Retirement & Financial Planning Report

One of the least understood choices faced by employees who are disabled or injured in the line of duty is whether to accept disability retirement, which is administered by the Office of Personnel Management or accept workers’ compensation, which is administered by the Office of Workers’ Compensation Programs in the Department of Labor.

“Non-scheduled awards” are compensation for loss of wage earning capacity. They are paid for the period during which you are unable to resume regular work because of an injury or disease-related disability. The amount of compensation paid to you is based on the difference between your capacity to earn wages and the wages of the job you held when injured.

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On the other hand, the disability retirement program is designed to provide an annuity that partially replaces the salary you lost because your disability kept you from performing on the job.

Note: While disability annuities under both CSRS and FERS are payable whether or not your disease or injury was incurred on the job, workers’ comp is not. To receive workers’ comp benefits, your employment-related disease or injury must have been sustained in the performance of your job.

To preserve your rights and those of your survivors, if you apply for workers’ comp, you should also apply for disability retirement benefits. (If you are a FERS employee, you further must file for Social Security benefits.) If benefits are approved under both workers’ comp and the disability retirement program, you’ll have to make a choice between the two. That’s because you can’t receive both benefits at the same time. (This same rule applies to FERS employees who are also found eligible for a Social Security benefit.) In most cases employees elect the benefits under workers’ comp because they are usually higher.

If OPM approves your case before OWCP does, it will begin making annuity payments to you. Then, if OWCP subsequently awards you benefits and you elect to receive them instead, the annuity already paid out to you must be reimbursed to OPM. In most cases, OWCP handles this by withholding the required amount from their payments. Those benefits are retroactive to when you went off the employment rolls.

While on workers’ comp, civil service disability annuity payments are suspended. However, if your compensation benefits end for any reason, including personal choice, OPM will reinstate your annuity as long as you haven’t recovered from the disability or been restored to earning capacity.

It’s important to understand that the time you spend on workers’ comp will not be counted in computing a new disability annuity or a regular annuity based on age and service. Instead, your annuity will be computed based on your service and “high-3” average salary as of the date you went on the annuity roll. However, it will be increased by any applicable cost-of-living-adjustments that were made during that period.

Clearly, not all job-related injury or disability cases require that you separate from service. Those of shorter duration may be handled through the receipt of workers’ comp while you are on leave without pay (LWOP). In that case, all the time spent on LWOP is considered creditable at retirement for determining your length of service and your “high-3” average salary. Unlike regular LWOP, the time you spend on workers’ comp is not subject to the six month per year limitation on creditable service.