Last Updated on April 27, 2019 by Federal Disability Lawyer
OWCP vs. OPM 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/CSRS 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 OPM 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/CSRS 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 & CSRS 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.
Robert R. McGill, Esquire
Federal Disability Attorney