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 INFORMATION ABOUT DISABILITY RETIREMENT

A disability retirement annuity protects an employee who is no longer able to provide useful and efficient service in his or her current grade or pay level because of a medical condition.

Generally, the Government and the employee both benefit if the individual remains employed as long as he or she can provide useful and efficient service without endangering himself or herself, others, or Government property. Disability retirement should be a last resort and is appropriate only when reasonable efforts to preserve the person's employment have failed.

Voluntary Retirement Versus Disability Retirement. Some employees mistakenly believe that retiring on disability is more favorable than retiring voluntarily. In reality, if you are eligible for regular voluntary retirement, you are entitled to an annuity at the same rate whether you are disabled or not. However, additional considerations apply to disability annuitants both before and after retirement.

  • Even if you are eligible for voluntary retirement, an applicant for disability retirement must prove eligibility through medical and other evidence.
  • A disability annuitant younger than age 60 must provide annual earnings reports, and the annuity is subject to termination if the annuitant is restored to earning capacity.
  • A disability annuitant younger than age 60 must provide medical evidence at his or her own expense, and the annuity is subject to termination if the annuitant is found to be recovered.
  • Unless you are permanently and totally disabled for all work, Federal income tax provisions do not offer preferential treatment for disability retirement over voluntary retirement. If you have questions regarding Federal tax treatment, contact the Internal Revenue Service (IRS).
  • Disability retirees are not eligible to elect the alternative annuity.
  • A disability annuitant must make a redeposit of refunded contributions plus interest to receive credit in a Civil Service Retirement System (CSRS) annuity computation for the service covered by the refund. In contrast, a voluntary retiree who fails to redeposit a refund for a period of service ending before March 1, 1991 will receive credit for the service (subject to a reduction in the annuity based on the amount of the redeposit due).
  • If you apply for disability retirement, you are not eligible to receive a Voluntary Separation Incentive Payment.

Disability Retirement and Office of Workers’ Compensation Program (OWCP) Benefits. If your medical condition was caused by an on-the-job injury or illness, you may apply for disability retirement and OWCP benefits at the same time. To apply for OWCP benefits, you should contact your local Human Resources Office or Injury Compensation Coordinator.

OWCP approval of a claim for benefits for a work-related injury or illness does not automatically entitle you to CSRS disability retirement. You must also file an application for CSRS disability retirement with the Office of Personnel Management (OPM). If you are approved for disability retirement and elect to provide survivor annuity, you will protect the rights of your eligible survivors to receive annuity benefits after your death. In addition, this will protect your own annuity rights in case you lose entitlement to OWCP benefits

If you are approved for disability retirement and are receiving OWCP benefits, you must elect which of the two benefits you want to receive. You cannot receive both payments for the same period of time, unless the benefit from OWCP is for a scheduled award. A scheduled award is usually paid for the loss, or loss of use, of a function or part of the body (such as hearing or limb loss).

If you elect OWCP benefits, OPM will suspend your disability retirement. If your OWCP benefit terminates you may elect to receive your disability retirement benefits.

Criteria for Disability Retirement. If you apply for disability retirement:

  • You must have completed at least 5 years of creditable Federal civilian service.
  • While employed in a position subject to CSRS, you must have become disabled, because of disease or injury, for useful and efficient service in your current position. Useful and efficient service means fully successful performance of the critical or essential elements of the position or the ability to perform at that level, and satisfactory conduct and attendance.
  • The disability must be expected to last at least 1 year.
  • Your agency must certify it is unable to accommodate your disabling medical condition in your present position and has considered you for any vacant position in the same agency, at the same grade or pay level, and within the same commuting area, for which you are qualified for reassignment.
  • You can apply while you are employed or after you are separated. If you apply after you are separated, your application must be received by OPM within 1 year of your separation. This time limit can be waived only in cases involving incompetency.
  • Your disability retirement application must be approved by OPM.

Timeframe to Apply. If you are currently employed, you should submit your disability retirement application to the Civilian Benefits Center. If you are separated for more than 31 days, you should submit your application directly to OPM within 1 year of your separation date.

Withdrawing Your Application. You may withdraw your application for disability retirement at any time prior to your date of separation or OPM approval of your application, whichever is later. Once OPM has approved the disability retirement and you have separated from Federal service, you cannot withdraw your application. Filing a voluntary retirement application before the disability application is approved is considered by OPM to be a withdrawal of the disability application.

Timeframe for Approval. Once it receives your application, OPM can take 2–6 months to make a decision about your disability retirement. If you wait until you have used all your sick leave before you apply for disability retirement, you could have a period of nonpay before you receive a decision from OPM.

Duty Status During the Application Process. While you are waiting for OPM to make a decision about your disability retirement application, you may continue to work if you are able, or you may use sick leave, annual leave, or leave without pay. Leave or leave without pay requests must be submitted to and approved by your supervisor. If leave without pay is expected to exceed 30 days, your supervisor should initiate an SF 52, Request for Personnel Action to document your nonpay status in your Official Personnel Folder.

Voluntary Leave Transfer Program. If you want to apply for donated leave, you should contact the Voluntary Leave Transfer Program coordinator at your local Human Resources Office for additional information. If you receive donated leave, be sure your timekeeper credits the leave retroactive to the beginning date of nonpay for medical reasons because your annuity will be retroactive only to the last day of continuous nonpay.

Effective Date of Separation. If OPM approves your application and you are still working, you may apply to use sick leave. If you do not have any sick leave, you will be separated from Federal service no later than the end of the pay period in which the approval notice is received by the Civilian Benefits Center. Your retirement specialist will coordinate with you to determine the date of your separation.

Effective Date of Annuity Benefits. The effective date of your disability annuity benefits depends on whether you are in a pay status on the effective date of your separation.

  • If you are in a pay status on the effective date of your separation, your annuity benefits will be effective on the day after the date of your separation.
  • If you are in a nonpay status on the effective date of your separation, your annuity benefits will be retroactive to the last day you were in a pay status. If you had periods of donated leave that interrupted periods of nonpay, this will affect your annuity because retirement benefits are retroactive only to the last day of continuous nonpay.

Reconsideration Rights. If OPM disapproves your disability retirement application, you will receive a written notice outlining the reconsideration procedures. You will also receive information about the reason for disapproval and what additional details you can provide. You must provide any additional information directly to OPM.

Termination of Disability Benefit. If you are younger than age 60, your benefit will stop if:

  • You are found to be medically recovered from your disabling condition. OPM may ask you to provide current medical information to determine whether you are recovered. If OPM finds you are recovered, your retirement annuity will stop 1 year from the date of the medical examination or upon reemployment in the Federal service, whichever occurs first.
  • In any calendar year, your income from wages and self-employment is at least 80 percent of the current rate of basic pay for the position from which you retired. In February of each year, OPM will send you a questionnaire about your earnings for the previous calendar year. Your annuity will stop at the expiration of 6 months from the end of the calendar year in which earning capacity is restored or upon reemployment in the Federal service, whichever occurs first.
  • You are reemployed in the Federal service in a position equivalent to what you held at retirement.

Annuity Rights Upon Termination of Disability Annuity When Not Reemployed. If your disability retirement benefits are terminated because OPM determined you were either restored to earning capacity or recovered from the disability, and you are not reemployed in a Federal position subject to the retirement system, you are considered involuntarily separated as of the date the annuity terminates and may qualify for an annuity based on the involuntary separation.

Disability Retirement and Voluntary Separation Incentive Pay. You cannot receive a separation incentive if you are or would be eligible for disability retirement. If you receive a separation incentive and are later approved for disability retirement, you must repay the entire amount (including taxes and deductions).

Disability Retirement and Reduction-in-Force. If you receive severance pay as the result of a reduction in force and are later approved for disability retirement, you must repay the entire amount of the severance pay. If you apply for disability retirement, you are not eligible to be registered in the Priority Placement Program.

Taxation of Disability Benefits. Disability retirement benefits are not tax-free. Under current IRS laws, there is no Federal tax benefit unless you are totally disabled for all gainful employment. Because OPM's decision on your application is based only on whether you are disabled for your current position, or for a vacant position of equal grade or pay, an OPM finding of disability might not meet the IRS criteria. You should contact your local IRS office for current tax information.

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