Simple Answers to the 10 Most Common Federal Disability Retirement Questions

Apr 15, 2024

Are you struggling to understand the process of Federal Disability Retirement? Do you have questions about your eligibility, the application process, or what benefits are available to you? Look no further!

We understand that navigating the world of disability retirement can be overwhelming, which is why we’ve compiled a list of the most frequently asked questions and provided simple, easy-to-understand answers. Our goal is to help you better understand this important benefit and help you make the best decisions for your future. So, let’s dive in and find the answers to the 10 most common Federal Disability Retirement questions!

1. What are the basic requirements for eligibility?

There are three main eligibility requirements for Federal Disability Retirement.

  1. You must be a career FERS employee, which just means you need to be enrolled in the Federal Employee Retirement System. This applies to most federal workers.
  2. You must have 18 months of creditable service
  3. You must have an injury or illness that keeps you from performing at least one essential function of your job

These three requirements determine if you are eligible for Federal Disability Retirement. If you meet them, it doesn’t automatically mean you’ll be approved, though. There are several other qualification requirements you need to meet, and talking with an die experienced Federal Disability Retirement attorney can help you figure out the best course of action for you.

2. What financial benefits can I expect?

The main benefit of Federal Disability Retirement is your monthly annuity payment. You will receive a monthly payment from the Office of Personnel Management (OPM) to supplement your income. The payment amount is based on your high 3 average, which is the average of your highest 36 consecutive months of basic pay.

The first year on disability retirement you’ll receive 60% of your high 3 average. Every year after that until you turn 62, you’ll receive 40% of your high 3 average.

3. Can I keep my health insurance?

You can keep your health and life insurance while on Federal Disability Retirement. You’ll continue to pay your premiums and the OPM will take over your agency’s portion.

If you were separated from your agency before being approved for Federal Disability Retirement and lost your insurance coverage, you will be able to reinstate it retroactively to cover any out-of-pocket expenses.

4. Can I still work after I retire?

Yes, you can work in the private sector and earn additional income while on Federal Disability Retirement! You can earn up to 80% of your previous position’s current salary while working in the private sector.

The OPM will perform income reviews to make sure you remain within the 80% income cap.

5. What is a survivor annuity?

If you are married when applying for Federal Disability Retirement, you will have the option to leave a survivor annuity to your spouse. This will provide your spouse with a portion of your annuity if you were to pass away before them. There are three options for you to choose from:

  1. Maximum survivor annuity– your Federal Disability Retirement gross annuity will be reduced by 10% and your spouse’s annuity upon your death will be 50% of your unreduced earned annuity
  2. Partial survivor annuity– your Federal Disability Retirement gross annuity will be reduced by 5% and your spouse’s annuity upon your death will be 25% of your unreduced earned annuity
  3. No survivor annuity– your Federal Disability Retirement gross annuity will not be reduced, and your spouse will not receive an annuity

Only a surviving spouse can receive a survivor annuity and if you select partial or no survivor annuity, your spouse will have to sign off on it.

It’s important to note the if you were to pass away before your spouse, you will lose the amount that is reduced from your annuity. This is a personal decision and should be carefully considered before making your selection.

6. How long does it take OPM to approve disability retirement?

This is a question we get all the time! A firm answer doesn’t exist because the OPM’s processing times vary significantly depending on their backlog. On average though, the processing time for a retirement case ranges from 6 to 9 months after the OPM receives the application.

If you’re considering applying soon, there’s good news: In early 2024, both the backlog and the processing time for all retirement cases decreased! This means now is a great time to start your application.

7. Do you have to be approved for SSDI to qualify?

In order to apply for Federal Disability Retirement, you must apply for Social Security Disability Insurance (SSDI). However, you do not have to be approved for SSDI to be approved for Federal Disability Retirement. You only need to show the OPM that you applied for SSDI through the Social Security Administration.

If you do get approved for SSDI, there will be an offset between your SSDI payments and your Federal Disability Retirement annuity payments.

8. Can I receive OWCP while on Federal Disability Retirement?

Many federal employees are familiar with workers’ compensation (OWCP) benefits, but may not be aware that there are rules about receiving OWCP wage loss and Federal Disability Retirement payments at the same time. Because OWCP is seen as a short-term benefit and Federal Disability Retirement as long-term, you can’t receive OWCP wage loss and Federal Disability Retirement simultaneously. You can, however, apply for both and place your Federal Disability Retirement on hold until your wage loss runs out. This is often the most financially beneficial solution for an on-the-job injury.

And note that while you can’t receive wage loss and Federal Disability Retirement at the same time, you can receive an OWCP Schedule Award or medical payments while on Disability Retirement.

9. What happens to my TSP if I’m approved for Federal Disability Retirement?

You can no longer contribute to your Thrift Savings Plan (TSP) while on Federal Disability Retirement. You’ll have three options for your TSP:

  1. Leave it alone and allow it to accrue interest until you can access it without a penalty. You won’t be able to add more money to it since you’re not receiving a paycheck from your federal agency anymore, but the money that’s already there will keep working for you. You can access it without penalty once you reach retirement age.
  2. Cash it out, but there may be a penalty. If you’re under 59.5 years old, you might have to pay a penalty in addition to regular income taxes on the amount you withdraw.
  3. Roll it over into another account. Rolling over your TSP involves moving the money to another retirement account, like an IRA or a 401(k) with a new employer. This option can be beneficial if you want to consolidate your retirement savings or if you prefer the investment options in another plan. However, you should carefully consider the investment options and fees in the new plan.

You can contact the TSP directly to discuss your options and plans for retirement.

10. What happens if I’m denied?

If you’re denied after applying for Federal Disability Retirement, don’t worry! You have three options to appeal during what’s called the “reconsideration stage.” You will be able to request a new decision, submit new evidence, or request an extension. If you’re denied again at the reconsideration stage, your application will move to the Merit Systems Protection Board, or MSPB. This stage requires a telephonic hearing and having legal support is strongly recommended. Our firm covers every stage of the denial process, and we offer a 100% money-back promise if your case is not approved after all three stages. Give our office a call to schedule a FREE consultation to see how we can help!

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