This is an introduction into the Defense Base Act (DBA) Insurance : overview, understand who is eligible for it, and understand the benefits of it.
What is the Defense Base Act (DBA)?
DBA insurance provides disability compensation and medical benefits to employees and death benefits to eligible survivors of employees of U.S. government contractors who perform work overseas.
Rule:
When required by AIDAR 752.228-3, contractors must procure DBA insurance pursuant to the terms
of the contract between USAID and USAID’s DBA insurance carrier, unless an exception applies.
What is Not Defense Base Act (DBA) Insurance?
Does not cover health insurance
Is not traditional life insurance
Does not apply in the US
Does not apply to spouses or children
What about subcontractors?
Subcontracts under USAID financed contracts (or cooperative agreements) are also included in the required coverage.
The Contractor further agrees to insert in all subcontracts hereunder to which the DBA is applicable, a clause similar to this clause, including this sentence, imposing on all subcontractors a like requirement to provide overseas workmen’s compensation insurance coverage and obtain DBA coverage under the USAID requirements contract.
Recommendation: The contractor should encourage its subcontractors to get their own policy.
Why is DBA not applicable to cooperative agreements?
In accordance with ADS 303, DBA does not apply to grants and cooperative
agreements, including grants under contract, or to subawards under these assistance
instruments. Recipients that desire to purchase DBA coverage may negotiate rates at
the discretion of the insurance carrier. However, recipients must require contractors who
are awarded procurement contracts under the assistance instruments to obtain DBA
coverage for their employees performing services overseas.
The Department of Labor agrees with the decision of the U.S. Court of Appeals for the Second Circuit in University of Rochester v. Hartman (Vishniac), 618 F.2d 170 (2nd Cir. 1980), that work performed pursuant to a grant is not covered under section 1651(a)(4) because Congress has enacted statutes to distinguish grants from contracts. Similarly, work performed pursuant to a cooperative agreement is not covered under 1651(a)(4).
DBA Insurance Premium Calculation – https://www.riskreconnaissance.com/dba-insurance-calculation/
The premium calculation is simple and straightforward. It is the rate provided by the underwriter multiplied by the payroll on a per $100.00 basis.
Here is what it looks like:
DBA Insurance Rate (Example only) $3.25
Payroll $500,000 ÷ $100.00 = $5,000
Premium = $5,000 x 3.25 = $16,250
Waiver of coverage (people, countries)
DBA insurance coverage is required for employees of contractors (and their
subcontractors), unless a waiver has been obtained from the U.S. Department of Labor
(See FAR 28.305). Blanket waivers from Defense Base Act insurance requirements
have been issued by the Department of Labor for foreign nationals in over 100 countries
in which USAID has or had programs. Foreign national employees covered by this
waiver (and/or their employers) are exempt from the requirement to secure Defense
Base Act Insurance. Foreign national employees and their employers should be aware
that, even though they do not have to secure Defense Base Act coverage, foreign
national employees must be provided worker’s compensation benefits as prescribed in
applicable foreign laws. However, the waivers do not apply to any employee who is:
- A citizen of the United States;
- A resident of the United States; or
- Hired in the United States.
Countries – Issued and Active Defense Base Act Waivers: https://www.dol.gov/agencies/owcp/dlhwc/dbawaivers/dbawaivers
SOURCE:
AIDAR – 752.228-3 Worker’s compensation insurance (Defense Base Act) – https://www.acquisition.gov/aidar/752.228-3-workers-compensation-insurance-defense-base-act.
A waiver of DBA coverage (see (48 CFR) AIDAR 728.305–70(a)) for contractor’s employees who are not citizens of, residents of, or hired in the United States, the contractor agrees to provide such employees with worker’s compensation benefits as required by the laws of the country in which the employees are working, or by the laws of the employee’s native country, whichever offers greater benefits.
Provider:
Beginning June 15, 2022, all new DBA insurance policies and renewals of existing policies must
be procured through Starr Indemnity & Liability Company (Starr). Acquisition & Assistance
Policy Directive (AAPD) No. 22-01, available on USAID’s AAPD website, contains information
regarding the rates and contact information for Starr. Contractors are not required to cancel DBA
insurance policies procured prior to June 15, 2022; those policies may remain in place until their
expiration.
USAID policy concerning DBA insurance requirements is available in ADS 302.
Answers to Frequently Asked Questions (FAQs) about DBA insurance may be found on
the Department of Labor’s website at:
https://www.dol.gov/agencies/owcp/dlhwc/FAQ/DBAFaqs.