FERS/SSDI Offsets: Major Precedent-setting Case

For those FERS Disability Retirement annuitants who are/were concurrently receiving SSDI benefits, and have gone out to earn more income — there is good news.

In the past, if you exceeded the allowable income-ceiling, you would lose your SSDI benefits because you engaged in substantial gainful activity.  With no longer receiving SSDI benefits, the FERS annuitant would go to OPM and request that the Disability Retirement annuity be “recalculated”, because he/she is no longer receiving the SSDI offset amount.

In the past, OPM has consistently (and now, wrongly, it turns out) argued that, because such an individual continues to remain “entitled” to SSDI benefits (even though he/she is not receiving any such benefits), that therefore OPM is not required to recalculate the FERS disability retirement annuity upwards for the benefit of the FERS individual.

No longer.

The U.S. Court of Appeals for the Federal Circuit just issued the opinion in Stephenson v. OPM, Case #2012-3074, in which they have clearly and unequivocally stated that OPM’s interpretation of the law has been in error.  When a FERS disability retirement annuitant loses his or her SSDI benefits for engaging in substantial gainful activity, OPM must recalculate the FERS disability retirement benefit.

I argued the case in early December; the Court issued its precedent-setting opinion in just over a month.  This is indeed a major victory for FERS annuitants.  You can now take this case and wave it at OPM and demand that your Federal Disability Retirement annuity be recalculated — in your favor.

Sincerely,

Robert R. McGill, Esquire

Federal Employees Retirement System (FERS) Disability Retirement: SSDI & FERS Offset (Continued…)

If a former Federal or Postal employee receives both FERS Disability Retirement annuity, as well as SSDI (with the proper offset), and finds a job, makes sufficient income to exceed the cap for SSDI — to the extent that Social Security finds that he or she is no longer “entitled” to SSDI benefits and suspends SSDI payments:  will the Office of Personnel Management recalculate the FERS Disability Retirement and reinstate the amount which was previously offset, to restore the full FERS Disability Retirement annuity?  The answer:  A number of recent cases have resulted in a “No”.  Petitions and Appeals are in the works. 

The reasoning and rationale of the Office of Personnel Management is that, because the individual is still “entitled” to SSDI benefits, but the benefits have merely been “suspended”, therefore the FERS Disability Retirement annuity is still offset by the “entitled” amount, not by what is actually received.  Pending the outcome of any Petitions for Review and Appeals to the U.S. Federal Circuit Court of Appeals, Federal and Postal Disability Retirement annuitants must be careful in deciding whether or not to actually pursue SSDI.  If one is planning to work at another job, with a reasonable expectation of exceeding Social Security’s cap for employment income, the fact that if one is restored to earning capacity, one’s FERS Disability Retirement may not be allowed to be recalculated to make up for the lost offset, should be taken into consideration.

Sincerely, Robert R. McGill, Esquire

FERS Disability Retirement: SSDI & FERS Offset

Federal and Postal Disability Retirement annuitants under FERS were required to file for SSDI as part of the process.  Most Federal and Postal employees who filed for Federal Disability Retirement benefits under FERS, never obtain an approval for SSDI.  This is natural, of course, and is part of the overall “framework” of the interaction between FERS Disability Retirement benefits and SSDI.  FERS Disability Retirement (as well as CSRS Disability Retirement) encourages Federal and Postal Workers to become employed in the private sector, and to become “productive” (translation:  continue to pay more taxes) in some other area of employment. 

Because Disability Retirement benefits under FERS or CSRS does not pay a great amount (60% of the average of one’s highest three consecutive years the first year under FERS, and 40% thereafter; a different computation methodology for CSRS employees, who are becoming rarer each year), the paradigm and plan of the Federal payment system for Disability Retirement annuitants had an implicit public policy approach of “encouraging” all such annuitants to find other employment.  Unless, of course, in addition to the FERS Disability Retirement annuity, one became entitled to SSDI payments, in which case the “cap” for income from other employment becomes much, much lower.  Many considerations should be thoughtfully approached when filing for SSDI, including plans for future employment.  Otherwise, some problems may be encountered if the annuitant receives both FERS Disability Retirement benefits, SSDI, and exceeds the cap from other employment.  More to Follow.

Sincerely,

Robert R. McGill, Esquire