Federal Manager's Daily Report

The administration’s budget proposal repeats several long-running proposals to reform the FECA injury compensation program, long an area of interest to managers because most of the costs of paying those benefits are charged back to the beneficiaries’ employing agencies, effectively reducing money available for current operations.

The budget estimates that in 2016, 113,000 federal employees or survivors are projected to file claims, and 47,000 to receive long-term wage replacement benefits for job-related injuries, diseases or deaths. In addition, it notes, typically claimants are kept in pay status for the first 45 days of disability, called the continuation of pay period.

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The budget includes long-running ideas—raised by entities including CBO, GAO and the Labor Department’s IG, to convert beneficiaries reaching regular retirement eligibility in the future to standard retirement benefits, which typically are less generous and whose costs are paid from the federal retirement fund, not from annual agency budgets. It also seeks to: establish an up-front waiting period for benefits for all beneficiaries; permit Labor to recapture compensation costs from responsible third parties; and authorize it to cross-match FECA records with Social Security records to reduce improper payments.

However, the plan also contains a new proposal to add an administrative surcharge to the amount billed to agencies for their FECA compensation costs, shifting FECA administrative costs from the department to agencies in proportion to their usage. The surcharge would not be applied until 2017 to give agencies an opportunity to plan for the change.