Opinion
Helping lawyers inform clients about NDIS compensation reduction amounts
29th Sep 2022
When a personal injury case resolves there is a lot that the plaintiff lawyer needs to do, from sorting out statutory repayments and finalising legal fees to providing final legal advice and guidance. Lawyers usually take care to ensure that their client is aware of any Centrelink preclusion period. They may also advise clients in writing of the desirability of obtaining independent financial advice.
Now, they also need to tell their clients about the NDIS CRA.
This is relevant not only for most clients who are already receiving NDIS funding, but also for those who will or may in the future.
Unfortunately, lawyers can’t predict exactly when this will happen or what the CRA will be. Clients often want to know exactly how their settlement will impact their future NDIS funding, and the answer is not straightforward.
The ALA is aware that lawyers are keen to meet their obligations, but are often unsure exactly what they can and need to say. To assist, I have prepared a short Q&A that has been reviewed and improved by the ALA’s NDIS Special Interest Group. It’s not legal advice and won’t answer all client questions but is designed to help lawyers provide basic CRA information to their clients.
The ALA NDIS SIG welcomes feedback on this topic.
Q&A: NDIS compensation reduction amounts (CRAs)
What is a compensation reduction amount?
- A CRA is an adjustment in NDIS funding to account for relevant compensation received.
Will my compensation payment impact my future NDIS funding?
- This is likely, yes, if you were injured and your personal injury lump sum compensation includes funds for NDIS-type supports (future care, future equipment, etc); but
- not if your compensation relates to the death of a relative and you weren’t injured; and
- not if your compensation was only for future economic and/or non-economic loss (and not for future care, etc).
Why does my compensation impact my NDIS funding?
- The NDIS doesn’t want to duplicate funding that is paid as part of the compensation.
- The idea is that if your compensation includes money for NDIS-type supports then you should spend that money on those supports.
How much will my NDIS funding be reduced?
- The National Disability Insurance Scheme Act 2013 (Cth), NDIS Rules and Operational Guidelines spell out a very particular calculation that the NDIA follows to estimate how much of the compensation is for future NDIS-type supports.
- They calculate this ‘compensation reduction amount’ using information about the settlement, various facts and figures from you, and information from the Office of the Scheme Actuary.
- The NDIA first provides you with an estimate of the CRA and then later a final ‘outcome’ figure. The CRA is recalculated at the time of each plan review.
Will my funding be reduced to nil?
- This is possible, but you can remain an NDIS participant even if funding is reduced.
- The CRA will depend on the size of the settlement, the size of your plan and a large range of factors that can’t be accurately predicted pre-settlement.
- An example of a CRA input that can’t be accurately predicted is the output of the NDIS actuarial model for compensation.
- The NDIS CRA online estimator could be considered to produce a worst case scenario figure (to be divided by remaining life expectancy) as it doesn’t take into account factors such as settlement reduction for contributory negligence.
When will I know how my compensation impacts my NDIS funding?
- The CRA calculation can only be performed after your claim has settled.
- Usually the NDIA will contact you about this in the lead up to your next plan review.
- It’s likely that the CRA will apply to your next plan (the first review after settlement).
- Even if your settlement was a while ago, the NDIA may still contact you and calculate a CRA.
Can I challenge the CRA calculation?
- You will be given the opportunity to provide input before and after the NDIA calculates the ‘estimated’ CRA.
- When you are sent the final ‘outcome’ calculation you will be advised that you can contact the NDIA if you disagree with the CRA.
- A CRA is a reviewable decision, but you need to seek a review within three months of receiving the decision.
- You can contact the Compensation Recoveries Branch on 1800 800 110 or email compensation@ndis.gov.au.
The ALA thanks Jane Campbell for this contribution.
Jane Campbell is a financial adviser and ALA NSW Committee member. She provides independent financial advice to seriously injured Australians. Jane is passionate about improving financial outcomes for injured people. She can be found at www.aeran.com.
The views and opinions expressed in this article are the author's and do not necessarily represent the views and opinions of the Australian Lawyers Alliance (ALA).
Learn how you can get involved and contribute an article.
CONTACT DETAILS
SEND ENQUIRY