If your health has taken an unexpected turn and you’re facing a disabling medical condition, the last thing you should be worried about is how to make ends meet.
But that’s the reality for many federal employees struggling with a medical condition. If the fear of financial insecurity is hanging over your head, Federal Disability Retirement can offer a lifeline.
This benefit provides you with a steady stream of income, allowing you to focus on your health and wellbeing. You’ll also be able to continue growing years toward your pension and remain on your federal health and life insurance.
So, how much can you expect to receive from your Federal Disability Retirement payments? The answer depends on a few key factors, including your salary and years of service. Let’s break down what you need to know to get a clearer picture of your potential income.
How much will you get paid?
Interim and Backpay
Once you’re approved for Federal Disability Retirement, the OPM will begin finalizing your payments.
During this finalization stage, you’ll receive “interim” payments. These payments will be around 80% of what the OPM expects your finalized payments to be. These payments will typically begin around three months after approval and help keep you afloat if you can’t continue working.
It may take longer than expected for interim payments to begin as the OPM is currently dealing with backlogs and increased retirement applications at the end of the year. But this is not cause for concern as the OPM will ensure you receive all the money that you are owed.
If you receive your interim payments and they are higher than expected, the OPM may have calculated your payments incorrectly resulting in an overpayment. If this occurs, you will have to repay the OPM any additional money they are owed.
You’ll also be eligible for back pay for any time that you were out of work before being approved. You’ll be paid at your Federal Disability Retirement rate from your last date of pay with your federal agency.
We often see federal employees with excessive leave who are worried about their finances because their disability has caused them to lose out on a lot of compensation. We understand how hard it is to continue working with a disability, but back pay can be a nice bonus to help cover any expenses you have incurred while out of work or during the interim period.
Your back pay will be affected by any income you receive from your agency. If you have been out of work for months and suddenly receive a holiday bonus from your agency, your last date of pay status will update, and you will not receive any compensation before that date. It’s important to be aware of your last date of pay and avoid any payments from your agency if you have been out of work for a significant amount of time.
Your back pay will be paid at your Federal Disability Retirement annuity rate, not your regular pay rate.
Once your case is finalized, the OPM will pay you any money you are owed. If they happened to overpay you during your interim period, you’ll have to repay them.
Monthly Payments
Once your case is finalized, you’ll begin receiving monthly payments based on your high 3 average.
Your high 3 average is the average of your highest 36 consecutive months of basic pay. Your HR will calculate this number, but you can also find it on your SF 50 or request an estimate from your HR office.
The first year on Federal Disability Retirement, you’ll receive 60% of your high 3 average. Every year after, you’ll receive 40% of your high 3.
You’ll also be eligible for COLAs after your first year of Federal Disability Retirement.
You can call our office to get a free benefit estimate and learn how much you might receive.
How will you get paid?
You will manage your payments through your Retirement Services Online account – which you’ll have to create one once you’re approved.
Most choose to have their payments directly deposited into their bank account. The OPM is currently phasing out of offering physical checks as an option, so your only other option is to receive your monthly payments on a Direct Express debit card.
Regardless, it’s important to make sure your mailing address is up to date in your retirement services account in case the OPM mails any information. It’s also important to make sure all of your banking information is up to date with the OPM.
When will you receive payments?
The OPM makes payments on the first day of the month. So, on the 1st of every month, you should see a deposit in your account.
If you don’t receive your scheduled payment, the OPM recommends calling your financial institute first to report your missing payment.
How long will payments last?
You’ll continue receiving Federal Disability Retirement payments until age 62.
Once you turn 62, your Federal Disability Retirement will recalculate into your regular retirement, and your payments will adjust.
We often refer to Federal Disability Retirement as a “bridge to 62” since it allows you to reach your full retirement age without continuing in your federal job. Don’t feel like you have to struggle through your job just to keep getting paid. Federal Disability Retirement can provide you with the peace of mind you deserve.
Understanding the different payments you will receive while on Federal Disability Retirement can help you plan and budget for upcoming expenses. We understand the entire Federal Disability Retirement process can be confusing, which is why we help federal employees apply for Federal Disability Retirement and secure their benefits.
If you are looking to apply for Federal Disability Retirement, you don’t want to do it alone! We have experience helping over 8,000 federal employees apply for this life changing benefit. Our team is here to guide you through this process and secure the benefits (and payments) you need. Schedule a FREE consultation today to see if you qualify.
