By Reg Jones
June 4th, 2012 | Uncategorized
In my May 14 column, I wrote about the difference in the benefits available to those who retire on disability versus those who receive workers’ compensation. Employees may be approved for disability retirement if they are unable to provide useful and efficient service in their current position or one of comparable grade and pay. But only those whose disability is based on permanent, total or partial disabilities sustained in the performance of their duties can be approved for workers’ compensation.
What spurred me to write about these differences is the proposed 21st Century Postal Service Act of 2012, which recently passed the Senate. Title III of that legislation addresses workers’ compensation reform, and it applies not just to Postal Service employees but to every federal employee.
That workers should be helped financially when they are disabled was not in dispute during the Senate debates, especially if the disability was incurred on the job; however, what was in dispute was whether an employee on workers’ comp should receive an income for the rest of his life that, in some cases, exceeds the amount he would have received if he had kept working and retired normally.
The Senate-passed measure is intended to encourage long-term beneficiaries to elect retirement when they meet age and service requirements. In its original form, the legislation would have automatically moved workers’ comp beneficiaries to the retirement rolls. As passed, however, those who are already on workers’ comp would be exempted, as would those who are totally disabled, regardless of their age. Other recipients wouldn’t see any changes for three years.
To illustrate the effect that being moved from workers’ comp to disability retirement would have on an employee, I’ve created two examples. Both employees have 21 years’ service, basic pay of $60,000 and a high-three for retirement calculation purposes of $56,000 — the average salary over their three consecutive highest-paid years. I’m assuming that their initial entitlement to benefits is the same as what they would be entitled to when they have the age and service to retire. In the real world, their initial benefits would be increased over time by annual cost-of-living adjustments, which are different for disability retirees and workers’ comp recipients.
The first example is a Civil Service Retirement System employee, whose initial disability annuity is calculated under the CSRS formula: the sum of 1.5 percent of $56,000 multiplied by the first five years of service, or $4,200; plus 1.75 percent of $56,000 multiplied by the next five years of service, or $4,900; plus 2 percent of $56,000 multiplied by the last 11 years of service, or $12,320. The total annuity is $21,420.
The second example is a Federal Employees Retirement System employee, whose initial disability annuity for the first 12 months is 60 percent of the $56,000 high-three or $33,600, minus 100 percent of any Social Security disability benefit. After the first 12 months and up to age 62, he receives 40 percent of the high-three, or $22,400, minus 60 percent of any Social Security disability benefit. At age 62, the disability annuity is converted to a regular retirement, as if the employee had worked to age 62.
Both employees’ workers’ compensation would be much higher than a disability annuity. If the employee has no spouse or dependents, he would receive two-thirds of his $60,000 basic pay, or $40,000. If he has a spouse or dependents, he would receive three-quarters of basic pay, or $45,000.
It should be no surprise to learn that most employees who have a choice between workers’ comp and disability retirement elect the former. Not only do workers’ comp payments start out larger than those available under disability retirement, the difference is greater because workers’ comp payments are tax-free. Disability annuities aren’t tax-free, unless an employee is considered to be totally disabled.
Will this provision become law? Only time will tell. Neither it nor any of the other provisions contained in the workers’ compensation portion of the Senate bill are in the House bill — yet.
June 4th, 2012 at 9:42 am
the real issue that needs addressed with workers comp and disability is FRAUD. so many lazy people claim they can’t do anything when it comes to work because of the restrictions of their “condition. ” then, these same clowns are out working around the house, hauling grocery bags, and even working under the table while collecting a
disability/workers comp check. the gov’t puts little or no effort into catching these rip-offs/fraudsters. it is “other -peoples-money” also known as the taxpayer so the gov’t dosen’t really care. if it were strictly their cash being stolen i think enforcement and prosecutions would go through the roof. so spend the money necessary to catch and prosecute these deadbeats. if it costs $5,000.00 to follow and film a fraud committer to gather the evidence to prosecute then do it! prosecute and the person is booted off the disability or wokers comp rolls and the gov’t comes out way ahead and the scumbag fraudster has to work for a living as he/she should have all along.
Bruno Kovacic Says:
June 5th, 2012 at 1:04 pm
Thank you for your article.
“Employees may be approved for disability retirement if they are unable to provide useful and efficient service in their current position or one of comparable grade and pay.”
Comment: Based on four pilots completed in the USPS Pacific Area (1999-2006) [designed specifically to address both the "totally disabled" (PR roll) worker & the impact of lost productivity caused by excessive amounts of "limited duty" (LDC roll) workers] for more than 1,700 injury cases it was found that…
100% of the PR roll (“totally disabled” rated) individuals were capable of doing some type of productive (not “make” work) work…with 43% meeting their full duty work assignment…simply by virtue of conducting a proper technology-based work capacity evaluation that had the ability to separate muscle strength and endurance (the ability to work) from pain behaviors, psychosocial suffering reactions and motivational interferences while using the laws of physics to determine their safe and sustainable work levels, and
100% of the LDC individuals averaged more than 7.2 hrs per day in productive work abilities…with nearly all of it being performed in their own craft…via the proper matching of medical restrictions to minimally accommodated work tasks in the work environment (for which the USPS is mandated by law to accommodate all medical restrictions no matter how severe) which was also automated for the employer’s use to manage this large volume of lost work productivity.
“Usefulness and efficiency” (whether in retirement disability or workers’ comp) lies in the proper assessment and matching of work “capability” (not disability) to the work environment. All else is just a cold slap in the face to legitimate workers who still work in spite of their chronic pain issues, and those who struggle under ADA to have a meaningful and productive life against odds of discrimination. If quadriplegics can do productive work…and until the laws of physics are disproven…then all of us (until our lips fail) can do something…other than burden the system through the “disease mongering of pain” and exaggerated claims of unproven “disability”. The cost shifting of disability compensation, either between disability systems and/or with retirement entitlements, is just a “smoke and mirror” game being played by the unscrupulous – worker, employer, medical provider or politician.
Enabling disability (I Can’t) is not compassion… the empowering of capability (I Can) is! We are better people when we work…labor is not a curse…and those mean minorities who seek unfair gain where they have no right should be constrained by strict rules of fairness that consider all…not just their special interests. Until we learn this as a society we will not solve the rampant runaway costs of the disability system, public or private.
The paradigm of “pain and disability” (I Can’t) is about to break us as an economy. The USPS (our country’s largest employer) is but the tip of the iceberg. Look around at the signs of the time…every state in the nation is struggling with runaway disability costs, high-risk pools are going belly-up requiring bailouts, self-insured groups are spiralling uncontrollably down in “death-spirals” of losses, and insurance company receiverships (failures) are on the rise. The new paradigm of capability (I Can) is the gateway to a better and more stable society for all if we have the courage to choose it. If not the economics will continue to unravel the fabric of our civilization.
Let’s not “confuse the issue with the facts”…we know…we have first hand documentation of the facts…all 1,700 cases! Government, at least as far as the USPS goes, lacks the political will to change…this is why reform is being pushed on them now.
As a small business owner, prior government contractor, a hard-working tax paying U.S citizen with chronic pain, and as a human being I have little sympathy for their plight other than the applauding any effort to enforce stronger rules of fiduciary accountability on these organizations.
If this seems harsh, stop to consider that, in 2006 we offered the USPS a proven solution based on the successes of these vary same pilots. In this proposal we demonstrated how by combining these solutions (PR & LDC) it would save them BILLIONS in disability costs if they chose to properly endorse and implement these cost containment strategies as a cost of doing business ! They ignored all our efforts and walked away into the folly of what we see today!
My vote supports the House passing this legislation, notwithstanding that it is only a small chip of the real problem.