Compensation - Revise the plan and reduce the supports – compensation received under an insurance scheme or a Commonwealth, State or Territory scheme

12. Revise the plan and reduce the supports – compensation received under an insurance scheme or a Commonwealth, State or Territory scheme

When a participant has received compensation in respect of a personal injury under an insurance scheme or a Commonwealth, State or Territory scheme, the NDIA may reduce the reasonable and necessary supports under the participant’s plan to take account of the compensation.

This applies to participants who receive compensation whether or not they were participants at the time they received the compensation.

If the person satisfies the requirements in "When a plan is revised and supports reduced because the participant receives compensation under an insurance or statutory scheme" (on this page) the person’s must be revised and their supports reduced.

12.1 Interaction with powers set out elsewhere in this Operational Guideline

If the person has entered into an agreement to give up his or her right to compensation, and the NDIA forms the opinion that the agreement is void, ineffective or unenforceable, the NDIA should require the person to take action to recover the compensation. See NDIA may require a participant or prospective participant to take action to claim compensation.

If the NDIA forms the opinion the agreement is enforceable, the NDIA should revise the plan and reduce the supports under this section (assuming the other criteria are satisfied).

12.2 When a plan is revised and supports reduced because the participant receives compensation under an insurance or statutory scheme

A participant’s plan must be revised and the reasonable and necessary supports stated in the plan reduced by the compensation reduction amount if the following criteria are met (rule 3.1(c) of the Compensation Rules):

  • the participant has sustained a personal injury which has caused, to any extent, their impairment, regardless of whether the person was a participant at the time of the injury; and
  • the person is receiving compensation under:
  1. a scheme of insurance; or
  2. a Commonwealth, state or territory scheme, including a payment under a contract entered into under such a scheme.

Examples of statutory schemes include the Transport Accident Commission (TAC) or State-based workers’ compensation schemes.

If these criteria are met, the participant’s plan must be revised and the reasonable and necessary supports stated in the plan reduced by an amount equivalent to the compensation reduction amount (External website) (external).

12.3 Calculating the compensation reduction amount

The purpose of calculating the compensation reduction amount is to ensure a participant does not receive funding from the NDIS for reasonable and necessary supports that are being funded under an insurance scheme or a statutory compensation scheme.

As a general rule, where a participant is receiving compensation from an insurance scheme or a statutory compensation scheme, their funding for reasonable and necessary supports from the NDIS is to be reduced by an amount equivalent to the value of the compensation for care and support expected to be received under that insurance or statutory scheme.

The NDIA has prepared a decision tree for calculating the compensation reduction amount where a participant has received compensation in respect of a personal injury under an insurance scheme or a Commonwealth, State or Territory scheme to assist in working through the calculation.

12.3.1 Calculation of compensation reduction amount

To calculate the compensation reduction amount, identify the total value of the care and support expected to be provided to the participant under the relevant scheme until the plan is required to be reviewed under the NDIS Act (rule 3.17 and 3.18 of the Compensation Rules). This must be:

  • in accordance with any applicable actuarial model published by the NDIA on its website at the time the calculation was undertaken; and
  • done in consultation with the person or entity that administers the scheme.

12.3.2 Where the person has received more than one compensation payment

The compensation reduction amount is to be amended as set out below if the person has received a compensation payment for the personal injury (rule 3.20 of the Compensation Rules).

A participant may have more than one compensation claim in respect of the same injury. For example, a participant may sustain their injury at work and receive workers’ compensation payments as well as common law damages from a court ordered judgement.

If a person has received a compensation payment that is made up of a part that is included in a judgement or settlement and a part associated with an insurance or statutory scheme, and a compensation reduction amount has been identified for the judgement or settlement, then the compensation reduction amount is to be amended as follows:

  • Subtract any compensation reduction amount that has been worked out for a judgement or settlement in relation to this injury: see Revise the Plan and Reduce the Supports – Compensation Received from a Judgement or Settlement.
  • Add the amount of any reduction in funding that has occurred under a previous plan in respect of this personal injury (if any).
  • This reflects that a participant may have had earlier plans which incorporated a reduction in respect of the same personal injury. Each time a plan is replaced or reviewed, this new or reviewed plan is to take into account earlier compensation reduction amounts to ensure they are not double counted.
  • Add the amount of any reduction in funding that the NDIA considered equal to the total amount paid personally by the participant for supports of a kind funded under the NDIS Act after the compensable event and before becoming a participant.

This reflects that a participant may have paid for their own supports for a period. This addition means that the participant will not be disadvantaged by this, and their compensation reduction amount will be lower.

12.3.3 Special circumstances

The NDIA may ignore the whole or part of a compensation reduction amount if the NDIA thinks it appropriate to do so in the special circumstances of the case (rule 3.10 of the Compensation Rules).

The Compensation Rules (External website) (external) note special circumstances may include financial hardship suffered by the participant but do not otherwise define what constitutes special circumstances, and a wide range of circumstances can be considered.

12.3.4 Compensation reduction amount cannot be negative

The compensation reduction amount cannot be negative. If, after working out the compensation reduction amount, the amount is nil or less than nil, the NDIA is to record the compensation reduction amount as nil and therefore there will be no reduction in the person’s supports (rule 3.21 of the Compensation Rules).

12.3.5 Supports must be reduced by compensation reduction amount

Where a compensation reduction amount has been calculated, the participant’s funding for reasonable and necessary supports is to be reduced by an amount equivalent to the compensation reduction amount.

The amount is to be recovered over the expected lifetime of the participant in accordance with accepted actuarial standards in consultation with the Scheme Actuary, and not as a lump sum.

12.4 Where a person receives a compensation payment awarded by a court and another payment as part of a statutory scheme

When a person receives a compensation payment awarded by a court and another payment as part of a statutory scheme, the payments are to be treated separately and a compensation reduction amount is to be worked out for each compensation payment. This means that more than one compensation reduction amount will apply to the person.

This page current as of
1 April 2019