
6. 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 employees
Only applies to the first tier vendor contractors and their direct
employees
Applies to foreign companies hiring third county nationals
Cannot be waived on grounds of cost
Cannot be waived on grounds of country of origin of worker
If vendor does not have coverage, the Prime may be responsible
for vendor’s injured or deceased employees
7. 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
8. 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
9. WHAT INFORMATION IS NEEDED ?
FIRST REPORT
Description of the accident
Description of the injuries or illness
Location, date and time of the occurrence
Injured employee’s:
Name
Nationality (U.S. National, 3rd Country National, Local National)
Address, Phone number
Country in which he/she works
Description 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)
10. WHAT INFORMATION IS NEEDED ?
REPORT OF DEATH
Exact date of birth
Copy of Death Certificate
Exact address of the deceased
Address of the doctors and hospital which provided treatment if
any
First information report, about the accident, filed with Police
Addresses 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 birth
Marriage Certificate for spouse, if any
Birth Certificates for any dependent children
Contact information for witnesses, if any
11. 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 number
Adjuster name, address and phone number
Further instructions/actions to take
Thorough investigation – Completed within 14 days
Return-to-work assistance – Adjuster will work with you, the
employee and the physician to optimize medical care and
facilitate a healthy return to work
12. WHAT HAPPENS NEXT…..
DEATH
Once report is submitted to Insurance Provider, you will receive:
Acknowledgement of claim, including:
Copy of the LS-202
Claim number
Adjuster name, address and phone number
Further instructions/actions to take
The Adjuster will keep you updated
Phone calls returned within one day by Insurance Adjuster
Written communication responded to within five days
Thorough investigation – Completed within 14 days
All claims are paid within 3 days of the final resolution
14. 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
15. BENEFITS UNDER DBA
Disability 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 AWW
Temporary Partial (TPD): 2/3 of employee’s loss of wages
Permanent Total (PTD): 2/3 of the AWW
Permanent 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)
16. 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.
17. BENEFITS UNDER DBA
Example 1: An engineer earning $37,700/year w/injuries to back
and right arm
AWW: $37,700 ÷ 52 = $725
TTD: 2/3 x $725 = $483
PTD: 2/3 x $725 = $483
PPD Unscheduled wage loss:
2/3 x ($725 – 300) = $283
PPD Scheduled body part:
50% x 312 weeks x $725 = $113,100
18. BENEFITS UNDER DBA
Example 2: Same engineer earning $95,000/yr in Afghanistan
AWW: $95,000 ÷ 52 = $1,826.92
TTD: 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
19. BENEFITS UNDER DBA
Death 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 child
16⅔ 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 fulltime
If 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 qualify
If there are no surviving depends, a death payment of $5,000 is
made to the Special Fund at US Treasury
20. 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.
21. BENEFITS UNDER DBA
Lifetime 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).
22. BENEFITS UNDER DBA
Commutation 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.
23. BENEFITS UNDER DBA
For 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 = $234,000
Children @ $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).
24. BENEFITS UNDER DBA
If 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.
25. RESOURCES
US Department of Labor
Division of Longshore and Harbor Workers'
Compensation (DLHWC) DBA Page
http://www.dol.gov/owcp/dlhwc/lsdba.htm
