Disability Insurance
Becoming disabled puts inherent hardships on you and your family, often leaving you wondering how living & medical expenses will be covered. Social Security can provide some assistance, as well as disability payments through your FERS annuity. However, these can still leave you without enough money to cover your monthly expenses. MyFedRetirementWerks can recommend other options to shield you from a disastrous financial situation, should you become injured or otherwise disabled..
When to Consider Applying for Disability Retirement
You should consider applying for disability retirement only after you have provided your employing agency with complete documentation of your medical condition and your agency has exhausted all reasonable attempts to retain you in a productive capacity, through accommodation or reassignment.
Eligibility Requirements
You must meet all of the following conditions to be eligible for disability retirement:
- You must have completed at least 18 months of Federal civilian service which is creditable under the Federal Employees Retirement System (FERS).
- You must, while employed in a position subject to the retirement system, have become disabled, because of disease or injury, for useful and efficient service in your current position.
- The disability must be expected to last at least one year.
- Your agency must certify that it is unable to accommodate your disabling medical condition in your present position and that it has considered you for any vacant position in the same agency at the same grade or pay level, within the same commuting area, for which you are qualified for reassignment.
- You, or your guardian or other interested person, must apply before your separation from service or within one year thereafter. The application must be received by either OPM or your former employing agency within one year of the date of your separation. This time limit can be waived only if you were mentally incompetent on the date of separation or within one year of this date.
- You must apply for social security disability benefits. Application for disability retirement under FERS requires an application for social security benefits. If the application for social security disability benefits is withdrawn for any reason, OPM will dismiss the FERS disability retirement application upon notification by the Social Security Administration.
Applying for FERS Disability Retirement
You must complete the following forms:
- SF 3107, Application for Immediate Retirement, and
- SF 3112, Documentation In Support of Disability Retirement
- If you are under age 62, documentation that you have applied for social security disability benefits after you separated from your agency.
If you have been separated from Federal service for 31 days or less
Your employing agency will help you complete these forms and will forward the completed forms to OPM. However, it is your responsibility to obtain all of the information necessary for OPM to make a decision on your claim. This includes providing all of the required forms and documents.
If you have been separated from Federal service for more than 31 days
Your application for disability retirement must be received by OPM within one year after the date of your separation. If you have been separated from Federal service for more than 31 days, your former employing agency may no longer have your personnel records and may not be able to recover them in time to process your disability retirement application and submit it to OPM within the one-year time limit. Therefore, you should submit your application directly to OPM rather than to your agency.
U.S. Office of Personnel Management
Retirement Operations Center
Post Office Box 45
Boyers, PA 16017
- Ask your former supervisor and employing agency to complete SF 3112B, SF 3112D and SF 3112E and give them to you so you can send them to OPM.
- If you think you will not have the completed package in time to meet the one-year time limit, send OPM the completed SF 3107 and SF 3112A, along with the name, address and telephone number of the person(s) you have asked to complete the remaining forms.
Periodic Medical Exams to Keep Your Disability Benefit
When the government approves your application for disability retirement, they may determine that, based on your medical condition, you will periodically have to provide them with current medical information in order to continue receiving benefits.
Paying for Periodic Medical Exams
You are responsible for paying for any medical exams that are needed. If you do not fulfill the request for evidence of continuing disability, it is likely that your benefit payments could be suspended until your continuing eligibility is established.
Changing Your Retirement to Disability Retirement
You can submit an application for disability retirement within one year after your separation from employment provided you did not elect the alternative form of annuity with a lump sum payment equal to your retirement contributions. You and your former employing agency must submit evidence that shows you became disabled while employed in a position subject to FERS coverage, and you and your agency must provide evidence that you were unable to perform useful and efficient service because of disease or injury in the position you retired from. Your former agency will also have to certify that it could not reasonably accommodate your condition. Moreover, you must not have declined an offer of reassignment to a vacant position in the commuting area at the same grade or pay level and tenure.
If you change to disability retirement, you will lose your special retirement supplement. This supplement is not paid to individuals who retire on disability.
Termination of FERS Disability Benefit
If you are under age 60, your benefit will stop if:
- You are found to be medically recovered from your disabling condition;
- In any calendar year your income from wages and self-employment is at least 80 percent of the current rate of basic pay from the position you retired from (also known as restoration to earning capacity); or
- You are reemployed in the Federal service in a position equivalent to what you held at retirement (also called “administratively recovered”).
Reinstatement of Disability Benefit if it Stops
- If your disability benefit stopped because you were found recovered either medically or administratively, your benefit can resume only if the disability recurs and you do not exceed the 80 percent earnings limitation.
- If your disability stopped because you exceeded the earnings limitation, your benefit can resume effective the first of the year after you no longer exceed the 80 percent earnings limit.
Disability Retirement Computation
FERS disability benefits are computed in different ways depending on the annuitant’s age and amount of service at retirement. In addition, FERS disability retirement benefits are recomputed after the first twelve months and again at age 62, if the annuitant is under age 62 at the time of disability retirement.
FERS Disability Computation if
- Age 62 or older at retirement, or
- Meet the age and service requirements for immediate voluntary retirement
You receive your “earned” annuity based on the general FERS annuity computation, as follows
| Age | Formula |
|---|---|
| If age 62 or older at retirement with less than 20 years of service, or | 1 percent of your high-3 average salary for each year of service |
| Under age 62 qualified for an immediate voluntary retirement | |
| If age 62 or older with 20 or more years of service | 1.1 percent of your high-3 average salary for each year of service |
FERS Disability Computation if
- Under age 62 at retirement, and
- Not eligible for immediate voluntary retirement
| Under Age 62 | Formula |
|---|---|
| For the first 12 months | 60% of your high-3 average salary minus 100% of your Social security benefit for any month in which you are entitled to Social Security benefits However, you are entitled to your “earned” annuity, if it is larger than this amount. |
| After the first 12 months | 40% of your high-3 average salary minus 60% of your Social Security benefit for any month in which you are entitled to Social Security disability benefits. However, you are entitled to your “earned” annuity, if it is larger than this amount. |
| When you reach age 62 your annuity will be recomputed using an amount that essentially represents the annuity you would have received if you had continued working until the day before your 62nd birthday and then retired under FERS. | If your actual service, plus the credit for time as a disability annuitant equals less than 20 years:: If your actual service, plus the credit for time as a disability annuitant equals 20 or more years: Total Service used in the computation:
Average Salary used in the computation:
|
Note: Disability annuities for individuals who performed service in an enhanced position such as law enforcement officer, firefighter, nuclear materials courier, air traffic controller, Capitol Police, or Supreme Court Policy will be credited at the higher 1.7% for that service.
Reductions in Disability Annuity
Survivor Benefits
If you are married, your benefit will be reduced for a survivor benefit, unless your spouse consented to your election of less than a full survivor annuity. If the total of the survivor benefit(s) you elect equals 50% of your benefit, your annuity is reduced by 10%. If the total equals 25%, the reduction is 5%.
Unpaid Service if “earned” annuity paid
If you have a CSRS component in your annuity, the CSRS portion of your benefit will be reduced by 10% of any deposit owed for CSRS non-deduction service performed before October 1, 1982, unless the deposit was paid before retirement.
Cost of Living Adjustments for FERS Disability Retiree
If you are under age 62, and your annuity was computed using 60% of your high-3 average salary, COLA’s are not payable for the first 12 months. COLAs which occur after this 12-month period are payable. If you are age 62 at retirement or if you meet the age and service requirements for an immediate FERS annuity, all cost-of-living adjustments occurring after the commencing date of annuity are payable.
Entitlement to Other Benefits-Effect on FERS Disability Benefit
Social Security Benefits
If you are under age 62 and your annuity benefits were computed using either 60% or 40% of your high-3 average salary, the Office of Personnel Management will reduce your monthly annuity by all or a portion of your Social Security benefits. While you are receiving an annuity computed using the 60% computation, OPM must reduce your monthly annuity by 100% of any Social Security disability benefit to which you are entitled. While you are receiving an annuity computed using the 40% computation, your monthly annuity will be reduced by 60% of any Social security disability benefit to which you are entitled. This reduction only applies for months in which you are concurrently entitled to both FERS and Social Security benefits.
Receipt of disability benefits from the Office of Personnel Management and total or partial disability benefits from the U.S. Department of Labor, Office of Workers’ Compensation Programs (OWCP) at the same time
Generally, you must decide which benefit is most advantageous for you and elect to receive that one. If you decide you want to receive Office of Workers’ Compensation Programs (OWCP) benefits, payments from the Office of Personnel Management will be suspended. However, if your OWCP benefits stop, you can ask us to pay your FERS disability benefit. You can receive an OWCP “Scheduled Award” and the Office of Personnel Management benefits at the same time.
We realize the number of options on supplemental disability insurance can be overwhelming. Speak with one of our benefits specialists today and let us help make sure your prepared for whatever life throws at you.
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