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March 5, 2019August 19, 2022

Some Thoughts on Social Security and FERS Disability Retirement

Do I have to file for Social Security Disability Income (SSDI)?

Filing for Social Security Disability benefits is “required” when filing for Federal Disability Retirement benefits under FERS. This additional step, however, has always been somewhat confusing and problematic. Why does the Federal or Postal employee who is filing for Federal Disability Retirement benefits have to file for SSDI, anyway? What are the consequences of being denied (which most Federal and Postal employees are, anyway)? What happens if the Federal or Postal employee who is filing for FERS Disability Retirement benefits becomes approved for SSDI?

The process of filing a Federal Disability Retirement application is fraught with major obstacles, confusing administrative procedures and complex, almost unintelligible roadblocks – not least of which is the requirement to file for Social Security Disability benefits with the U.S. Social Security Administration. Most Federal Agency Human Resource Offices will tell you that you “must” file for Social Security benefits before applying for FERS Disability Retirement benefits, as if such a step is a prerequisite for even a preliminary consideration of a Federal Disability Retirement application. Indeed, most Federal Agency H.R. Offices, and even the U.S.P.S. Shared Services Office in Greensboro, North Carolina, will not process a Federal Disability Retirement application unless there is some evidence that an SSDI application has been filed. Is this truly what the law requires? And, more importantly, how far does one have to go in meeting the requirement – merely a cursory effort to satisfy the formality, or must one wait until all appeals are exhausted (which, for SSDI procedures, could potentially take years, by which time the 1-year statute of limitations to file for Federal Disability Retirement benefits may have lapsed)?

FERS Disability Retirement and SSDI Offset

The plain fact is that the U.S. Office of Personnel Management doesn’t care a twit about Social Security Disability Insurance – unless it is approved, and that, only if the FERS Disability Retirement application is also approved. For, if both are approved (FERS Disability Retirement & SSDI benefits), then the law requires an offset between the two – 100% offset in the first year of concurrent payments (where the FERS annuitant would receive 60% of the average of one’s highest 3 consecutive years of service), then a 60% offset during the subsequent concurrent years of payments (where the FERS annuity is paid at 40%). It is the offset itself which OPM is concerned about, and since Social Security payments are primary (meaning that the SSDI payments are paid in full) while the FERS Disability Annuity is “secondary” (where the offset occurs by reducing the amount of the FERS Disability Annuity by the percentage of legally-mandated offset required), OPM is concerned that an approval of SSDI benefits will therefore impact the amount of annuity payments calculated by OPM’s disability retirement payments.

How does the interactive process work – between filing for a FERS Disability Retirement and Social Security Disability Insurance? Here is an example:

A Federal or Postal worker starts to prepare filing for a Federal Disability Retirement application, and begins completing the SF 3107 series of forms, as well as the SF 3112 series. As part of the process, he or she is told that one must apply for Social Security Disability Insurance, and attach proof of such filing along with the other Standard Forms for a Federal Disability Retirement application. He does so – files, knowing that it will be denied, especially since he is technically still “employed” by the Federal agency or the Postal Service. He asks himself, “Why do I need to file”? The reason: That is the law, and whether the law makes sense or not, it is a requirement. The FERS retirement paradigm has always been based upon a 3-pegged financial system: The Federal Retirement; Social Security; the TSP (Thrift Savings Plan). When one is accessed (the retirement itself), then the other component (Social Security) must also be applied for. Having filed, the requirement is satisfied. Questions: Do you need to do anything more? Can you just not put much effort into it? If the SSDI filing is denied, must you appeal it? The answers: No, yes and no. Postscript: Once you receive an approval for your Federal Disability Retirement application, will you have to file again when you are no longer employed? Not necessarily; however, if OPM asks you to re-file, then you should go ahead and file with the SSDI Office once again. What are some of the factors to consider as to how aggressively you may want to pursue Social Security Disability benefits when concurrently filing for Federal Disability Retirement benefits? Here are some factors to consider:

First, as stated earlier and reiterated again, understand that there is an offset between FERS Disability Retirement annuity and Social Security Disability Insurance benefits – a 100% offset in the first year of concurrent benefits with a FERS annuity at the 60% rate; then, a 60% offset during all subsequent years (until recalculation at age 62) while FERS benefits are paid at the 40% rate. Since Social Security is “primary”, the offsetting reduction is applied to as against the FERS Disability annuity. However, Social Security has a very low threshold of capacity to earn any income before you “lose” it (normally somewhere in the range of $1200 – $1300 per month), and so if the FERS Disability Annuitant plans on working at some private sector job making more than the threshold amount, it may not be worthwhile to even pursue Social Security Disability benefits aggressively. Contrast the low threshold under SSDI against the allowable amount for a FERS Disability Annuity: You are allowed to make up to 80% of what your former position currently pays.

An example of the FERS-SSDI offset calculation

Thus, by way of example: Hypothetical Annuitant A: A former Postal worker made $55,000.00 per year (and, for purposes of making this example simple, the same amount for the average of his highest-3 consecutive years of service.) Thus, in the first year, he receives $33,000 as his FERS annuity (60% of $55,000), and in the second year, $22,000 as his FERS annuity (40% of $55,000). Rounding off the numbers to simplify, let’s say that it comes to around $3,000 per month for the first year, then $2,000 per month for the subsequent years. The former Postal worker also gets SSDI approved, and the amount comes to $2,000 per month.

How does the offset work? Well, as SSDI is “primary”, the Postal worker would receive $2,000 from Social Security the first year, and $1,000 from his FERS annuity (as 100% of the SSDI payment is offset against the FERS payment), and in the second and subsequent years, he would receive $2,000 from Social Security and $800.00 from FERS (as 60% of the SSDI payment is offset against the FERS payment). If Annuitant A works at a private-sector job and makes $1,000 per month, all well and good – for, that amount would not exceed the threshold for either the FERS Disability Retirement annuity nor the SSDI allowable amount. If, however, he goes out and makes $2,000 per month, or some higher amount that violates the allowable threshold for Social Security, then he will lose the SSDI benefit, and any prior offset with FERS will be recalculated to allow for the full annuity.

Should I pursue Social Security disability benefits?

Thus, the factors that one should consider when pursuing Social Security Disability concurrent with a FERS Disability Retirement application, should take into account the following questions:

Will I be working at a private sector job, and if so, how soon after I begin receiving a FERS Disability Retirement annuity, and approximately how much will I expect to be making?
While the combination of FERS Disability Annuity and the SSDI payments will net me more, will it be worthwhile if I go out and get a job that exceeds the Social Security threshold of acceptable limits? For, as a practical matter, while the offset against a FERS annuity payment is supposed to be recalculated by OPM if the SSDI benefit is lost, the reality is that OPM is a large and rather unresponsive bureaucracy, so that getting the full benefit back will often take up a great amount of time – several months, at least.
Do I expect to work at a private sector job that will make pursuing SSDI impractical, and therefore should I put in the minimum effort necessary to simply comply with the requirement of filing for SSDI?

Be careful…

These are some considerations that should be thought through during the initial stage of the process. In theory, getting approved for SSDI and getting both the FERS annuity, as well as the SSDI benefit – even with the offset – would seem to be a “no brainer” given that the combination of both will almost always net you more money. However, a caveat on what has been occurring more and more is in place. The “Offset” between the FERS Federal Disability Retirement annuity and SSDI payments is supposed to happen automatically.

One would think that, in this computer-age of technological advancement, cross-checking based upon Social Security numbers and other identifying factors would be fairly commonplace and automatic. Think again.

Many hundreds, if not thousands, of Federal and Postal Federal Disability Retirement annuitants receive notification years later of an “overpayment” that must be repaid and reimbursed – amounting to, in some cases, in the hundreds of thousands of dollars. How and why does this occur? Quite simply, because the two agencies – OPM and the Social Security Administration – never communicated with each other, never cross-checked the payments, and most importantly, never offset the required amount. Thus, the Federal or Postal worker who was approved both for FERS Disability Retirement benefits, as well as SSDI, received two “full” checks, and continued to deposit both and spend both amounts.

Now, some would say: Well, yes, repaying the government is only fair – you should have known that the offset wasn’t happening, and you should have “set aside” the amount of the offset knowing that you would one day be “caught” accepting both. Without making a judgmental comment on such a perspective, the reality is that, whether the Federal or Postal dual-annuitant knew, didn’t know, didn’t think he or she would be “caught” or be forced to repay the amount of the overpayment, the simple fact of the matter is that overpayment based upon the incompetence of the Federal bureaucracy occurs all too often, and because the funds from a FERS Disability Retirement comes from the U.S. Government, when the oversight of overpayment is caught, the best you can do is to negotiate the most advantageous repayment plan possible.

Finally, a closing thought on the case of Stephenson v. OPM – a major case won by this author, argued before the U.S. Court of Appeals for the Federal Circuit, decided on January 18, 2013. In that case, OPM had steadfastly refused to restore the full amount of a FERS Disability Retirement annuity despite the loss of the offsetting SSDI benefits, arguing that there was a period where the annuitant remained “entitled” to SSDI benefits despite not actually receiving any money from the Social Security Administration. OPM refused to recalculate and restore the FERS Disability annuity amount and continued to offset a phantom payment merely because a person was still hypothetically “entitled” to the amount. That issue is now resolved because of the decision in Stephenson v. OPM, but a caveat concerning offsets is in order, here.

Theoretically and legally, one can get approved by SSDI, work, earn an amount that exceeds the SSDI threshold, then request that OPM restore the previously offset amount and recalculate so that the full FERS Disability annuity is received. However, as a practical matter, OPM is a large and cumbersome bureaucracy that takes forever to respond. Just keep that in mind. Thus, with any and all issues concerning SSDI, offsets and FERS Disability Retirement, keep the following close to heart: You may be “right”, but it may take a long, long time to recover – whether on the issue of restoration and recalculation of a lost benefit; whether it concerns overpayment; or any other issue concerning SSDI, FERS Disability Retirement annuity and the interacting, offsetting features between the two. Thus, as with everything else, plan accordingly.

Sincerely,

Robert R. McGill, Esquire
Federal Disability Attorney

About the Author

Robert R. McGill is an attorney who specializes in Federal Disability Retirement, a practice area he dedicates 100% of his time helping Federal and Postal workers secure their disability retirement benefits under both FERS and CSRS. For more information about his legal services, publications and forum, please visit his Federal Disability Attorney website.

February 12, 2019June 8, 2022

FERS Disability Retirement Compared To OWCP

OWCP vs. FERS Disability Retirement

The Department of Labor administers Federal Worker’s Compensation Benefits through the Office of Workers’ Compensation Programs (OWCP). Such benefits are non-taxable, and are paid for temporary total disability, for injuries or medical conditions which result from, or are caused by, a workplace injury. There are many tangential factors which may be added to this basic definition, but for purposes of distinguishing OWCP from the Office of Personnel Management (OPM) Disability Retirement, this definition will suffice. Additionally, generally speaking, OWCP/Federal Worker’s Compensation is not a “retirement system.”

OPM Disability retirement, on the other hand, is a retirement system. As a result of a medical condition which impacts one’s ability to perform the essential elements of one’s job, a person is eligible to retire early, based upon a “medical disability.” A person on OPM Disability Retirement is separated from the Federal Agency, and he or she may “move on” in life, and perhaps start another career (with certain limitations as stated below).

When is it Time to File for FERS Disability Retirement?

An individual must file for Federal Employees Retirement System/Civil Service Retirement System (FERS/CSRS) disability retirement benefits with the Office of Personnel Management within one (1) year of being separated from Federal Service – otherwise, the right to be eligible for disability retirement benefits is lost. Do not confuse this with being placed on Leave Without Pay (LWOP), or being out on OWCP for being injured. The clock begins ticking when you are actually separated from service. Most people, however, should not wait until they are separated to file for disability retirement benefits, but rather, should file whenever it becomes apparent that he or she can no longer perform one or more of the essential elements of the job.

Taxable vs NonTaxable Benefits

OWCP benefits are non-taxable. OPM Disability Retirement benefits, on the other hand, are taxed. While receiving disability retirement benefits, a person may undertake a job search, accept another position, and earn up to 80% of what his or her former position currently pays. Individuals receiving OWCP temporary total disability may not work at another job – period. Here is a sample scenario using FERS Disability Retirement rules:

A worker’s average salary for 3 consecutive years totals $50,000. The individual goes out on disability retirement, and after the first year (in which he would receive 60%, or $30,000), he is eligible to receive an annual annuity of 40%, or $20,000. The worker then applies for and accepts a job in the private sector. The worker can accept a job that pays up to $40,000 per year (80% of the current salary), and still be eligible to receive the $20,000 per year disability annuity.

The 80% Rule Increases Over Time

The rule is “80% of what a person’s former job pays currently.” If 5 years from now, a person’s former position pays $60,000 per year instead of $50,000, then he can make up to $48,000 per year at the job, because 80% of $60,000 is $48,000.

Filing for Disability Retirement while on Workers’ Compensation

It is often not a bad idea for those who are receiving OWCP benefits to remain on OWCP for as long as they can stand it (i.e., the persistent harassment, the constant oversight by so-called “2nd opinion doctors”, etc.) — but to always have the FERS/CSRS disability retirement annuity approved as a back-up source of income. Individuals may file for disability retirement concurrently while on OWCP — but you simply cannot collect from both at the same time (See 5 C.F.R. Sec. 844.105, “Relationship to workers’ compensation. (a) Except as provided in paragraph (b) of this section, an individual who is eligible for both an annuity under part 842 or 844 of this chapter and compensation for injury or disability under subchapter I of chapter 81 of title 5, United States Code (other than a scheduled award under 5 U.S.C. 8107(c)), covering the same period of time must elect to receive either the annuity or compensation.”).

When OWCP terminates payments (and there is a very good chance that this will happen at some point in the near future), it is a wise option to have your disability retirement benefits approved, but held in an inactive status. Federal workers have every right to elect one benefit over the other. Indeed, if you wanted to, you are allowed to go back and forth between OWCP and FERS Disability Retirement.

As a secondary issue on this matter, a closer look at 5 U.S.C. Section 8106, paragraph (c) (2), (OWCP) on “partial disability” compared with the definition for disability retirement reveals: that “partially disabled employee who refuses or, neglects to work after suitable work is offered to, procured by, or secured for him, is not entitled to compensation.” This means that if OWCP secures a job for you as a retail store greeter for instance, and pays you the difference between your salary and what retail store pays — and you decide to say “no”, OWCP has every right to cut off your payments.

On the other hand, under the laws concerning FERS Disability Retirement, 5 C.F.R.Sec. 844.103 (a)(2) states that, in order to be eligible for disability retirement, the individual “must, while employed in a position subject to FERS, have become disabled because of a medical condition, resulting in a deficiency in performance, conduct, or attendance, or if there is no such deficiency, the disabling medical condition must be incompatible with either useful and efficient service or retention in the position.” The difference here is that, under OWCP, if you are “partially disabled,” if you are offered any job that OWCP believes you can do, you must accept it. On the other hand, under FERS/CSRS disability retirement laws, if you are partially disabled — meaning that you simply cannot do at least one or more of the essential elements of your job — then you are entitled to disability retirement benefits, and your agency or the Postal Service cannot simply offer you any job; they must offer you a job in the same pay or grade, and one in which you are qualified or, if you are in the Postal Service, then it must an accommodation in the same craft.

Controlling Your Future

Under OWCP, you have no control over your future – OWCP determines your future. Under OPM Disability Retirement, you can obtain disability retirement benefits, and then take control of your future and work at another job of your choice, make up to 80% of what your (former) position pays and still continue to receive your disability annuity.

Sincerely,

Robert R. McGill, Esquire
Federal Disability Lawyer

Robert R. McGill is an attorney who specializes in OPM Disability Retirement, a practice area he dedicates 100% of his time helping Federal and Postal workers secure their disability retirement benefits under both FERS and CSRS. For more information about his legal services, publications and forum, please visit his Federal Disability Retirement website.

Note: This article was originally published in Lawyers.com

February 11, 2019August 19, 2022

What is Federal Disability Retirement?

Is it an accident that so many Federal and Postal employees are unaware of the benefit of “Federal Disability Retirement” for FERS employees? Is it a deliberate “conspiracy of silence” — a benefit which exists but is not trumpeted by the Federal Government for fear of the floodgates of applications being opened?

More likely than not, there is another explanation: the new Federal employee is neither concerned nor interested in a benefit which one neither imagines nor foresees as a possible avenue of choice. The general rule in life is that the younger we are, the more invincible we believe we are; as one grows older (or wiser and more mature, as we like to think), thoughts of our own mortality and vulnerability become exponentially magnified. Like so many things in life, the very concepts of “disability” and “retirement” (leaving aside the compounding and conjoining of the two terms) are far and removed — until it becomes a living necessity.

Federal Disability Retirement and Regular Retirement

When a medical condition begins to impact a Federal or Postal employee, it is important to know that the benefit termed as “Federal Disability Retirement” exists and is available. It is a benefit which is part of the total ’employment package” when an individual becomes a Federal or Postal employee. Federal Disability Retirement allows an employee to retire earlier, but not because he or she necessarily got enough years of Federal service to qualify for a retirement annuity (that would be “regular” retirement), but because the employee is medically unable to perform the essential functions of his or her present Federal job.

Thus, when one needs to access such a benefit, one should never think that there is something degrading or nefarious about applying for Federal Disability Retirement benefits — it is not an attempt to “game the system”; it is not a judgment upon the worth of an individual; it is not a conclusion to one’s life. Rather, it is a recognition that: (A) one suffers from a medical condition, which (B) impacts and impedes one’s ability to perform the essential elements of one’s Federal or postal job, and (C) that one is no longer a “good fit” for one’s particular job.

You may still work somewhere else

It does not mean that the Federal or Postal employee cannot be productive in some other capacity; indeed, the statutes and regulations governing disability retirement annuity payments allow for an individual to go out and become employed in another, different job, so long as it is (1) substantially different from the type of essential elements which prevented one from performing in the previous job, and (2) one makes no greater than 80% of what the prior (Federal or Postal) job currently pays.

The minimum eligibility requirements

Further, for purposes of determining minimum eligibility requirements, here are some additional “basics”: To be eligible for a disability retirement annuity under FERS or CSRS, a Federal or Postal employee must establish by a preponderance of the evidence that:

(1) he or she has completed a minimum of 18 months of Federal service (for FERS employees) or five years (for CSRS employees which, presumably, all CSRS employees already have the minimum eligible period of Federal service);

(2) while employed in a position subject to FERS or CSRS, the Federal or Postal employee becomes disabled because of a medical condition, resulting in a deficiency in performance, conduct, or attendance, or, absent such deficiency, the medical condition must be incompatible with either useful and efficient service or retention in the position;

(3) the disabling medical condition is expected to continue for at least one year from the date the application is filed; and

(4) accommodation of the disabling medical condition in the appellant’s former position or in an existing vacant position must be unable to be accomplished by the agency. 5 U.S.C. § 8337(a); 5 C.F.R. § 831.1203(a).

The above set of legal criteria constitute the “basics” of eligibility. Certain other elements should also be kept in mind:

The Federal employee need not prove that he or she is “totally disabled”; rather, the standard of proof which must be met is to merely show that he or she is unable, because of disease or injury, to render useful and efficient service in the position occupied.

Your disability does not have to be job-related

Further, it is important to understand that “causality” is not an issue in Federal or Postal Disability Retirement law — unlike Federal Worker’s Compensation (OWCP). This is because, to be eligible for Federal Disability Retirement benefits, you don’t need to have an “on-the-job” injury, or suffer from an occupational disease or illness. You can be playing touch football in your backyard and break your leg, and if the condition of your medical disability lasts for at least a year, and prevents you from performing the essential elements of your job, then you are eligible for Federal Disability Retirement benefits.

Separation from Federal service

One additional – but very important – point which must be considered in filing for Federal Disability Retirement benefits. First, one does not need to be separated from service in order to file for disability retirement. However, if a Federal or Postal employee is separated from service, that employee has only up to one (1) year to file for Federal Disability Retirement benefits. If you don’t file within one (1) year of being separated from service, you have lost the right to apply for such benefits forever.

Further, if a separation of service occurs, it is best to attempt to negotiate with the Agency to have the separation characterized as one based upon a medical reason — either explicitly (“separation is based upon your medical inability to perform your job”) or implicitly (“separation is based upon excessive absences,” combined with a reference in the proposed removal to medical conditions implying that the absences resulted from one’s medical conditions). I have written many articles as to why it is important to obtain a separation from the Federal service based upon one’s inability to perform one’s job. It is for the sake of securing what is known as the “Bruner Presumption“.

Seeking help from Bruner

The “Bruner Presumption” is so named from a Federal Circuit Court case, Bruner v. Office of Personnel Management, 996 F.2d 290 (Fed. Cir. 1993). It essentially stands for the proposition that, if a Federal employee under FERS or CSRS is removed for his or her medical inability to perform the duties of his or her position, that such a specified removal constitutes “prima facie” evidence of entitlement to disability retirement. This legalese simply means that it makes it harder for the Office of Personnel Management to deny a disability retirement application. However, always remember that it is still, even with the Bruner Presumption, the responsibility of the applicant to show that he or she is entitled to disability retirement benefits — by having the necessary medical documentation showing that you cannot perform the essential elements of the job.

You already had Federal Disability Retirement Insurance all this time

Like life insurance and health insurance (you will still be able to maintain your health or medical insurance), the fine print and details of the contractual benefits are often “out of sight” and “out of mind” — until the necessity arises. Federal Disability Retirement benefits are rarely considered until the need arises. It is a benefit accorded to all Federal and Postal employees, and is part of the “employment package” — the totality of compensatory benefits.

Placed on a linear spectrum, when an employee begins his or her Federal career, disability retirement benefits are merely an irrelevancy to set aside for those unnamed and faceless “old folks”; as one moves along the linear spectrum of life and career, however, and medical conditions develop over time, the benefits of a disability retirement annuity become magnified in importance. A lifetime of working to obtain a semblance of financial security need not become devastated because of a medical condition. A disability retirement annuity allows for a certain level of financial security – and secures a “fresh start” of productivity in allowing for a second career and a different occupation. While “out of sight” for today, it is nevertheless a benefit to be mindful of for the future.

Sincerely,

Robert R. McGill
Federal Disability Attorney

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