Sick leave is the gift that keeps on giving. Provided to federal employees at a steady rate of 4 hours per pay period, it can be used for a number of purposes, including physician or dental appointments, when you are physically or mentally ill, or attending to the health needs of family members.
However, the closer you come to retirement, the more valuable it becomes. That’s because once you meet the age and service requirements to retire, your unused sick leave will increase the amount of your annuity.
Getting retirement credit for unused sick leave came about as a result of study done by OPM’s predecessor, the U.S. Civil Service Commission, four decades ago. It discovered that nearly half of all federal employees had no sick leave balances when they retired, and the rest had an average of only 352 hours. A follow-up study by the then-House Post Office and Civil Service Committee found that retiring employees used an average of 320 hours in their last year on the job alone.
That is, they were out “sick” 40 days in that year on average, an astoundingly precision-timed epidemic of poor health hitting so many people who had always been so robust. (This was at a time when sick leave usage was restricted to personal health situations; the authorities to use it for various other purposes such as family care didn’t come until many years later.)
Of course, no medical investigation was needed to diagnose what was going on: employees were burning off leave that soon would be of no value to them, and their agencies were letting them do it. The law was changed. Not surprisingly, sick leave use late in careers plummeted, agency productivity increased, and employees benefited by staying on the job.
To understand just how valuable benefit that is, you need to know how your sick leave is converted into months and years of service when you retire. In short, 174 hours equals one month and 2,087 hours equals one year of service.
Unlike annual leave, there is no limit on how much unused sick leave you can accumulate. Since you get 104 hours of sick leave a year (4 hours for each of 26 pay periods), under the formula explained below you would have a year’s worth after 20 years of service, if you didn’t use any of it. Of course, it’s a very rare person who would do that. But, if you used a third of your available sick leave, which is a very reasonable usage rate, over a 30-year career you still would end up with a year’s worth.
If you are under CSRS retirement, a year’s worth of sick leave translates into a 2 percent increase in your annuity (for each year after 10 years of service, which almost certainly would be the case); a month’s worth increases it by 1/6 percent.
In dollar terms, if your annuity based on actual service was $50,000, an extra year of credit for unused sick leave would boost it to $51,000.
If you have any days of actual service that don’t equal a full month when you retire, those days will be converted to retirement hours and added to your unused sick leave hours. For retirement purposes, all days are 5.797+ hours long, with a month being 174 hours. Any days that don’t add up to a full month are discarded.
Just to be sure we are on the same page and end up with the same understanding, as I stated at the beginning, sick leave can be used to increase your annuity; however, it can’t be used to make you eligible to retire. It can only be added after you have met the age and service requirements. Further, you won’t get any credit for unused sick leave if you leave government before you are eligible to retire and later apply for a deferred annuity. But if you return to work for the government, those unused hours of sick leave will be re-credited to you.
Next time, I’ll explain what’s the same and what’s different about sick leave for FERS employees.