Incapacity Payments

What are incapacity payments?

Incapacity payments compensate veterans for economic loss due to the inability (or reduced ability) to work because of an injury or disease that has been accepted as service related under the MRCA or the DRCA. 

What will happen from 1 July 2026?

From 1 July 2026, all new claims for incapacity payments will be assessed under the MRCA. All veterans will be able to claim under the MRCA, even if their condition/s were accepted under the VEA or the DRCA. 

Additionally, existing DRCA incapacity recipients will be transitioned onto MRCA incapacity payments. MRCA incapacity payments are calculated differently to DRCA incapacity payments and are more beneficial for veterans. Veterans may see an increase in their payments. 

No veterans or family members will experience a reduction in the payments they are already receiving. 

Current MRCA veterans

The eligibility and application process for incapacity payments will remain the same for veterans under the MRCA. 

Current DRCA veterans

From 1 July 2026, all claims for incapacity payments will be paid under the MRCA. 

If you are already receiving incapacity payments under the DRCA, DVA will transition you onto MRCA payments. You will not need to re-claim incapacity payments (unless your payments have already ceased and you need to reapply).

Current VEA veterans

From 1 July 2026, you may be eligible for incapacity benefits under the MRCA if you are prevented from undertaking remunerative employment and are still of working age. 

If you are receiving Disability Compensation Payments (DCP) under the VEA immediately before 1 July 2026, these payments will continue to be paid and you may also be eligible for incapacity payments – you will be able to receive both payments at the same time. 

Whilst you can start the process of gathering documents to apply under the MRCA, only claims from 1 July 2026 will be considered under this expanded eligibility. If you need financial support in the meantime, you may consider claiming an increase to your DCP, Loss of Earnings Allowance, or Service Pension under the VEA. You can contact your advocate or DVA for help. 

Current TPI veterans

If you are receiving DCP above the general rate (e.g. the Special or Intermediate Rate) immediately before 1 July 2026, these payments will continue but you can also claim MRCA incapacity payments. 

In many cases incapacity payments will be paid at a higher rate than TPI, as incapacity benefits are based on actual earnings – they are not paid at a fixed rate like TPI is.  

Currently, any incapacity payments a veteran receives will reduce (offset) the amount of DCP they are paid. However, from 1 July 2026 these offsetting rules are changing – only ‘above general rate’ pensions will be reduced because of incapacity payments. Offsetting ensures that a veteran does not receive two types of compensation for the same loss (e.g. loss of earnings).

Veterans who receive both an ‘above general rate’ pension and incapacity payments will only have a portion of their DCP reduced, rather than the entire pension. As such, they will continue to receive a DCP amount equivalent to a ‘general rate’ (0-100% depending on their impairment levels).  

Once incapacity benefits cease (for example due to reaching retirement age) DCP is no longer offset by the incapacity benefits.

Additional Resources

There is a range of additional resources available on the Legislation Reform website covering a variety of topics. These include: Special Rate Disability Pension (SRDP) and the Veteran Card.

There are individual pages for different veteran cohorts including VEA veterans, DRCA veterans, MRCA veterans and family members of veterans.