Permanent impairment assessments for Australian veterans operate under two distinct systems that approach disability evaluation in fundamentally different ways. For many veterans, understanding these differences can significantly impact their compensation outcomes.
The Australian Department of Veterans’ Affairs (DVA) uses two separate methodologies for assessing permanent impairment in veterans, based on when their service occurred. These systems—DRCA and MRCA—differ dramatically in their fundamental approach, assessment tools, calculation methods, and treatment of multiple conditions. This complexity creates both challenges and opportunities for veterans seeking compensation.
The Safety, Rehabilitation and Compensation (Defence-related Claims) Act 1988 (DRCA) applies to service before July 1, 2004, while the Military Rehabilitation and Compensation Act 2004 (MRCA) covers service from that date forward. Most veterans with lengthy service spans have conditions assessed under both acts, making it crucial to understand how these systems differ.
Fundamental approach differences: Parts versus whole
The most significant difference between these systems lies in their fundamental assessment philosophy:
DRCA: The isolated approach
DRCA uses what’s called an “injury-based approach” where each condition is assessed in isolation from others. This approach was cemented by several High Court decisions (including Canute v Comcare, Fellowes v MRCC, and Robson v MRCC) that established:
- Each injury must be assessed separately
- Even when injuries affect the same body part, they receive separate ratings
- Medical practitioners must isolate the effects of each condition
The DRCA approach resembles examining individual puzzle pieces rather than the complete picture. Each condition receives its own rating as a percentage of “whole person impairment” (WPI), and these percentages are not combined except in specific circumstances.
MRCA: The holistic approach
MRCA employs a “whole person approach” that considers the combined effect of all service-related conditions on entire limbs or body systems. Under this system:
- All accepted conditions are assessed together
- Focus is on total functional impairment
- Conditions affecting the same body part are evaluated for their overall impact
This approach recognizes that multiple conditions can interact to create greater disability than would be suggested by assessing each in isolation. The MRCA methodology aligns with modern disability assessment principles that view functional capacity holistically.
The assessment process: Who conducts them and how
Both systems follow similar initial processes but diverge significantly in their assessment methodologies.
Assessment authorities
For both DRCA and MRCA assessments, DVA follows this order of preference for medical assessors:
- The veteran’s treating general practitioner
- The veteran’s treating specialist
- Independent Medical Examiner (only as a last resort)
DVA’s policy emphasizes using treating doctors where possible, as they typically have the best understanding of the veteran’s condition and its progression.
Assessment guides and tools
Each system relies on its own comprehensive assessment guide:
- DRCA uses the Guide to the Assessment of the Degree of Permanent Impairment 2023 (DRCA PI Guide), which includes tables for various body systems and a Combined Values Chart for specific scenarios
- MRCA uses the Guide to Determining Impairment and Compensation (GARP M), which contains tables for both medical impairment and lifestyle effects
When conditions cannot be assessed under the DRCA PI Guide, assessors default to the American Medical Association’s Guides to the Evaluation of Permanent Impairment, 5th Edition (AMA5).
The practical assessment journey
The assessment process follows these general steps under both systems:
- Initial liability claim for service-related condition is accepted
- Veteran requests permanent impairment assessment (or DVA initiates it)
- Medical assessment is conducted
- Documentation is submitted to DVA
- DVA delegate calculates impairment rating
- Compensation amount is determined
However, key differences emerge in how these assessments are documented and calculated.
Calculating impairment ratings: Percentages versus points
The calculation methodologies differ substantially between the two systems.
DRCA calculation methodology
Under DRCA:
- Impairment is assessed as a percentage of whole person impairment
- Each condition receives its own percentage rating
- Only values specified in the DRCA PI Guide can be used (generally multiples of 5%)
- Non-economic loss (lifestyle effects) is assessed separately using weighted formulas
- The WPI percentage determines the portion of maximum payment the veteran receives
The veteran also completes a Non-Economic Loss Questionnaire about lifestyle effects, which contributes to the final assessment.
MRCA calculation methodology
Under MRCA:
- Impairment is measured using impairment points on a scale from 0 to 100
- GARP M tables specify points for various impairments
- Lifestyle effects are rated on a scale of 0 to 7
- Medical impairment and lifestyle ratings are combined using calculation tables
- Different compensation factors apply to warlike/non-warlike service versus peacetime service
Unlike DRCA’s lump-sum-only approach, MRCA offers veterans the choice of periodic payments, a lump sum, or a combination of both.
Multiple conditions: The most significant difference
The handling of multiple conditions affecting the same body part represents perhaps the most consequential difference between the systems.
Multiple conditions under DRCA
Following the High Court’s interpretation, DRCA requires:
- Each injury to be assessed separately and in isolation
- Medical practitioners to determine if impairments can be isolated from each other
- Separate conditions affecting the same body function to receive separate ratings
For example, a veteran with anterior cruciate ligament damage and meniscus damage in the same knee may receive separate ratings if the effects can be isolated. This approach can theoretically result in combined compensation exceeding 100% of the maximum rate.
Multiple conditions under MRCA
MRCA takes a fundamentally different approach:
- All accepted conditions are combined to arrive at total impairment
- Conditions affecting the same body part are assessed for their combined functional impact
- Focus is on total impairment rather than individual injuries
This integrated approach better reflects the reality of how multiple conditions interact to affect function, but it caps total compensation at the maximum rate.
Implications for veterans making claims
These system differences create several important implications for veterans:
Threshold requirements
- DRCA: Each condition must individually meet minimum thresholds (generally 10% WPI, with some exceptions at 5%)
- MRCA: Combined conditions can reach minimum thresholds (10 impairment points, with some exceptions at 5 points)
This difference significantly impacts veterans with multiple minor conditions. Under DRCA, a veteran with three conditions each assessed at 7% WPI would receive no compensation since none reaches the 10% threshold. Under MRCA, these conditions would be combined, potentially exceeding the threshold and qualifying for compensation.
Compensation structure
- DRCA: Only lump-sum payments are available
- MRCA: Veterans can choose between periodic payments, lump sum, or a combination
Age factors also play differently in each system. MRCA lump sums are age-adjusted (reduced for older veterans), while DRCA lump sums are not age-adjusted.
Additional benefits
MRCA offers additional benefits unavailable under DRCA:
- Gold Card for life with 60+ impairment points
- More comprehensive benefits for dependents
- Stronger emphasis on holistic rehabilitation
Navigating both systems
Veterans with service spanning both time periods must navigate both systems, which creates:
- Complex calculations under transitional provisions (Chapter 25 of GARP M)
- Potential for reduced total compensation in some circumstances
- Need for expert guidance from trained advocates
Practical examples: Same veteran, different outcomes
The following examples illustrate the real-world impact of these different methodologies:
Example 1: Multiple minor conditions
A veteran with three conditions from pre-2004 service, each assessed at 7% WPI:
- DRCA outcome: No compensation (none meets 10% threshold)
- MRCA outcome: If the same conditions were under MRCA, they would be combined, potentially exceeding the 10-point threshold and qualifying for compensation
Example 2: Multiple conditions affecting the same function
A veteran with lumbar spine injuries resulting in both limited range of motion and persistent pain:
- DRCA approach: Medical assessor must determine if these effects can be isolated. If so, separate ratings may be given.
- MRCA approach: The overall functional impairment of the spine would be assessed, combining all effects.
Example 3: Transitional case
A veteran with spine conditions from pre-2004 service (DRCA) and knee conditions from post-2004 service (MRCA):
- DRCA conditions are assessed separately using DRCA PI Guide
- MRCA conditions are assessed using GARP M
- Chapter 25 transitional provisions ensure compensation doesn’t exceed the maximum amount
The future: Simplification and harmonization
The complexity of navigating multiple compensation systems has been identified as a significant stressor for veterans. In response, the Veterans’ Entitlements, Treatment and Support (Simplification and Harmonisation) Act 2024 will bring significant changes:
- From July 1, 2026, DRCA and the Veterans’ Entitlements Act will close to new claims
- All new claims will be processed under an improved MRCA
- DRCA veterans with high impairment levels may qualify for additional benefits
This reform represents the most significant change to veterans’ compensation in decades and aims to address many of the challenges arising from the current multi-act system.
Conclusion
The divergent approaches of DRCA and MRCA to permanent impairment assessment reflect an evolution in thinking about how to fairly compensate veterans for service-related injuries. DRCA’s isolated assessment can benefit veterans with multiple severe conditions, while MRCA’s holistic approach generally advantages those with multiple minor conditions that collectively have substantial impact.
Understanding these differences is crucial for veterans navigating the system, as the assessment methodology can significantly affect compensation outcomes. The upcoming transition to a simplified system in 2026 promises to reduce this complexity, but veterans currently making claims must continue to navigate both frameworks with careful attention to their distinct approaches and implications.
