MINISTER PORTFOLIO DEADLINE. Hon Dr Nick Smith Minister for ACC 19 January 2010

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1 BRIEFING MINISTER PORTFOLIO DEADLINE Hon Dr Nick Smith Minister for ACC 19 January 2010 Action sought Title For your information PROVIDING HEARING LOSS ENTITLEMENTS, ACC AND VETERANS' AFFAIRS NEW ZEALAND Date 19 January 2010 Security N/A Copied to N/A For referral to N/A Agencies consulted ACC, Veterans' Affairs New Zealand Contact information Policy Advisor DDI: MB: N/A Authorising manager DDI: Manager Workplace Policy - ACC MB: N/A Tracker number 10/91687 Minister s comments Minister s feedback Very Poor Poor Neutral Good Very Good Quality of advice Writing style Quality of analysis Completeness of information

2 10/91687 Department of Labour Briefing PROVIDING HEARING LOSS ENTITLEMENTS, ACC AND VETERANS' AFFAIRS NEW ZEALAND Recommended actions 1 Note you may wish to refer to this paper for your proposed meeting with the Minister for Veterans Affairs. This briefing provides you with information on the legislative framework of hearing loss entitlements for veterans under ACC and Veterans Affairs legislation. The appendices for this paper include hearing loss information requested by you, from ACC, on entitlements for veterans and hearing loss thresholds in other jurisdictions. 2 Note the ACC scheme provides entitlements for all veterans and defence personnel from 1 April Veterans are also eligible for allowances from Veterans Affairs under the War Pensions Act Veterans and defence personnel injured prior to that date may be eligible for allowances under the War Pensions Act Note the War Pensions Act 1954 and the ACC scheme have different purposes. The War Pensions Act has a benevolent intention to counterbalance the impact of injury, while the ACC scheme is an injury prevention, rehabilitation and compensation scheme. 4 Note the War Pensions Act 1954 is currently being reviewed by the Law Commission and they are due to report back later this year. The outcome of the review of this Act, while not yet finalised, may affect the hearing loss allowances for veterans. 5 Note the ACC scheme is perceived as providing greater assistance for injury related hearing loss than the War Pensions Act 1954, and any changes to the ACC scheme hearing loss entitlements will affect all ACC claimants, including veterans who are eligible for assistance. Workplace Policy Manager - ACC for Secretary of Labour Hon Dr Nick Smith Minister for ACC... /... / /... /... 1

3 10/91687 Department of Labour Briefing PROVIDING HEARING LOSS ENTITLEMENTS, ACC AND VETERANS' AFFAIRS NEW ZEALAND Purpose 1 This paper provides you with the following information that you requested from the Department of Labour and ACC: a b c an exploration of the legal / legislative issues around entitlements for veterans hearing loss, including the possibility of using a consistent approach to entitlements. This information is contained in this briefing. further information about provision of entitlements related to hearing loss for veterans. This has been prepared by ACC and is contained in Appendix 1 Aide memoire hearing loss services provided by Veterans Affairs New Zealand and ACC further information about how thresholds for hearing loss / hearing aids used in other jurisdictions as well as more detail on what exactly a 6% hearing loss means, including technical information. This has been prepared by ACC and is contained in Appendix 2 Aide memoire ACC: Hearing loss international comparisons and technical advice. Analysis 2 To examine the legal / legislative issues of entitlements for veterans hearing loss and the potential of using a consistent approach to entitlements, this paper: describes the eligibility for hearing loss allowances for veterans and defence personnel from ACC and Veterans Affairs provides available information on the numbers of veterans suffering Occupational Noise Induced Hearing Loss (ONIHL) and the extent of claims or allowance being paid to them outlines entitlements under the War Pensions Act 1954 and the ACC scheme and detail the current review of the War Pensions Act 1954 provides comparisons of the assessment of ONIHL between the ACC Scheme and the War Pensions Act 1954 and internationally between the treatment of veterans with ONIHL in Australia and New Zealand. analyses the potential impacts of the proposed changes to the ACC scheme for hearing loss entitlements. 2

4 Eligibility of veterans for hearing loss aid 3 The ACC scheme began on 1 April This means all defence personnel and veterans injured after that date are eligible for ACC. These veterans can apply to receive ACC entitlements, allowances through the War Pensions Act 1954 or both. 4 Injuries that occurred prior to 1 April 1974 are not covered by the ACC scheme. The ACC scheme tends to be more generous than the allowances provided by Veterans Affairs. This has led to some disparities which are currently under investigation as part of the review of the War Pensions Act Background Available information on veterans and ACC claimants suffering ONIHL 5 Veteran Affairs estimate there are 50,000 to 60,000 New Zealand veterans, but this is expected to fall to 30,000 to 40,000 over the next five years as the veteran population ages. Of these, an estimated 12,500 veterans receive a pension or allowance for hearing loss. Veterans Affairs funds around 1,800 hearing aids at a cost of $5.0 m each year. 6 While someone may be eligible for hearing loss entitlements under the ACC scheme as well as through Veterans Affairs, anecdotal evidence suggests in such cases they are generally directed towards the ACC scheme which is perceived as being more generous. Provisions for veterans under the War Pensions Act The War Pensions Act 1954 provides allowances for veterans who have a disability as a result of their military service. The costs of allowances are paid by Veterans Affairs, which is an operation unit of the New Zealand Defence Force. The purpose of these allowances is benevolent. Unlike the ACC scheme which provides rehabilitation and compensation for an injury, payments under the War Pensions Act are designed to counterbalance the impact of the injury on a veteran s quality of life. 8 A veteran is defined as a person who has taken part in a war or an emergency as defined by the Minister of Veterans Affairs. Defence force personnel who took part in routine service prior to 1 April 1974 are also eligible to apply under the War Pensions Act The ACC scheme covers injuries for routine service after this date. 9 For ACC purposes, a veteran who suffers hearing loss is treated the same as any other claimant with hearing loss. This means they receive ACC entitlements for hearing loss that occurred after 1 April 1974, if their hearing loss is caused by a single event such as an accident involving an explosion, head, brain or ear injury; by treatment injury or is identified as ONIHL. It is estimated that 90% of hearing loss claims are for ONIHL. ACC does not collect information on how many veterans have hearing loss claims. 3

5 Specific entitlements under the War Pensions Act 1954 for veterans with hearing loss 10 Currently under the War Pensions Act 1954, Veterans Affairs provides allowances to pay for: a b c d special equipment such as hearing aids, includes audiologist fees replacement aids if the previous aid is at least five years old (or earlier if the aid is faulty and uneconomic to repair, or there is a significant change in the veteran s needs) hearing aid battery allowance of $1.78 per fortnight (annually consumer price index adjusted), and devices such as amplified phones and FM systems. 11 Veterans Affairs has limits set to the amount of funding they provide for hearing aids and fitting fees. Extra funding for hearing aids is available in some circumstances. These fees are currently being reviewed but are currently on average around half the amount per person paid by ACC. A detailed breakdown of hearing loss services is provided in Appendix 1 to this paper. Current review of War Pensions Act The War Pensions Act 1954 is being reviewed by the Law Commission. The Law Commission s report is due later this year, following which changes are likely to the War Pensions Act 1954 and may impact veterans entitlements. Issues being considered by the review include disparities between the ACC scheme and the War Pensions Act. Entitlements under the ACC Scheme for those suffering ONIHL 13 Currently ACC provides a range of hearing loss assistance, including initial and replacement hearing aids, audiology fees, repairs and maintenance, and batteries. ACC also provides advice on hearing protection and supports claimants in learning more effective ways to communicate in everyday situations. 14 ACC meets these costs in full. Changes currently before Parliament involve introducing a 6% hearing loss threshold to the ACC scheme. Other ways of containing ACC costs relating to hearing loss claims are also being investigated. 15 Claimants who suffer a permanent impairment from hearing loss equating to a 10% whole-of-person disability, may also be eligible for an independence allowance or lump sum payment. This is likely to apply to a small number of claimants. A comparison of the assessment of ONIHL under the ACC Scheme and the War Pensions Act 16 For hearing loss claims, the ACC claimant is required to attend an appointment with an ear, nose and throat (ENT) specialist, and often an audiologist, to assess their hearing loss, which ACC arranges and pays for. If a claimant supplies ACC or Veterans Affairs with recent reports sufficient to satisfy the agency s assessment requirements then retesting is not required. 4

6 17 As noted in Appendix 1 a greater proportion of veterans are requesting and receiving extra funding for hearing aids. If a veteran requests an aid with extra features than clinically needed they will pay an extra cost. Comparison between New Zealand and Australian veterans 18 In Australia the defence forces have their own compensation schemes. The Commonwealth Hearing Services Program provides hearing service vouchers for veterans with hearing loss due to service in the Australian defence forces. These vouchers enable veterans to obtain free of charge a quality hearing aid that will provide a satisfactory rehabilitation outcome 1 to meet their clinical needs. If the veteran chooses an aid with extra features, the veteran meets the extra costs. These services are also available to veterans dependents. 19 The Commonwealth Hearing Service Program also applies to pension concession card holders, sickness beneficiaries and members of the Australian Defence Services. This is a more co-ordinated approach for beneficiaries and veterans than currently exists in New Zealand. Analysis of proposed changes to the ACC scheme for hearing loss entitlements 20 The Department considers that changes to the ACC scheme will impact on veterans who are eligible for ACC. Veterans Affairs is currently reviewing the amount they pay in fees for fitting hearing aids. The review of the War Pensions Act 1954 will also examine veterans entitlements. Impact of proposed changes to the ACC scheme for hearing loss entitlements 21 Currently a veteran who also qualifies for ACC is more likely to receive the higher end of the market range hearing aid, and be given a greater range of hearing assistance than a veteran who does not qualify for ACC. 22 Reductions in ACC entitlements for hearing loss will negatively impact veterans as well as other claimants who are eligible for ACC. Future hearing loss claimants may find they do not meet the thresholds for entitlements under ACC if their injuryrelated hearing loss is assessed at less than 6%. A potential way forward for dealing with veterans with ONIHL 23 It is possible the review of the War Pensions Act 1954 may result in increases in funding for veterans with hearing loss. This would lessen the differences with ACC claimants for hearing loss. Veterans Affairs are aware of the proposed changes to the ACC hearing loss entitlements and how it will affect veterans and defence personnel. There is the opportunity to consider alignment of hearing loss entitlements with other agencies as regulations are developed. You may wish to refer this briefing to the Minister of Veterans Affairs. 1 accessed 7 December

7 Appendix 1: ACC aide memoire prepared by ACC hearing loss services provided by Veterans Affairs New Zealand and ACC This aide memoire responds to the Minister s request for information relating to hearing loss services provided by Veterans Affairs New Zealand (VANZ). Hearing loss services provided by VANZ are compared with hearing loss services provided by ACC (all prices are GST exclusive). VANZ ACC Any veteran, who has hearing loss accepted under the War Pensions Act 1954 as a disability attributable to or aggravated by service, can be supplied with a hearing aid or aids if this is recommended by their audiologist or ENT specialist Set limit of $800 wholesale per hearing aid. If a veteran s hearing needs cannot be met within the funding cap, over-scale funding can be considered provided certain criteria are met (eg severely or profoundly deaf). 2 Once it has been determined that over-scale aids are required, funding will be provided to the level required to meet the veteran s needs o Monaural = $470 o Binaural = $620 VANZ are currently reviewing fitting fees to ensure that they are still fair and equitable Approximately 12,500 people have an accepted hearing loss claim under the War Pensions Act 1954 at the current time New Zealand Audiological Society (NZAS)-affiliated audiologists. VANZ retains and reserves the right to use the services of audiometrists or audiologists who are not members of NZAS Eligibility Hearing aids Personal injury accepted for cover caused by accident, treatment injury or workrelated gradual process. Eligibility to entitlements based on recommendation from ENT and using a needs-based assessment tool No set cost limit current average price per aid approximately $1,700, although prices vary and can range from $1,100 per aid to in excess of $2,500 Fitting fees o Monaural = $940 o Binaural = $1,585 + $200 fee per hearing aid to manage the hearing aid fitted to clients Volumes Providers 53,842 clients received a hearing loss service paid for by ACC in the year ending 30 June 2009 New Zealand Audiological Society (NZAS)-affiliated audiologists 2 For the period 1 July June 2009, 545 out of a total of 1216 veterans were approved for over scale funding. VANZ advises that this is higher than usual. In previous years approvals for over scale funding were 25-35%. 1

8 Appendix 2: Aide memoire prepared by ACC Hearing loss international comparisons & technical advice Purpose 1 This aide memoire provides the information you requested at your meeting with officials on 26 November Specifically, you asked for information on: the use of thresholds for hearing loss and/or hearing aids in other jurisdictions (including Australian Government proposals and workers and non-workers compensation schemes in the United Kingdom, Canada and the United States) technical advice on what exactly a 6% threshold looks like, detailing what one can and cannot hear at that level. International comparisons Thresholds for hearing aids 2 Under Australian workers compensation schemes, hearing aids generally have to meet the test of being reasonable, necessary and appropriate. However, advice received from WorkCover New South Wales is that a level of 6% hearing loss is required by that scheme before hearing aids are available on recommendation from an ear, nose and throat (ENT) specialist. 3 Australians not eligible for workers compensations schemes can apply to the Office of Hearing Services (OHS), which purchases services for 80% of Australian hearing aid users. As part of its Budget measures for 2009/10, the Australian Government announced in May 2009 that it will introduce a minimum hearing loss threshold of 23 decibels (db) per ear from 1 January The threshold will not take into account high-frequency loss typical of occupational noise-induced hearing loss (ONIHL). ACC calculates that a threshold of 23 db means that, depending on the loss at the measured frequencies, the threshold for automatic eligibility to a hearing aid could vary from 5% to 22% (based on the 1988 National Acoustic Laboratories calculation tables, used by Australia and New Zealand). 4 In England, hearing aids are available free of charge, on a rental basis, through the National Health Service (NHS). Repairs, replacements and batteries are also free. 5 In Ontario, Canada, adults and children with a valid Ontario Health Insurance Health Card are eligible to receive 75% coverage of the cost of one or two hearing aids up to a maximum grant of $CD500 [$NZ620] per hearing aid. For workers, the Workplace Safety and Insurance Board (WSIB) requires a minimum age-adjusted hearing loss of 22.5 db in each ear across four frequencies to grant access to health care entitlements and rehabilitation benefits (which equates to 8%-9% on the NAL scale). The WSIB may authorize the purchase of a hearing aid if the worker has an allowed claim for ONIHL, the aid is prescribed by an audiologist, and the need for a hearing aid has been evaluated. 6 The Quebec Health Insurance Plan provides a single hearing aid for people in a range of circumstances, including people of any age with an average hearing loss of at least 35 db in their better ear. A second aid is available in some cases. 7 In the United States, Medicare and most private insurance plans will pay for the doctor s visit to determine the need for a hearing aid, but not for the device itself. There are exceptions, including coverage for cochlear implants to treat severe 1

9 hearing loss or deafness, some Veterans Affairs programs and some federal employee insurance. Some hearing aid assistance is also available through Medicaid for low-income earners. Contribution towards hearing aids 8 WorkSafe Victoria, Australia, reports that it generally approves mid-range hearing devices, at a cost of between $A400 [$NZ490] and $A1,900 [$NZ2,330]. Clinical justification must be provided for hearing devices exceeding $A1,900, showing how the additional cost is necessary to meet the individual needs of the worker including their transition back to work. 9 WorkSafe British Columbia (Workers Compensation Board of B.C.) caps the cost of hearing aids at $CD700 [$NZ870]. If exceptional circumstances can be demonstrated, the full cost of the aid may be paid. Alternatively, a cost-sharing arrangement is possible if the client wishes to purchase a more expensive aid, whereby WorkSafe BC contributes $CD1,176 [$NZ1,465] per aid. 10 Ontario s WSIB has recently introduced a capped price of $CD1,400 [$NZ1,745] per hearing aid. Workers are responsible for costs exceeding that amount, unless exceptional circumstances can be shown. 11 American private plans that do pay for hearing aids usually contribute only $US500 [$NZ660] to $US1,000 [$NZ1,330] toward the cost. Monetary compensation for workers 12 All Australian jurisdictions have an impairment threshold in place for industrial deafness, which means that an injured worker is not entitled to lump sum compensation until they reach the threshold level. Impairment threshold levels vary across states: minimum of 5% in Queensland, Tasmania, Northern Territory, South Australia and for Comcare (Commonwealth employers and employees) minimum of 6% in New South Wales and Australian Capital Territory minimum of 10% in Victoria, Western Australia and for Seacare (seafaring employees). 13 In England, the Industrial Injuries Disablement Benefit (IIDB), a weekly disablement pension, is available to people who have worked in a prescribed noisy occupation for at least 10 years, and whose degree of disablement from hearing loss is at least 20%, or at least 50 db in both ears. ACC calculates that the equivalent minimum percentage loss on the NAL 1988 scale (used by NZ and Australia) of the IIDB s minimum 20% disability requirement would be 49.6% (average of 50 db across all frequencies with 60 db at 4 khz because it is typically higher for people with ONIHL). 14 WorkSafe British Columbia requires a minimum of 28 db per ear for compensation for loss of hearing of non-traumatic origin but arising out of and in the course of employment. ACC calculates that, based on the NAL 1988 scale, the minimum hearing loss required to receive compensation would be between 12% and 16%. 15 In Ontario, under the WSIB, workers whose hearing loss is sufficient to result in a permanent impairment benefit as recognized by the AMA Guides (at or above 26.25/26.25 db or 25/32.5 db in the better/worse ear, respectively) can be referred for a Non-Economic Loss (NEL) determination. 2

10 16 In the United States, permanent impairment ratings determine the level of compensation awardable. Methods for calculating hearing impairment vary across states, with approximately a third using medical evidence rather than a specific formula. The remainder use a range of formulas, measuring hearing loss at varying frequencies, all of which require a minimum of 25 db. Effects of noise-induced hearing loss 17 NIHL is an example of cochlear (inner ear) hearing loss. It produces an absence of some very low volume sounds, including consonants, as opposed to a reduction in loudness for sounds of normal intensity. 18 The most obvious effect of NIHL is a difficulty in hearing quiet, high-pitched sounds, and can result in ambiguity and a struggle to fill in the gaps of speech against background noise. 19 Hearing aids can help to some degree by amplifying the high frequency sounds to a point where people can detect them, but there are still difficulties dealing with amplification of unwanted sounds. 20 The diagram below shows speech sounds that may be lost at different levels of hearing loss (vertical axis) and different frequencies, or pitch (horizontal axis). 21 NIHL typically causes loss of sound around 4,000 Hz. 6% hearing loss, depending on how it is distributed across the various frequencies, equates to between 30 db and 40 db hearing loss. As the diagram shows, the speech sounds that a person with around 6% hearing loss may have difficulty hearing are the f, s, and th sounds, or children whispering. 22 The actual difficulty in speech or communication will depend on the situation a person is in (eg a quiet room as compared to a building site), as well as the impact of other types of hearing loss (such as age-related loss) and/or other difficulties, such as impaired vision. 3