While an injured federal employee is receiving FECA 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. Image: Freer/Shutterstock.com
Following is the section from a recent Congressional Research Service report on Federal Employees Compensation Act benefits explaining how the FECA program interacts with other benefit programs.
Coordination with Retirement Benefits for Federal Employees
Most federal employees are covered by either the Civil Service Retirement System (CSRS) or the Federal Employees’ Retirement System (FERS). The CSRS covers federal employees initially hired before January 1, 1984. The FERS covers employees hired on or after that date and CSRS-eligible employees who voluntarily switched to FERS coverage during “open seasons” held in 1987 and 1998. Employees contribute to the cost of the CSRS and FERS through payroll taxes. Both the CSRS and FERS provide for defined benefit pensions for retired and disabled federal employees. The FERS defined benefit pension is smaller than that provided by the CSRS, however, the FERS also provides for participation in the Social Security system and the Thrift Savings Plan (TSP), a federally managed defined contribution plan similar to a 401(k) plan offered to private-sector workers.
While an injured federal employee is receiving FECA 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.
The amount of the FERS basic annuity is increased from 1% of the employee’s high-three average pay to 2% 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.
Coordination with Disability Retirement Benefits
Both the CSRS and FERS offer federal employees who are unable to continue working because of disabilities 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 months 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 case of a FERS or CSRS retirement annuity, a FECA beneficiary who is 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.
Coordination with Social Security Disability Insurance Benefits
Because FECA is a workers’ compensation program, it is covered by the public disability offset provisions of Section 224 of the Social Security Act. 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 cannot exceed 80% of his or her average monthly wage used to calculate his or her SSDI benefit (“average current earnings”). The FECA beneficiary’s SSDI benefits, or the benefits for his or her spouse or dependents, are reduced until the 80% threshold is reached.
Coordination with Social Security Retirement Benefits
Federal employees covered by the FERS system are also covered by the Social Security system for their periods of federal employment. 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.
Coordination with Public Safety Officers’ Benefits
The amount of FECA benefits payable to a state or local law enforcement officer who is also eligible for benefits for death or permanent and total disability under the Public Safety Officers’ Benefits (PSOB) program is reduced by the amount of the PSOB benefit. There is no offset or reduction of FECA benefits for federal law enforcement officers or other federal public safety officers, such as federal firefighters, who also receive PSOB benefits.
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