Over the past few weeks, we have looked at the criteria you must meet to be eligible for disability retirement, how to apply for that benefit, and how your annuity would be calculated under CSRS and FERS.
Now let’s look at what happens once you are on the disability annuity roll:
If you are under age 60 and your disabling condition isn’t considered permanent, OPM will periodically ask you for additional medical documentation of your condition to determine if you are still disabled. If it determines that you are still disabled, your annuity will continue. If it concludes that you have recovered, it will suspend your disability annuity either after one year or when you are reemployed, whichever comes first.
While it is usually up to OPM to decide if you have recovered from your disabling condition, you can take the initiative and inform OPM that you have recovered. If you do, they will take you at your word.
Regardless of whether your disabling condition is considered to be temporary or permanent, until you reach age 60, OPM will review your earnings each year to find out if you have been restored to earning capacity—in other words, if you are capable of making a living. Your earning capacity would be considered to be restored if your earnings from wages or self employment exceeded 80 percent of the current base pay for the job you held immediately before you went on disability retirement. To see what is included when making that earning capacity determination, go to http://opm.gov/retire/pubs/handbook/C060.pdf and scroll down to Section 60A1.1-2.
If OPM determines that you have been restored to earning capacity, it will continue your annuity for six months and then suspend it. If your annuity is suspended, it can be reinstated if your medical condition has recurred or your earning capacity falls below the 80 percent level.
Note: Unless you are totally disabled for any gainful employment, you won’t receive any tax benefit from being on disability retirement. Although OPM’s determination that you are disabled generally won’t meet the Internal Revenue Service’s criteria for a tax-free benefit, one made by the Social Security Administration will. That’s because the SSA’s criteria are more stringent than OPM’s.
See also, how to calculate a federal disability retirement at ask.FEDweek.com