Federal Disability Retirement vs Social Security Disability Insurance

by | Nov 27, 2023

Last Updated November 29, 2023

We understand that the thought of being unable to work due to injury or illness is something no one wants to face. While we hope this remains a hypothetical scenario for you, it is crucial to stay informed about the eligibility criteria for Social Security Disability Insurance (SSDI) and Federal Disability Retirement. These two programs have distinct requirements, and our experienced legal team is here to guide you through the process and help you understand the differences.

Primarily, Federal Disability Retirement is specifically for federal employees while SSDI is available to those who’ve paid into social security while working.

While one of the requirements for Federal Disability Retirement is that you must apply for SSDI, that is about where the criteria similarities end.

What is Social Security Disability Insurance?

The Social Security Disability Insurance program pays benefits to you and your family if you have worked long enough and paid social security taxes on your earnings.

You must suffer from a long-term (1 year or more) or permanent disability that completely prevents you from performing any type of work. It’s a total and permanent disability benefit awarded when you can’t complete gainful employment.

The Social Security Administration (SSA) will determine your payment based on your lifetime average earnings before you became disabled.

SSDI Eligibility Criteria

The Social Security Administration uses a 5-step process in determining your eligibility for Social Security Disability Insurance.

Are you working?

If you’re working and you earn, on average, more than the substantial gainful activity limit, the SSA won’t consider you disabled. The substantial gainful activity limit changes every year, but in 2023 it is $1,470 a month or $2,460 a month if you are blind.

Is your medical condition severe?

SSA’s standards of disability look to see if your medical condition significantly limits your ability to do basic work activities– lifting, standing, sitting, walking, and remembering—for at least 12 months.

Does your impairment meet or medically equal a listing?

The SSA’s list of impairments describes medical conditions the agency considers severe enough to prevent you from completing a substantial gainful activity, regardless of age, education, or work experience.

If your condition isn’t on the list, the agency looks to see if your condition is as severe as a condition on the list. If the severity meets or exceeds the severity of listed impairment, the SSA will determine you have a qualifying condition.

Can you perform the work you did before?

The SSA decides if the medical impairment prevents you from performing any past work. If it doesn’t, they decide you don’t have a qualifying disability.

Can you do any other type of work?

If you can’t do the past work, the agency looks for other work you can do despite your impairment. Your age, education, past work experience, and skills you have are considered when determining if you can do other work. If you can’t do other work, you are considered disabled, and if you can, it’s decided you don’t have a qualifying disability.

What is Federal Disability Retirement?

Federal Disability Retirement is a benefit available to FERS federal employees who are struggling with a disability. This benefit allows you to retire now while maintaining your federal benefits.

Federal Disability Retirement provides a secure monthly annuity, creditable years of service, the option to maintain your health and life insurance, and the ability to work in the private sector.

You will remain on Federal Disability Retirement until age 62 when your Federal Disability Retirement automatically transfers into your regular FERS retirement.

Federal Disability Retirement Eligibility and Qualification Criteria

In order to be eligible for Federal Disability Retirement, you must meet the following 3 basic requirements:

  • You must have 18 months of creditable civilian service
  • You must be a FERS career employee
  • You must have become disabled, because of disease or injury, for useful and efficient service in your current position

Additionally, to qualify, you must meet the following 7 requirements:

  • You must have a diagnosed medical condition, which is defined as a health impairment resulting from a disease or injury, including a psychiatric disease.
  • Your medical diagnosis must be expected to last 12 months or one year
  • Your disability must cause a service deficiency in performance, attendance, or conduct, after a period of useful and efficient service
  • There must be a relationship between the service deficiency and the medical condition such that the medical condition has caused the service deficiency.
  • Your disability does not have to be work related, but it does have to have arisen or worsened while in your federal position
  • Your agency must be unable to accommodate you without removing any of the essential functions of your job description
  • Your agency must be unable to reassign you to a vacant position, at the same pay and grade level, within your commuting area, that you are qualified for

What happens if you receive both?

One of the application requirements for Federal Disability Retirement is that you must also apply for Social Security Disability Insurance. You may be approved for both benefits, and in this case, there will be an offset.

If approved for both SSDI and Federal Disability Retirement, your SSDI will become the primary benefit and you’ll receive those payments in full, but your Federal Disability Retirement payments will be reduced by a percentage of your SSDI benefit.

The first year you receive both benefits, your Federal Disability Retirement will be reduced by 100% of your SSDI benefit. Every year after, your Federal Disability Retirement will be reduced by 60% of your SSDI benefit.

Look at the image below for an example offset of Federal Disability Retirement and SSDI if your high 3 average was $72,000.

SSDI Offset Chart

Having both these benefits typically results in a higher annuity overall, but it severely restricts your earning potential as you must stay within the substantial gainful activity limit.

Both social security disability insurance and Federal Disability Retirement can be extremely helpful for anyone struggling in their job with an injury or illness. The eligibility criteria for both benefits is strict, but if you meet the requirements, it is worth applying in order to financially secure your future.

Schedule a free consultation with our team today to learn more about these benefits and how we can help.

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