Permanent impairment points are a method of calculating compensation for veterans who have suffered disease or injury related to their service in the Australian Defence Force (ADF) under the Military Rehabilitation and Compensation Act 2004 (MRCA) for all service-related injuries occurring after 1 July 2004. 

Points are based on the degree of impairment caused by service-related conditions. The higher the number of points, the greater the level of impairment considered, which subsequently influences the compensation and benefits provided to the affected member.

One area that often requires guidance is understanding how compensation is calculated for permanent impairment incurred during service. For veterans to qualify for PI compensation, several criteria must be met. Firstly, there must be an accepted condition directly linked to ADF service. This condition should result in an impairment likely to persist indefinitely. Understanding these prerequisites is important for veterans seeking compensation through DVA, as they form the foundation of a successful claim.

What is a permanent impairment? 

A permanent impairment refers to a service-related injury or illness that will indefinitely impact the life of a veteran. While it is often associated with a permanent disability, it does not always have to be the case for DVA to award permanent impairment compensation. With a permanent impairment, you may receive a medical discharge from the ADF and experience a change in income.

In plain English, a permanent impairment is an injury or disability that may affect your ability to look after yourself or continue to work regularly due to any injury sustained while in service. This could be any bodily injury or disease to the reproductive, psychological, or digestive system. These can be assessed, and permanent impairment points may be awarded under the MRCA. 

MRCA vs DRCA

Once the application for long-term disability is accepted, the veteran’s compensation will fall under one of two systems—the DRCA or the MRCA, depending on when the injury occurred. 

For all service-related injuries occurring after 1 July 2004, permanent impairment is calculated using points under the MRCA. 

For any injury obtained up to or on 30 June 2004, permanent impairment is calculated as a percentage under the Safety, Rehabilitation and Compensation (Defence-related Claims) Act 1988 (DRCA). The degree of the injury is assessed per the DRCA PI Guide. 

How are permanent impairment points calculated under the MRCA? 

Permanent impairment compensation aims to ease the financial burden caused by a person’s inability to work or resume their usual daily activities. Before granting this, DVA evaluates how the permanent impairment has impacted the veteran’s work and daily life.

The process begins when a veteran files a claim for a long-term injury or condition. This allows DVA to review whether the veteran’s condition is lifelong and meets the requisite standards outlined in their Statement of Principles. It also involves checking whether the condition is related to the veteran’s military service.

Permanent impairment points are rated on a scale of 0 to 100 points, associated with minor to total impairment. The impairment rating is then combined with the type of service you were completing at the time of your injury, along with a lifestyle rating from 0 to 7, to determine the compensation payable.

For PI compensation eligibility, your injury or disability must be assessed at 10 impairment points or more. However, cases related to loss of toes and fingers, hearing loss and loss of taste or smell require only 5 impairment points. 

The underlying concept is that the greater the disability’s severity and impact on daily activities, the greater the compensation. 

What is a permanent impairment payment? 

A permanent impairment payment is a financial benefit provided to current or former ADF members. This payment is intended for veterans who have suffered an injury or disease attributable to their service, resulting in a permanent impairment. 

The payment is intended to compensate for the loss of quality of life and the pain and suffering caused by service-related impairments. The assessment and determination of the level of impairment will follow specific legislative criteria, ensuring payments accurately reflect the severity of the condition and its impact. 

Are you eligible for PI payments?

If your service-related injury or disease occurred before or on 30 June 2004, you may qualify for PI payments under the DRCA. For any injury or disability that occurred on or after 1 July 2004, you may qualify for permanent impairment payments under the MRCA. 

Although these two laws are similar, they offer different benefits and have distinct qualifications.

How are permanent impairment payments calculated under the MRCA?

Periodic PI payments are calculated by taking the highest amount you can receive each week for PI and multiplying it by a specific number related to your situation. These numbers, known as compensation factors, differ based on your impairment level and how it affects your day-to-day life and are detailed in the GARP M document. The calculation also differs depending on whether your service was during a time of war or peace. The payment rates under MRCA are shown below.

MRCA Permanent Impairment rates to 30 June 2024 – warlike/non-warlike 

MRCA Permanent Impairment rates to 30 June 2024 – peacetime 

What’s the difference between Permanent Impairment payments, Special Rate disability pension and incapacity payments?

Permanent impairment payments, special rate disability pension, and incapacity payments are DVA compensation payments. 

Incapacity payments are meant to compensate for economic losses and replace income. They are taxable when the income they replace is taxed. 

The Special Rate Disability pension (SRDP) is another type of periodic compensation for those with severely restricted capacity to work because of conditions acquired during service on or after 1 July 2004. It is not automatically granted; however, if you are eligible for SRDP, you must choose between this and incapacity payments. If you choose the SRDP payment, you cannot receive the MRCA incapacity payment. 

The permanent impairment payment is another payment for veterans who have received an injury due to their service. If a PI payment is made, SRDP is reduced dollar for dollar. 

Understanding the difference between permanent impairment payments, special rate disability pensions, and incapacity payments can help you make informed decisions about your situation. 

How are PI payments made? 

For payments under MRCA, veterans can receive PI compensation payments fortnightly or as a lump sum. For DRCA, compensation is paid as a lump sum. 

Making the choice to take a lump-sum payment requires thoughtful consideration. Once chosen, the option for a lump sum payment is final. 

For payments under MRCA, the lump sum payment calculation considers multiple factors, including life expectancy. Veterans should seek trusted financial advice for military personnel to ensure they adequately understand the financial implications of this decision. If you are assessed at 50 points or higher, you can also claim back the costs of seeing a qualified financial advisor from DVA. 

What if I disagree with my PI points assessment?  

If you disagree with your PI points assessment and feel that the level of compensation awarded is insufficient, you can appeal DVA’s decision. A new delegate will be assigned to determine your claim, and the process will be repeated to ensure a fair final outcome. 

If necessary, you may be asked to provide additional information, such as medical evidence or other relevant documents, to support your appeal.

Can I get an additional payment if I am severely impaired? 

You may qualify for an additional lump sum payment for each eligible dependent if you are severely impaired. To receive this additional payment, your assessment must be calculated at 80 or more impairment points and if you have been paid or are entitled to be paid permanent impairment compensation. This lump sum payment is tax-free. 

What if my impairment gets worse? 

If your health condition worsens, DVA allows you to submit new claims to reassess your benefits. For example, under the DRCA, if it’s found that your condition has worsened by more than 10% since your first evaluation, you might qualify for higher permanent impairment payments. The journey may not end with the initial PI payment claim. Additional PI payments can be paid when your impairment points have increased by a minimum of 5 under the MRCA. 

In addition, you can also receive compensation under the MRCA even if you have previously received or continue to receive payments under the DRCA or VEA. 

What If I Am Already Receiving Other Financial Support From DVA?

As permanent impairment point payouts are not counted as income for service pension or ISS purposes, receiving a lump sum or periodic payment will not impact these payments. However, there is an exception to this rule – if you applied for PI payments under the financial hardship rules, they would be counted as income or as an asset under the asset test if taken as a lump sum.

Seek professional advice about your Permanent Impairment Payment

The permanent impairment compensation scheme represents a critical support mechanism for veterans who have sustained lasting injuries or diseases due to their service in the ADF. 

Understanding permanent impairment payments takes time because of the complexities involved. Any decisions you make will have far-reaching implications, so seeking advice from a qualified and experienced veteran financial advisor such as National Service Financial can help. We consider several factors, such as your personal circumstances, future financial security and more, to help you get it right as decisions are final and irreversible. 

Also, if you are assessed at 50 impairment points or more, DVA may provide an allowance towards the cost of any financial advice. 

At National Service Financial, we aim to provide the knowledge and support needed to make informed decisions, ensuring that those who have served our country receive the recognition and compensation they rightfully deserve.