Are you employed by a U.S. government contractor or subcontractor, and working overseas on a contract for the Department of Defense (DOD)? If so, it’s likely that your employer is required by the federal government to provide you with DBA Insurance. The Defense Base Act (DBA), enacted in 1941, was originally passed as an extension of the Longshore and Harbor Workers’ Compensation Act, which provides medical care and lost wages to employees hurt on the job.
While the intent of the Defense Base Act at inception was to provide coverage for workers on military bases outside the United States, it has since been broadened by the Mutual Security Act of 1954 to include civilian workers building non-military, public works projects abroad, such as dams, harbors, roads, and schools. The act applies to both U.S. and foreign nationals working on government contracts, and covers injuries and deaths that happen in the course of employment, even if the injury or death occurred outside work hours or stated duties.
Role of the Employer
Before an employee is sent overseas, it’s important his/her contractor or subcontractor obtains an insurance policy, and informs the employee of benefits and instructions on filing a claim. If the employer fails to provide insurance authorized by a DBA carrier, a fine of $11,000 and imprisonment for up to a year may be imposed. The employer also might be subject to lawsuits for failure to provide proper insurance as required by law.
The only instance in which employers are not required to provide this coverage is if granted a waiver by the Labor Department; there are two basic types of waivers, contract specific, in which the contractor is self-insured or has purchased workers’ compensation insurance that fulfills DBA requirements, and geographic, in which the host country already provides adequate workers’ compensation insurance.
What Are DBA Insurance Rates?
DBA insurance premiums (whose minimums range from five thousand to 25 thousand dollars per policy, according to industry representatives referenced in a recent Government Accountability Office report) are generally reimbursable by the federal government, and evidence compiled between 2002 and 2013 suggests premiums paid by the government have sharply increased, along with an increase in U.S. military and civilian engagement around the world.
According to the Department of Defense, “From a somewhat small and insignificant part of the casualty insurance business line—government-wide DBA insurance premiums paid to the top four DBA insurance carriers totaled $18 million in 2002—it grew over twenty-fold to a major market segment covering almost 200,000 prime and subcontractor employees and generating annual government-wide premiums of more than $400 million.”
Premiums may vary based on the type of job, risk calculated and other factors, and are computed per $100 of payroll or with a minimum premium set. A sampling of rates provided by the Travel Insurance Center quoted coverage for white collar workers at $3.50 per $100 of payroll, while rates for pilots were $10 per $100 of payroll.
Government agencies can choose either a single insurer for DBA insurance coverage, or the open market system. The State Department, for example, which holds many contracts around the world, transitioned from a single insurer to the open market in 2012. The GAO studied this transition, and concluded rates were higher at the State Department after the change (for example, coverage for a worker in the construction sector was $7.59 per each $100 of payroll versus $5.50); however, the study also gave credence to the idea that premiums would have risen regardless.
Benefits: Disability, Death, Medical
DBA insurance coverage includes medical, disability and death benefits to covered employees, detailed below:
- Disability compensation equals two-thirds of the employee’s weekly wages, with a cap at $1,256.84 per week, though this rate changes each October. Employees also are eligible to be compensated for partial loss of earnings. These lost wages are paid out biweekly.
- Death benefits are provided to the surviving spouse or to one child, and equal half the employee’s weekly earnings, or two-thirds of earnings to two or more survivors. These benefits never expire, and will be paid for life with no maximum or minimum payout. Compensation may be adjusted based on cost of living calculations. A widow or widower also is eligible to receive funeral expenses totaling up to three thousand dollars.
- For injuries, employees have the right to seek treatment using a physician of their choosing. Insurance will cover all medical care, including hospital and surgical costs, medical supplies, and travel to receive treatment.
- Vocational rehabilitation is available for employees who are injured and cannot return to their former jobs.
For more useful on central components of DBA insurance, review DBA Insurance: 5 Key Provisions.
Contact BBG For More Information!
The Business Benefits Group specializes in DBA insurance for contractors who are working on Department of Defense contracts overseas, and can help contractors get organized for success. We can also support their Expatriates or even Third Country Nationals through an International Coverage policy.