While an injured federal employee is receiving Federal Employees Compensation Act benefits and not working, he or she does not make any CSRS or FERS contributions, but does continue to accrue time in service for the purposes of retirement eligibility. Because FECA benefits are not considered earnings under either the Social Security Act or Internal Revenue Code, FECA beneficiaries generally may not contribute to the Social Security system via the payroll tax or to the TSP.
Once a FECA beneficiary becomes eligible for CSRS or FERS retirement benefits, he or she may elect to receive these retirement benefits or remain in the FECA program for the duration of disability. Once this election is made, it may be changed at any time.
That amount of the FERS basic annuity is increased from 1 percent of the employee’s high-three average pay to 2 percent of the high-three average pay for any period during which the employee was receiving FECA benefits rather than earnings. This provision, enacted in 2003, is designed to partially replace retirement income lost because of the employee’s inability to contribute to the Social Security system or the TSP while receiving FECA benefits.
Both the CSRS and FERS offer federal employees who are unable to continue working because of disabilities have the option to take a disability retirement annuity before reaching normal retirement age. For the purposes of the CSRS and FERS disability retirement systems, an employee is considered disabled and eligible for an annuity if he or she is unable to perform his or her current federal job and cannot be accommodated with a job at the same rate of pay by his or her employing-agency because of a medical condition that is expected to last at least one year. An employee must have five years of service to qualify for disability retirement benefits under CSRS and 18 month of service under FERS. Generally, the amount of an employee’s disability annuity is lower than what the employee would have received had he or she worked until normal retirement age and collected a CSRS or FERS retirement annuity.
As in the cases of a FERS or CSRS retirement annuity, a FECA beneficiary also eligible for CSRS or FERS disability retirement benefits may elect to receive these disability retirement benefits or remain in the FECA program for the duration of disability. Once this election is made, it may be changed at any time.
If a FECA beneficiary is also receiving Social Security Disability Insurance (SSDI) benefits, then the total amount of the beneficiary’s monthly SSDI benefit, all SSDI benefits paid to his or her spouse or dependents, and his or her FECA benefit can not exceed 80 percent of his or her average monthly wage at the time of his or her disability. The FECA beneficiary’s SSDI benefits, or the benefits for his or her spouse or dependents, are reduced until the 80 percent threshold is reached.
If a federal employee covered by FERS is entitled to both FECA and Social Security retirement benefits, the amount of his or her monthly FECA benefit is reduced by the amount of his or her Social Security retirement benefit attributable to his or her federal service.