OPM Medical Retirement: One Option In Reserve

The inevitability of life’s occurrences and the belief in determinations of impending disasters results from our everyday experiences.  Thus do we have proverbial declarations which guide us:  “When it rains, it pours”; the applicability of Murphy’s Law (does anyone really know what that means, other than a general sense of confusion around the next corner or, more precisely, an unspecified aura that if anything can go wrong, it will go wrong – which is a truism attained through osmosis by simply living); tomorrow will reflect today, and today is a reflective twin of yesterday, and the day before that; and so it goes (as those fans of Vonnegut will be familiar with).

And so we can expect the certainty of life’s uncertainties:  Federal agencies and bureaucracies will continue to have to operate on a limited budget; there will be political wrangling over the funding requirements of the Federal agencies; the U.S. Postal Service will continue to operate in the red, and will offer buyouts this summer, which will tantalize few, incentivize some, and demoralize many.  It is also likely that early outs will be offered for non-Postal, Federal agencies, as well, if only in a superficial attempt to streamline the expected shrinking funding mechanisms which have become an inevitable mark of Federal agencies and the U.S. Postal Service.

For Federal employees and U.S. Postal workers, whether under FERS, CSRS or CSRS Offset, the time to consider one’s career, future planning, vocational endeavors, and financial security must be engaged and reviewed on a regular basis.  Such an approach, of course, applies to all; but when forces of political funding fights constantly impact upon personnel issues and manpower concerns, Federal and Postal workers must always have a heightened sense of impending doom.  Further, when a medical condition impacts a Federal or Postal worker, the myriad (but ultimately, limited) choices and venues of relief must be thoroughly understood, and accessed with a thoughtful, deliberative approach.  Federal Disability Retirement is one such avenue of choice when a medical condition begins to impact the performance of a particular set of duties for Federal and Postal workers, and should be considered when the traumatic interruption of a medical condition begins to seriously weigh upon the Federal or Postal employee.

With these principles in mind – of a pervasive expectation of disasters around the proverbial corner, the reality of Murphy’s Law, and the need to recognize future trends – it is imperative that the Federal employee and the U.S. Postal worker be fully cognizant of, and be ready to access, the multitude of available compensatory venues when the need arises, and the concerns surface, so that consideration can be given to secure one’s future.

Resources unknown have the same result as untapped wealth.  Thus, just as an arsenal of weapons left in a separate woodshed does nothing to protect a home from intruders if inaccessibly stored, so the lack of knowledge one maintains during periods of calm fails to provide a semblance of security unless reserved as a resource when the need arises.

What, then, are the available resources?

MRA+10:  The problem here is that the reduction of benefits can be onerous.  At 5% for every year under the age of 62, the reduced pension could mean a pittance and hardly worth it.  That, plus the issue of not receiving any COLAs until reaching the age of 62, and further, no retroactive COLAs thereafter, it may well seem like an ungrateful return for the decade or more spent in working for the Federal government.  Normally, consideration for such an early retirement will have an underlying reason, and that rationale often encapsulates a medical basis. But if the underlying consideration for such a necessity involves a medical reason, then certainly the Federal or Postal employee should always consider the option of filing for Federal Disability Retirement benefits.  A comparative analysis should obviously be made in the amount of annuity to be received.  But an obvious advantage in filing for Federal Disability Retirement benefits under FERS, is that the time that one is on Federal Disability Retirement counts toward the total number of years of Federal Service, such that when one’s annuity is recalculated and converted from Federal Disability Retirement to “regular retirement” at age 62, those years while on Federal Disability Retirement counts toward the total number of years of service.

DOL/ OWCP – is ultimately not a retirement system, and is essentially meant to allow for compensation to continue during the time of recuperative need.  Causality is always a factor of proof necessitated, or some semblance thereof involving inherent occupational hazards; and while it pays more than Federal Disability Retirement benefits (66 2/3rds% for workers without dependents, and 75% for those with), the onerous requirements to maintain such payments can be restrictive, trying and angst-stricken:  Worker’s Comp is known to cut benefits off with a narrow window of responsive opportunity.  Whether because you failed to follow a technicality, or because one of their chosen “second-opinion doctors” has deemed you to be “fit for full duty” based upon a 5-minute examination (if you want to even call it that), the dangers of insecurity lurking behind the monthly receipt of a worker’s comp temporary total disability payment may cause one to pause, and consider other alternatives (hint:  how about filing for Federal Disability Retirement benefits, if only as a “back-up” system in the event of the inevitable cessation of OWCP benefits?).

Voluntary Early Retirement Authority (VERA) offers – It is always something to consider; but, again, if the Federal agency or the U.S. Postal Service proposes an incentivized early retirement, the question one should ask is:  If I am in need of taking an early retirement, is there a reason in doing so?  If the answer to the first question is a resounding “yes”, then the follow-up question should always be:  is the underlying reason for needing to accept an early retirement based upon a medical condition?  If the answer to the second questions is similarly an unreserved, “yes”, then the option of filing for Federal Disability Retirement benefits should be considered.  That option may take the following guise:  compare and contrast the benefits offered between the early retirement benefits and a Federal Disability Retirement annuity; determine whether one can pursue both sequentially (first, taking the VERA, then filing for Federal Disability Retirement benefits within 1 year of being separated from Federal service as a result of the VERA) or, if certain pay-back provisions are in force, to simply file for Federal Disability Retirement benefits in lieu of a VERA.

Social Security Disability – under FERS, SSDI has to be filed, anyway, if you are considering filing for Federal Disability Retirement benefits.  Most FERS employees who file for Federal Disability Retirement benefits do not qualify for SSDI, for several reasons:  the standard for qualifying for Social Security Disability benefits is “higher” (tantamount to “total disability” as opposed to being disabled from performing one or more of the essential elements of one’s positional duties); and, further, there is always the question of how much a Federal Disability Retirement annuitant really wants to get approved for SSDI, given the extremely low threshold of allowable outside earned income (whereas, for Federal Disability Retirement annuitants, the (former) Federal or Postal employee is allowed to make up to 80% of what one’s former position currently pays).  SSDI, in the end, is an essential tentacle of another benefit – Federal Disability Retirement – and while all Federal and Postal employees under FERS who file for Federal Disability Retirement benefits must also file for SSDI, anyway, the likelihood of getting SSDI approved stands a weaker chance because of the higher standard of proof.  Which leaves us to the “preferred” benefit for those with medical conditions that impact the Federal or Postal employee’s ability and capacity to continue working in one’s position.

Finally, Federal Disability Retirement – a benefit that allows for a secure future, while considering a second vocation in the private sector.  It is, in the end, a progressive paradigm for Federal and Postal employees with a medical condition or disability, precisely because it allows for a further life in the universe of alternate employment.  Federal Disability Retirement pays an annuity of 60% of the average of one’s highest three consecutive years of Federal service for the first year, then 40% every year thereafter, until age 62, at which point it gets recalculated and reconstituted as “regular retirement.”  The advantage, however, is that the time that the former Federal or Postal employee is receiving a Federal Disability Retirement annuity, counts toward the total number of years of Federal Service, such that one is actually building up one’s final retirement calculations by being on Federal Disability Retirement.  Further, the Federal or Postal annuitant is allowed to go out into the private sector, and make up to 80% of what one’s former position currently pays, and continue to receive the Federal Disability Retirement annuity.  Thus, unlike Social Security Disability, OWCP Benefits, and even certain private disability policies, Federal Disability Retirement laws do not penalize the Federal Disability Retirement annuitant from remaining productive in the final years of employment activity, when building one’s “retirement fund” becomes crucial for the financial security and well-being for one’s future.

In the end, each unique and particularized situational input must be considered for the lives of Federal and Postal workers in formulating a strategy for securing one’s financial future.  While there are certainly available options to consider, and the delineated (but ultimately unexhausted) list as shown here will certainly allow for some planning, it is the option of Federal Disability Retirement which should be of primary interest when a medical condition begins to prevent the Federal or Postal employee from continuing in one’s Federal or Postal career.  That there exists the option of becoming eligible for Federal Disability Retirement benefits after accruing a minimum of 18 months of Federal Service is a benefit both generous and progressive.  Having full knowledge of what is available, allows for an arsenal of weapons to be kept in reserve, for that day of potentiality when necessity may dictate the actualization of that which once remained inert, but became activated when the winds of change blew in from the horizon of the unknown.

© 2016 Robert McGill. All rights reserved. This article may not be reproduced without express written consent from Robert McGill.


About the Author

Attorney Robert R. McGill specializes in federal disability retirement cases helping Federal and Postal workers secure their disability retirement benefits under both FERS and CSRS. For more information about his legal services, visit his OPM Disability Retirement blog.