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Q&A – Federal Disability Retirement vs. Social Security Disability

In this article we’ll dive into some of questions we received during our recent webinar on Federal Disability Retirement vs. Social Security Disability and go into more detail with some of the answers. These common questions show just how difficult it can be to understand the nuances around FERS Federal Disability Retirement and Social Security Disability (SSDI). If you are interested in obtaining either of these benefits, then this article is for you. Read on to learn how these benefits can affect your future and what to watch out for along the way.

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Q: Is it possible to receive social security disability and workman’s comp?

A: Yes, you can receive both OWCP Federal Workers’ Comp and Social Security Disability benefits at the same time, however these benefits offset.

Q: What does “offset” mean in context of federal employee benefits?

A: Offset refers to how benefit payment calculations are made when multiple benefits are involved. In these situations, the payment of one benefit can reduce the payment of another, so that you are not able to receive “double” benefits. For example, if your annuity for Federal Disability Retirement was calculated at $4,000 /month, and you were approved for Social Security Disability payments of $1,000 /month, instead of receiving $5,000 /month, the $1,000 from SSDI would reduce or “offset” the FDR annuity to $3,000 /month (for the first year in this specific situation). These benefits would then combine to provide you with $4,000 /month.

The offset interactions between benefits can vary greatly and can change year over year. Make sure you consult an expert about calculating your benefits payments.

We have outlined details on some of the offsets here: https://www.federaldisability.com/blog/2017/12/avoid-payments-watch-offsets/

Q: Would it be beneficial to be approved for Social Security Disability or am I better off staying with FERS Disability Retirement?

A: When you initially apply for FERS Disability Retirement, you must also apply for Social Security Disability Insurance (SSDI). If you are approved for SSDI it will “offset” your disability retirement annuity. However, you do not have to be approved for SSDI to be approved for FERs Disability Retirement.

Q: I am currently on FERS Disability Retirement and Social Security Disability Insurance was denied. Should I keep re-applying for SSDI?

A: If you have been denied for SSDI benefits, you can appeal their decision or re-apply at any time. However, though you must apply for SSDI alongside your initial Federal Disability Retirement application, you do not have to be approved for SSDI to receive approval for Federal Disability Retirement. So, re-applying is not necessary.

Q: If I am approved for Social Security Disability Insurance (SSDI) before OPM Disability Retirement approval, will I automatically be denied for Disability Retirement?

A: No, you would not be automatically denied for OPM Disability Retirement, In fact, you can be approved for both and receive payments from both at the same time. However, these benefits do “offset”.

Q: Can I continue to work if I collect social security disability? What do I have to do if I want to go back to work part time?

A: In this case you should contact your local Social Security Administration (SSA) office directly. SSDI is a state regulated benefit and they often have strict restrictions when it comes to working.

Q: How does Federal Disability Retirement and Social Security Disability Insurance affect VA Disability?

A: Good news, your VA Disability benefits will not be offset by FERS Federal Disability Retirement or Social Security Disability. This is a great way for you to maximize your benefit payments.

Q: I am currently on OPM Disability Retirement at 59 years old, what will happen when I reach 62? Will I switch to regular retirement and social security automatically?

A: Once you reach the age of 62, your OPM Disability Retirement benefits will be calculated at the regular retirement rate and will include your creditable years of service. Your social security benefits will convert to regular social security once you reach retirement at age 65.

Q: I am 43 how much money will I get if I get disability retirement now?

A: The first year you are approved for Federal Disability Retirement you will receive 60% of your high-3 average salary (the highest average salary over a consecutive 36-month period). From year two and beyond you will receive 40% of your High-3 each year until you turn 62. Additionally, you will be able to earn up to 80% of your positions current rate of pay while working in the private sector. This gives you a 140%-120% combined potential. Another important feature of this benefit is that you will continue to accrue creditable years of service (in addition to your current years of service) until the age of 62.

Learn more about this calculation here: https://www.federaldisability.com/blog/2017/06/much-federal-disability-retirement-pay/

Q: Once you are approved for disability retirement. Can the benefit be stopped or canceled?

A: Yes, while this is uncommon, there are situations that can cause your benefits to be paused. This includes, returning to work for the federal government, exceeding the 80% private sector earnings cap, and more.

Learn more about these situations here: https://www.federaldisability.com/blog/2018/03/reemployment-affects-retirement-benefits/

Q: If the OPM deemed there was overpayment of Federal Disability Retirement benefits when I received retroactive SSDI backpay, could I receive a waiver due to financial hardship?

A: You can contact OPM to try and fight their overpayment claim. However, you cannot receive both full benefits during the same period. It they were not offset, OPM will request the overpaid money back.