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OWCP Benefits vs Medical Retirement

 

The following describes the differences between OWCP Benefits and Medical Retirement

CSRS Disability:

Under an OPM approved disability retirement an employee would receive the following: If covered by CSRS an “earned” annuity computed under the general formula, however the law guarantees a minimum annuity to employees who retire because of disability. If a disabled workers earned annuity is less than the guaranteed minimum, the minimum generally becomes the basic annuity. The guaranteed minimum is not a fixed amount but varies from one an employee to another based on age, service and average salary. It is the lesser of the following: 40 % of the employees high three or the amount obtained from the general formula after increasing the actual creditable service by the time remaining from the commencing date of the annuity to the date of the employees 60th birthday.

FERS Disability:

Disability benefits under FERS are based on the retirees age and amount of service. Disability benefits are recalculated after the first year and at age 62. If a disabled worker is under age 62 and not eligible for immediate retirement the following benefits apply: For the first twelve months 60% of the high three, minus 100% of any Social Security Benefits. After the first twelve months 40% of the high three minus 60% of any Social Security Benefits. Employees are entitled to an earned annuity- of 1% of their high three multiplied by years of service- if it is larger than their disability computed under the other provisions. When an employee reaches age 62 The FERS benefit is recalculated basing the calculation on the assumption an employee worked to age 62. From the second year forward FERS Disability benefit is indexed by the FERS cost of living formula minus one percent. Under FERS Disability the employee must have applied for Social Security Disability Benefits first.

Social Security Disability:

SSA benefits don’t begin until a five month waiting period expires and continues until age 65 or until SSA determines the benefits not longer apply. SSA does conduct a review every three years.

After disability retirement is approved OPM may also review the case periodically. If OPM determines the employee is no longer disabled, the annuity will be terminated after one year or upon reemployment in the Federal Government. Disability annuities can continue after reemployment based on the position and salary of the new position. Under current law there is no tax benefit for disability payments unless the employee is totally disabled for all gainful employment. OPM bases the decision on whether you are disabled for your current position or a vacant position of equal grade and pay. Employees should always check with IRS.


Differences between FECA and Disability Retirements:

Most employees will choice a FECA retirement because it results in a higher payment, mostly because FECA are tax free. Employees can switch between the two choices if it results in a benefit to the employee. However, employees should be aware their election can result in a disadvantage. For example if an employee elects a OPM retirement they are now considered an annuitant. If an employee recovers and is reemployed by the federal government the employee is now considered a rehired annuitant and is subjected to the rules governing reemployed annuitants. Being subjected to those rules may be disadvantageous if rehired at a lower grade and pay level. It is also recommended that if an employee is eligible for an immediate retirement that they should just retire so they are not subjected to the medical requirements and a subsequent loss of benefits. On the other hand certain job restoration rights are not available if you elect an immediate retirement.

Approval of a disability retirement does protect future annuity rights. If for some reason FECA benefits are cancelled an employee is entitled to disability benefits.

Once approved by OPM and FECA for disability the employee must elect which benefit they want to receive.

Simultaneous FECA and Disability Payments:

In limited circumstances an employee can receive both benefits. Since I believe Kim is a party to the DET Mold lawsuit this might apply. If she receives a payment from a third party and FECA suspends payments based on this settlement Kim could collect her OPM benefits while she is receiving financial compensation from the third party.

Refunds of Retirement Contributions:

Employees who are receiving FECA benefits can receive a refund of their federal retirement contributions however they must keep the following in mind. If a separated CSRS employee receives the refund and returns to duty the employee will forfeit all credit service, unless the redeposit the refunded payment. The FERS employees loose the time and the ability to make a deposit of the refunded payment to regain the time. Taking a refund while on a FECA award can be risky. While most employees believe the FECA will continue forever, if the employee recovers they could be forced back into federal service.

Impact on Retirement:

An employee on LWOP while receiving FECA benefits will receive full credits for the LWOP for retirement purposes. LWOP while receiving FECA is not subjected to the normal limitation of only 6 months a year. Typically an employee will stay on LWOP for a year, after a year the employee usually will be separated. An employee receiving FECA will stay on that benefit for as long as they qualify.

FECA Benefits:

Partially disabled employees are compensated at 66 2/3% without dependants and 75% with dependants. The pay rate used is based on the date of injury and includes night differential, Sunday differential, holiday pay, it doesn’t include overtime. Employees receiving compensation are entitled to COLA increases each March. The only deductions from compensation are health benefits. Compensation payments are not subject to federal income tax. Other benefit under FECA include medical care to include transportation expenses, extra compensation during vocational rehabilitation and an attendant where required. Employees can also collect unemployment benefits while receiving FECA payments. FECA benefits are the same for permanent total disability as those provided for temporary total disability. There is no such thing as OWCP/FECA retirement. AN employee receiving an FECA payment continues to receive said payment until the condition no longer exists and or the employee has been returned to government service. However once the employee returns to federal employment all time outside is then creditable for a normal retirement.

Hopefully this helps but while it is still an individual decision based on the info provided, it is almost always recommend the employee stay on the FECA rolls in lieu of any other option.
 

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