Federal Employee Disability Retirement Guide: Because your health matters

Annuity Calculation under FERS Comments Off

I once read that the most valuable asset that a person usually has is his or her house.  Thus, for most of us, our homes are likely to be our biggest investments.  However, I believe that at least in this world, speaking from a purely materialistic point of view, our bodies are really our most important assets. Although this last statement may sound like blasphemy to the world around us, there is really is no greater disaster than falling ill with a chronic condition that affects one’s ability to work.

From all of the most impressive statistics that I have ever read, the one that has surprised me the most is one that states that among all the social classes that exists, it is the rich who most often commit suicide — usually when they lose their life investments.  For the rest of us, one of the most serious catastrophes we can suffer is to get a medical condition or physical/mental injury that threatens our ability to make a living.  Suicide is not really an option if we really love our families.  These days, even dying is prohibitively expensive — at least in the United States.

A generous benefit available to Federal employees

Fortunately, at least U.S. Federal employees have an option that is incredibly generous: Federal Disability Retirement, a benefit also known as OPM Disability Retirement because is is administered by the U.S. Office of Personnel Management (OPM). For the vast majority of Federal employees who are currently under the FERS program (FERS being an acronym for Federal Employee Retirement System, the code of law which currently applies to most Federal employees), it is necessary to have only 18 months working for a governmental agency; that is, for instance, working for the U.S. Postal Service, the DEA, the CIA, Department of Education or even working for the U.S. Armed Forces as a civilian (deplorable military personnel have their own retirement system administered by the U.S Office of Veterans Affairs).

Although this is not the panacea that will solve all the problems of the world, for the Federal or U.S Postal Employee, Federal Disability Retirement at least provides an opportunity to start a new life all over again; it is a benefit that allows the Federal employee to work in a new job or occupation that does no longer cause irreversible damage to his or her own health, that is, all this while earning a basic salary or base annuity.  As long as the Federal worker continues to suffer from the same medical condition, or permanent physical or psychological impairment; and as long as he does not earn more than 80% of what he previously earned in the government, the pensioner will be able to continue receiving this annuity until reaching the age of 62.  In fact, all the years that this individual was in OPM Disability Retirement will count as if he was working all these years.

A hypothetical case: a Postal employee

Let’s take as a hypothetical case a person we’ll call John Smith, someone who has been working for the U.S. Postal Service for 20 years, and who at the time of starting his disability retirement he was 42 years old.  When he turns 62, that is 20 years later, John will have an equivalent “work” credit of 40 years.  In other words, the benefit will be practically the same as if John had continued working for the United States Federal Government for the last four decades.

Continuing with this same hypothetical, if John had been working for the U.S. Post Office as a Mail Carrier, and his medical condition or physical injury (by recommendation of his health care provider) prevents him from walking or standing up for more than an hour a day (to illustrate a medical condition with a physical limitation), John may still be able to work sitting behind a desk in an office or starting an online business in his own home.  As we saw earlier, his Federal Disability Retirement benefits would allow him to earn up to 80% of what he previously made in the Postal Service as a Mail Carrier (a percentage of the base salary which is adjusted yearly by official inflationary increases, or a percentage of what that salary currently pays to all U.S. Mail Carriers).

Continuation of OPM Disability Retirement benefits

Let’s say for the sake of simplicity that a U.S. Mail Carrier position currently pays $50,000 a year, in this case John can still work on any job he can physically do, earning up to $40,000/year (80% of what the Postal Service currently pays for this occupation) without having to worry about losing the benefits. If he makes more than this, he will lose his Federal Disability Retirement benefits for ever, including his future permanent Regular Federal or Postal Retirement (the program that also administered by the OPM and which covers all Federal employees who qualify after working for a Federal agency for certain number of years, not because of disability purposes).

There is also a second reason why a Federal employee can lose his or her Federal Disability Retirement benefits for ever.  In the unlikely case that the former Postal employee, in our example, decides to find a new job with another Federal agency, he will also lose his OPM Disability Retirement benefits.  In this case, the pensioner will have to immediately report his new Federal job to the OPM or risk to have to pay all the annuity payments back to OPM (counting from the first day of getting the new Federal Government job).

OPM, OWCP and SSA

Please note that OPM Disability Retirement benefits should not be confused with the benefits paid by the Office of Workers’ Compensation Program (OWCP) which, as a temporary benefit, does not allow the active Federal employee to work.  Under the disability program administered by the Office of Personnel Management (OPM) the Federal employee becomes a Federal retiree or pensioner, which means that he or she will not longer maintain any work relationship with the former government employing agency.

In our illustrative case, this means that John will no longer receive harassment calls from his former Posmaster, Postal supervisors, OWCP Case Manager or even the annoying OWCP Nurse Practitioner to demand him to get better so he can go back to work, or to threaten to cut his OWCP benefits, or to be fired from the Post Office for using excessive sick time (if a Federal employee gets fired, he or she will continue receiving OWCP benefits for a while only, normally a few years, but then he will no be longer be eligible to even apply for OPM Disability Retirement benefits under the dangerous One Year rule).

Also, the Postal Service will not be able to send John to more OWCP-paid mercenary doctors to completely re-evaluate his medical restrictions and challenge his benefit payments.  Although OPM does maintain a continuing medical condition verification process, its program is much less invasive.  If John also receives annuity compensation from the Social Security Administration (SSA), a program called Social Security Disability Income (SSDI), then OPM most likely will let the SSA handle the medical condition verification process (which typically occurs every three or seven years).

How much does the Federal Disability Retirement annuity pay?

As a pensioner, Mr. Smith will receive a Federal Disability Retirement annuity of $30,000 per year (60%) for the first 12 months of disability retirement, and from there, $20,000 per year (40%) until he turns 62. John would also be free to receive the same health insurance he received when he was working for the Postal Service.  Remember that this is a basic annuity.  John can still earn more money by either working somewhere else or by getting concurrent SSDI benefits.

At the age of 62, John will receive, again, an OPM pension equivalent to what he would receive if he had never stopped working. In our example, he would receive a work credit of 40 years. At this age of 62, John would also qualify to receive regular Social Security Retirement benefits.  In this specific case, John’s income would increase significantly as he would receive more money from both the OPM and the SSA.

Perhaps some readers will think that the benefits explained in this short OPM Disability Retirement guide sounds too good to be true, but one should keep in mind that in many ways Federal Disability Retirement works like a private disability insurance, only that is administered by the United States Government.  In private disability insurance programs, each person must pay a monthly fee to remain eligible for disability insurance; but with OPM Disability Retirement, in each and every paycheck that the Federal worker has been receiving for all these long years of hard work, the Federal employee already had to pay a deduction for Regular and Disability Retirement.  Federal Employee Disability is not a welfare program — it’s a benefit you have already paid for.

Taking your future income seriously

For the Federal Worker who suffers from a type of medical disability that does not allow him to work efficiently, the benefits are very generous, but obtaining them is not something so simple. There are specific laws that the applicant must know and address to qualify.  The process can be long and last several years in some cases. That is why it is generally advisable to hire a top Federal Disability Retirement lawyer to handle both the application and the process.

Your future income is not something you should play with.  Hiring an experienced lawyer not only will help you to improve your chances of getting your initial application approved, but you’ll be also paying for peace of mind.  Nobody can assure you 100% an approval, but an honest attorney will be able to evaluate the specifics of your case and give you a fairly accurate assessment of what are your chances of getting FERS Disability Retirement in the First or Second Stage of the process.

Believe me, you really don’t want to deal with the Merit Systems Protection Board (MSPB) at the Third Stage.  Those guys will side with the Federal Agencies about 98% of the time.  Even at this stage, a good Federal Disability Retirement attorney should be able to help you there, but why should you take any chance?

It’s better to do things well from the very beginning.

CMC

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