Q&A – FERS Federal Disability Retirement vs. OWCP Federal Workers’ Compensation

Sep 17, 2020

FERS Federal Disability Retirement vs. OWCP Federal Workers’ Compensation

Our recent webinar covered one of our most popular topics, the differences between FERS Federal Disability Retirement and OWCP Federal Workers’ Compensation. This is a complex subject and brought up a lot of questions during the webinar. We outlined some of the most important ones here. Read on for the answers!

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Q: Can you receive multiple schedule awards if you have multiple accepted claims?

A: Yes, you can receive multiple schedule awards, but each must be for a separate body part.

Q: Does the time on OWCP Federal Workers’ Compensation count towards my creditable years of service at retirement?

A: Yes! Your time on OWCP will count as creditable years of service towards your retirement. This is a major benefit as we see a lot of federal employees utilizing OWCP benefits before switching over to Federal Disability Retirement.

Q: Can I apply for FERS Disability Retirement while receiving OWCP wage Loss payments?

A: Yes, you can apply for disability retirement while receiving wage loss payments. However, you are not able to receive them at the same time. You can elect to switch to Disability Retirement once you are approved for the benefit or choose to remain on OWCP Wage Loss.

Q: How long does it take to get approved for FERS disability retirement?

A: OPM’s processing times can vary greatly depending on their backlog. Historically it can take anywhere from 6-12 months to receive a decision for disability retirement. However, recently we have seen decisions made in as little as 2-4 months.

Q: What if you’re not old enough for regular federal retirement?

A: Age and service requirements for disability retirement differ from regular retirement and can allow you to retire early.

Q: Is FERS Disability Retirement a lifetime benefit?

A: You can stay on the disability retirement benefit until age 62, once you reach 62 years old the benefit will automatically switch to regular retirement. It’s important to remember that your creditable years of service will play into your regular retirement calculation.

Q: Is there statute of limitations on my original OWCP Federal Workers’ Compensation claim that was turned down when I originally submitted it?

A: There are multiple appeal options available to you. However, we would need to evaluate the formal denial in order to see what your options are.

Q: I have been approved for FERS Disability Retirement, but I am still receiving OWCP Federal Workers’ Compensation. Do I still earn years of service while receiving OWCP benefits?

A: Yes, once you switch over to your Disability Retirement benefit, you will get those years of service retroactively.

Q: Is it possible to switch from Regular Federal Retirement to Federal Disability Retirement?

A: If you are eligible for regular retirement, then you would not be eligible for disability retirement. However, you can switch if your Regular Retirement is an Early Retirement.

Q: How long does it take to receive my first annuity check for Federal Disability Retirement?

A: Once you are approved, it can take a few weeks for the OPM to start issuing payments. Additionally, it is dependent on your agency providing requested information to them.

Q: Can you receive an OWCP Scheduled Award for a pulmonary injury?

A: Yes, kidney and lung are available for a scheduled award.

Q: Can I receive an OWCP schedule award for PTSD and head injury?

A: Impairment to the brain, spine, or heart, that does not adversely cause an impairment to another body part is not eligible for a scheduled award. Additionally, PTSD is not eligible for a schedule award.

Q: Will my FERS Disability Retirement be restored after I go back under the 80% private sector earnings cap?

A: If you report your updated earnings to the OPM to reflect you have gone back under the 80%income cap, they will automatically reinstate your annuity benefit.

Q: Is FERS Disability Retirement still taxable if you live in a state where retirement isn’t taxed?

A: It is still taxable at the federal level; however, you will not be subject to state taxes if you live in a state that does not tax retirement.

Q: Is Military time included in creditable years of service?

A: If you bought back your military time, then yes, it would be included in your creditable years of service. Check out our recent article How Military Buy Back Affects Your Federal Disability Retirement.

Q: Does the VA disability income count towards the 80% income cap?

A: VA disability benefits do not count towards your 80% income cap under Federal Disability Retirement.

Q: Is the Federal Disability Retirement 80% private sector earnings cap based on gross or net earnings?

A: The 80% private sector earnings cap is based on the gross amount of what your previous federal position is currently paying.

Q: Is the 80% private sector income cap factored based on the high three average or your former position’s current salary?

A: The 80% private sector income cap is calculated off the current salary of your last position.

Q: What happens to my FERS Disability Retirement if I pass away? I’m single and my children are both adults.

A: You are only able to leave a survivor benefit annuity to a spouse, but you are able to designate a beneficiary to receive your FEGLI.

Q: Does the Federal Disability Retirement annuity increase with step increases?

A: You do not receive step increases; however, you will receive Cost of Living Adjustments (COLAs).

Q: Will my medical insurance payments come out of my Disability Retirement annuity?

A: Yes, while on Disability Retirement, your health insurance premiums will be deducted from your monthly annuity from the OPM.

Q: Can I go back to my current federal job part time while collecting Federal Disability Retirement?

A: We do not recommend working within the federal government at all after receiving federal disability retirement.

Q: Can you receive a schedule award for back injury that causes nerve damage?

A: If your back injury has caused permanent damage to another appendage you may be able to be approved for a OWCP Schedule Award.

Q: Do you get back pay for federal disability retirement?

A: You will receive back pay from your last date in pay status with your employing agency.

Q: Do I have to apply for Social Security Disability before applying for Federal Disability Retirement?

A: You must show proof that you have applied for SSD when you submit your application for disability retirement. However, it is not required that a decision has been made on the application.

Q: If I am currently on Social Security Disability (SSDI) can I apply for FERS Disability Retirement?

A: Yes, you are required to apply for Social Security Disability in order to apply for Federal Disability Retirement. However, you do not have to be approved for SSDI to be approved for Federal Disability Retirement.

Q: What if you are not approved for social security disability?

A: You do not have to be approved for SSD benefits in order to be approved for Disability Retirement benefits.

Q: How do I calculate how much I am going to get between FERS Disability Retirement and Social Security Disability?

A: If you are approved for social security disability, you will receive 100% of your SSD as the primary benefit, and the first year you will receive your FDR annuity minus 100% of your SSD. The second year and each year after, you will receive your FDR annuity minus 60% of your SSD. We have a chart on our website that simplifies the formula: https://bit.ly/ssdoffset

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