Disability Benefits Under CSRS and FERS
CSRS and FERS both provide disability benefits. The benefits offered by the two plans are alike in some ways and different in others. Depending on your personal situation, the benefits offered by one plan or the other may be better for you.
Unless you have a serious chronic illness or a life-threatening medical condition, you will probably base your choice between CSRS and FERS more on what you want your retirement benefit to be than on the disability benefits offered. You should be aware of the differences between the plans, though, in case one or the other clearly meets your needs better. Note that, if you transfer to FERS, all of your disability benefits will be paid according to FERS rules.
This section explains the key features of the disability benefits given by both plans. It also points out some areas to think about in deciding which plan is better for you.
CSRS requires you to have at least 5 years of creditable civilian service before you can qualify for disability benefits. FERS requires 18 months of civilian service.
Those who apply for disability benefits under CSRS Offset or FERS must also apply for Social Security disability benefits or show that they are not eligible for them.
There are separate eligibility requirements that you must meet in order to qualify for Social Security disability benefit. You must meet Social Security eligibility requirements and have earned a specified number of Social Security credits before becoming disabled.
CSRS and FERS both use the same definition of disability. In order to be declared disabled under either plan, you must be unable to do your job, and must not turn down a suitable vacancy within your agency that is within your commuting area and at the same grade or pay level as your current position.
The definition used to determine your eligibility for Social Security disability payments is more strict than under CSRS and FERS. It requires you to be unable to perform any job, rather than just your current job. So even if you have the required number of Social Security credits, you may qualify for FERS or CSRS disability payments, but not qualify for Social Security disability payments.
Under CSRS, your disability benefit will generally be equal to your projected benefit at age 60 or 40 percent of your high-3 average salary, whichever is less. If you have more than 22 years of service when you become disabled, you will receive your accrued benefit, which will amount to more than 40% of pay. cost-of-living adjustments will be added annually at the full rate of inflation.
Under CSRS Offset, your basic annuity is computed under CSRS rules described in the preceding paragraph. In addition, if you qualify for Social Security benefits, OPM must reduce your annuity by the value of your Offset service in your Social Security disability benefit. The calculation is the same as was described earlier for a regular retirement.
FERS uses a different benefit formula that takes into account any Social Security disability benefits for which you may be eligible.
During your first year of disability, FERS will pay you 60% of your high-3 average salary minus 100% of an approximation of any Social Security benefit for which you qualify. No COLA's will be paid during this year.
(Note that Social Security disability payments and the reduction in your FERS benefit will not begin until 5 months after you qualify for Social Security disability. You will receive full FERS benefits during this period.)
During your second and any future years until age 62, your basic FERS benefit will amount to 40% of your high-3 salary. If you are entitled to Social Security disability benefits, your FERS annuity will be reduced by 60% of the approximate amount of your Social Security benefit. COLA's match the inflation rate if it is 2% or less. If the inflation rate is more than 3%, the COLA will be 1% less than the inflation rate.
The total FERS and Social Security benefit you receive will be equal to at least 40% of your high-3 salary plus 40% of your Social Security disability benefits. You may also get your Thrift Savings Plan account when you become disabled.
Your basic FERS disability benefit will be recomputed at age 62. At that time, you will receive your accrued FERS retirement benefit. In this case your accrued FERS benefit would be based on years of service that include the time you were receiving disability benefits. Also, the average salary used would be based on what you were earning at the time you became disabled, increased by all cost-of-living adjustments under FERS during that period.
CSRS and FERS
Under the Social Security law, your Social Security disability check must be reduced if the combined amount of your employees' compensation payment and/or public disability benefit is more than 80% of what is called your "average current earnings." Public disability benefits come from employment not subject to Social Security taxes, such as CSRS. Since FERS includes Social Security, this type of reduction is less likely under FERS.
Continuing Eligibility for Disability Payments
Under both CSRS and FERS, if you retire on disability and then decide to work again, your disability benefits may be affected. If your total income from work is more than 80% of the current salary of the position you retired from, your disability benefits will end. They may also end if you go back to work for the Federal Government.
Also, at times you may be required to prove that you still meet the CSRS and FERS definition of disability.
In general, the combined FERS and Social Security disability benefit (if you qualify for the Social Security benefit) will be larger than the CSRS benefit. However, it is more difficult to qualify for the Social Security disability benefit, and you must be covered for the number of years required by Social Security. Even if you do not qualify for Social Security, the FERS benefit is likely to be larger. Depending on your recent coverage under Social Security, you may have to work under FERS for 5 years before Social Security disability protection is available.
Also when your FERS benefits are recomputed at age 62, you may stand to lose a significant portion of your benefit. Remember when you transfer to FERS, you take your CSRS credit with you. If your combined CSRS and FERS benefits (under regular rules) are more than the benefit produced by the FERS disability rules, you will receive the combined benefit. This means that the possibility of becoming disabled may be less of a concern for CSRS employees with substantial CSRS service because of the larger accrued benefit that transfers to FERS based on that service. However, if disability benefits are a serious concern for you, you should ask your agency for estimates of benefits under both CSRS and FERS before you make a transfer decision.
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