Enacted in 1941, the Defense Base Act (DBA) provides coverage for U.S. and foreign employees working outside of the United States. DBA coverage is essentially worker’s compensation insurance that allows employees to collect in the event of an injury or illness while working on a contract financed by the U.S. government. Dependents of the employee may also collect benefits if the employee is killed as a direct result of employment under the U.S. government-financed contract. Employees may file an insurance claim if they meet a number of conditions. Government employers who do not provide DBA insurance coverage may face harsh penalties.
DBA Insurance Claims
The Defense Base Act covers a number of employment activities, including employees who work for private employers on U.S. military bases or on any land outside the U.S. used for military purposes. It also includes employees who work on public work contracts with any U.S. government agency, as well as employees who work on contracts funded by the U.S. under the Foreign Assistance Act. You may also be covered by DBA insurance if you work for an American employer providing services like welfare outside the U.S. for the benefit of the Armed Services.
DBA insurance is a specific type of worker’s compensation insurance governed by a strict set of criteria. The insurance typically provides benefits such as disability, medical, and death. An employee may receive benefits if he or she suffers from an illness or becomes injured as a result of a work-related incident. It also offers coverage for death caused by a work-related accident or illness. It’s important to note that the coverage for death, injury, or illness is not just limited to working hours under some circumstances. To be eligible for benefits under DBA insurance, employees must follow guidelines outlined in their DBA insurance policy.
One of the most common DBA insurance claims is related to loss of wages. When an employee becomes injured or ill as a government employee outside the U.S., they may be eligible to collect benefits from lost wages. A specific formula is used to determine the dollar amount that the employee will receive to recover these lost wages while they are unable to work. If the injured worker becomes permanent unable to return to work, wage benefits may be paid for life. If the injury causes death, a death benefit may be paid to the employee’s survivors.
Medical expenses may also be paid by the DBA insurance carrier if an employee suffers injury. While out of the U.S., employees must choose a medical facility based on what is available at their location. However, once an employee returns to the U.S., they are entitled to a physician of their choice. In addition, the DBA insurance carrier has the right to request a medical examination to be performed by a physician of their choice. If the recovery time is expected to be lengthy due to the severity of the injury, the insurance carrier may assign a Nurse Case Manager to assist in healthcare planning.
In cases where an injury is severe and local medical facilities are not equipped to provide medical treatment to an employee, DBA may cover medical evacuation to transport the worker to another facility in the employee’s country of citizenship. However, a DBA carrier will only pay for the cost of the evacuation if transported on a commercial airline. Other benefits provided through DBA insurance includes vocational rehabilitation coordinated by the U.S. Department of Labor to trained an injured employee for a new occupation. The insurance carrier will only pay for the return of mortal remains of a deceased employee.
DBA Insurance Penalties
Employers who fail to provide their employees with DBA insurance may face a number of penalties. All government contracts contain provisions that require contractors to obtain the insurance necessary to cover them in the event of an accident, illness, or death. Failure to do so could result in hefty fines and a loss of contract. Employers are considered in violation of the law if they are uninsured or insured by an unauthorized insurance carrier. They may also be in violation if they have no DBA endorsement from their authorized carrier or are operating under an ineffective waiver.
It’s important to understand that an employer is responsible for all liability that is imposed under the Defense Base Act. Other parties such as the agent or broker, government contracting office, attorney, insurance company, or the Department of Labor are not. In addition, the prime contractor may also become liable for any benefits due of its subordinate contractors or subcontractors are uninsured and become injured or ill on the job. DBA insurance is not required to be in place during contract bidding, but is necessary after employee deployment. For these reasons, it’s crucial to have DBA insurance coverage for employees to avoid penalties.
Certain unlawful actions could also lead to penalties for employers and insurance carriers. In some instances, an employer or insurance carrier will commit a reprehensible action while administering DBA insurance claims. Some of these actions may include:
- Refusal or failure to provide medical benefits owed to an employee based on the Defense Base Act
- Delaying or cutting off medical benefits for inappropriate reasons
- Failing to comply with DBA orders
- Making misrepresentations or false statements
- Discouraging or threatening employees to prevent them from making claims
- Terminating employment after an employee has suffered an injury and claimed coverage under the DBA act
Having DBA insurance is one of the best ways to protect employees working abroad. As with traditional worker’s compensation insurance, DBA insurance rates can greatly vary depending on a wide range of factors. As an employer, it’s your responsibility to obtain the necessary DBA insurance coverage. Today there are very few insurance brokers that specialize in DBA insurance. Without the proper knowledge of DBA insurance, you could end up paying more than you need to, while leaving yourself open to legal penalties and financial risk.