FERS & CSRS Disability Retirement for Federal and USPS Workers: OWCP Dilemma

Benefits received through FECA (Federal Employees’ Compensation Act), administered through the Department of Labor and otherwise known under the acronym of OWCP, provide for temporary total disability compensation during the time that a Federal or Postal employee is injured and is unable to go back to one’s former job.

It pays well.  The problem, often, however, is that it pays well enough just to maintain a person to prevent him or her from drowning.  This dilemma is highlighted by the fact that a Federal or Postal employee who is receiving OWCP benefits (scheduled awards excepted) is unable to work at a job (with some exceptions regarding a person who had already been employed at a second job when injured at his primary vocation) or receive additional earned income.

Federal Disability Retirement benefits, on the other hand, whether under FERS or CSRS, allows for earned income up to 80% of what one’s former position currently pays.

While the Federal or Postal worker is allowed to concurrently file for, and get approved, both Federal OWCP benefits as well as FERS or CSRS Disability Retirement benefits, if both are approved, you must choose between one or the other approved benefit, and allow the unchosen one to remain inactive.

While FERS & CSRS Disability Retirement benefits, filed and obtained through the U.S. Office of Personnel Management, pays less than OWCP benefits, it is the added advantage of being able to work at another vocation which makes it more attractive.

It is like the difference between a shipwrecked victim who can hang onto a small floating device as opposed to a raft with oars; while the former allows for survival, it is the latter which will ultimately take one to the destination of final fruition.

Sincerely,

Robert R. McGill, Esquire

Medical Retirement Benefits for Federal & Postal Employees: OWCP & OPM Disability Retirement

Many calls come in where individuals have been on OWCP benefits for some time; it is, as I often explain, a difficult road to take, let alone stay on.  The compensation is certainly better, and in comparison to what Federal Disability Retirement benefits pay under FERS or CSRS, it can mean the difference between relative financial comfort and hardships.  But the difficulties which people — almost without exception — encounter with OWCP — from the constant harassment, to the threat of cutting off benefits, to repetitive examinations before Second Opinion and referee doctors, etc., makes for intolerable conditions.  Further, OWCP is not a retirement system, as I incessantly and redundantly state; it is a mechanism in which to allow for temporary compensation to be received while a Federal or Postal worker is recuperating from an on-the-job injury.  And that is the key concept — the Federal or Postal worker is expected, in the end, to recuperate and go back to work.  OPM Disability Retirement, on the other hand, is just that — a retirement from the Federal Service, for a medical condition which is expected to last for a minimum of 12 months, but as in most cases, as a permanent condition of the Federal or Postal employee.

Sincerely,

Robert R. McGill, Esquire

CSRS & FERS Disability Retirement: The OWCP Paradigm

One may choose OWCP benefits because, financially, it pays more (75% non-taxed for an individual with dependents; 66 2/3% for a single individual) than a Federal Disability Retirement annuity.  It is a pragmatic paradigm to rely upon for the immediate time-frame; however, it is not a practical paradigm for the future.  Obviously, one should obtain an approval from the Office of Personnel Management for one’s disability retirement, concurrently with receiving OWCP temporary total disability payments.  However, upon an approval from OPM, you need to elect between the two — because you cannot be paid by both concurrently.  Many people (rightly) choose to remain on OWCP and keep the OPM Disability Retirement annuity in “limbo or annuity purgatory” — again, because OWCP pays more.

However, as a paradigm for the future, it should not be relied upon forever.  This, because OWCP is not a retirement system.  Instead, it is a system of allowing for payment during a time of occupational disease or injury, for a person to be able to recover from such an injury.  While on OWCP benefits, however, you cannot work at another job (unlike under FERS & CSRS disability retirement); in fact, if you engage in too many physical activities similar to those which you might do at work, you may find that you will be criminally charged for “fraud”.  This has happened to many people, and it should frighten anyone who is on OWCP.  In such cases, you will often find that you have been videotaped over hundreds of hours — but the “edited” version upon which OWCP investigators charge you with, will be a video clip of about 5 minutes.  Next:  Why OWCP is not a good paradigm for one’s future.

Sincerely,

Robert R. McGill, Esquire

FERS/CSRS Disability Retirement Compared To OWCP

OWCP vs. OPM Disability Retirement

The Department of Labor administers Federal Worker’s Compensation Benefits through the Office of Workers’ Compensation Programs (OWCP). Such benefits are non-taxable, and are paid for temporary total disability, for injuries or medical conditions which result from, or are caused by, a workplace injury. There are many tangential factors which may be added to this basic definition, but for purposes of distinguishing OWCP from the Office of Personnel Management (OPM) Disability Retirement, this definition will suffice. Additionally, generally speaking, OWCP/Federal Worker’s Compensation is not a “retirement system.”

OPM Disability retirement, on the other hand, is a retirement system. As a result of a medical condition which impacts one’s ability to perform the essential elements of one’s job, a person is eligible to retire early, based upon a “medical disability.” A person on OPM Disability Retirement is separated from the Federal Agency, and he or she may “move on” in life, and perhaps start another career (with certain limitations as stated below).

When is it Time to File for FERS/CSRS Disability Retirement?

An individual must file for Federal Employees Retirement System/Civil Service Retirement System (FERS/CSRS) disability retirement benefits with the Office of Personnel Management within one (1) year of being separated from Federal Service – otherwise, the right to be eligible for disability retirement benefits is lost. Do not confuse this with being placed on Leave Without Pay (LWOP), or being out on OWCP for being injured. The clock begins ticking when you are actually separated from service. Most people, however, should not wait until they are separated to file for disability retirement benefits, but rather, should file whenever it becomes apparent that he or she can no longer perform one or more of the essential elements of the job.

Taxable vs NonTaxable Benefits

OWCP benefits are non-taxable. OPM Disability Retirement benefits, on the other hand, are taxed. While receiving disability retirement benefits, a person may undertake a job search, accept another position, and earn up to 80% of what his or her former position currently pays. Individuals receiving OWCP temporary total disability may not work at another job – period. Here is a sample scenario using OPM Disability Retirement rules:

A worker’s average salary for 3 consecutive years totals $50,000. The individual goes out on disability retirement, and after the first year (in which he would receive 60%, or $30,000), he is eligible to receive an annual annuity of 40%, or $20,000. The worker then applies for and accepts a job in the private sector. The worker can accept a job that pays up to $40,000 per year (80% of the current salary), and still be eligible to receive the $20,000 per year disability annuity.

The 80% Rule Increases Over Time

The rule is “80% of what a person’s former job pays currently.” If 5 years from now, a person’s former position pays $60,000 per year instead of $50,000, then he can make up to $48,000 per year at the job, because 80% of $60,000 is $48,000.

Filing for Disability Retirement while on Workers’ Compensation

It is often not a bad idea for those who are receiving OWCP benefits to remain on OWCP for as long as they can stand it (i.e., the persistent harassment, the constant oversight by so-called “2nd opinion doctors”, etc.) — but to always have the FERS/CSRS disability retirement annuity approved as a back-up source of income. Individuals may file for disability retirement concurrently while on OWCP — but you simply cannot collect from both at the same time (See 5 C.F.R. Sec. 844.105, “Relationship to workers’ compensation. (a) Except as provided in paragraph (b) of this section, an individual who is eligible for both an annuity under part 842 or 844 of this chapter and compensation for injury or disability under subchapter I of chapter 81 of title 5, United States Code (other than a scheduled award under 5 U.S.C. 8107(c)), covering the same period of time must elect to receive either the annuity or compensation.”).

When OWCP terminates payments (and there is a very good chance that this will happen at some point in the near future), it is a wise option to have your disability retirement benefits approved, but held in an inactive status. Federal workers have every right to elect one benefit over the other. Indeed, if you wanted to, you are allowed to go back and forth between OWCP and FERS/CSRS disability retirement.

As a secondary issue on this matter, a closer look at 5 U.S.C. Section 8106, paragraph (c) (2), (OWCP) on “partial disability” compared with the definition for disability retirement reveals: that “partially disabled employee who refuses or, neglects to work after suitable work is offered to, procured by, or secured for him, is not entitled to compensation.” This means that if OWCP secures a job for you as a retail store greeter for instance, and pays you the difference between your salary and what retail store pays — and you decide to say “no”, OWCP has every right to cut off your payments.

On the other hand, under the laws concerning FERS & CSRS disability retirement, 5 C.F.R.Sec. 844.103 (a)(2) states that, in order to be eligible for disability retirement, the individual “must, while employed in a position subject to FERS, have become disabled because of a medical condition, resulting in a deficiency in performance, conduct, or attendance, or if there is no such deficiency, the disabling medical condition must be incompatible with either useful and efficient service or retention in the position.” The difference here is that, under OWCP, if you are “partially disabled,” if you are offered any job that OWCP believes you can do, you must accept it. On the other hand, under FERS/CSRS disability retirement laws, if you are partially disabled — meaning that you simply cannot do at least one or more of the essential elements of your job — then you are entitled to disability retirement benefits, and your agency or the Postal Service cannot simply offer you any job; they must offer you a job in the same pay or grade, and one in which you are qualified or, if you are in the Postal Service, then it must an accommodation in the same craft.

Controlling Your Future

Under OWCP, you have no control over your future – OWCP determines your future. Under OPM Disability Retirement, you can obtain disability retirement benefits, and then take control of your future and work at another job of your choice, make up to 80% of what your (former) position pays and still continue to receive your disability annuity.