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Policy: Labor

Disability can be easy street for federal bureaucrats

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Watchdog,Mark Flatten,Watchdog Blog,Labor unions,Labor,Free Ride Feds

Part two of a three-part series

Getting hurt on the job can be a golden parachute for federal workers.

Benefits are significantly better than comparable plans offered by states to their workers. Some people make more money staying at home on disability than they do staying on the job.

Federal employees old enough to retire have no reason to do so. Most will collect 75 percent of their wages, tax free, for the rest of their lives on disability.

That's about 26 percent more than they could make if they retire under their government pension plan, according to the Government Accountability Office.

There is no age or time limit. More than 10,000 federal employees drawing disability for on-the-job injuries are at least 71 years old, according to the Department of Labor, which runs the Federal Employees Compensation Act program. Six are older than 100, according to congressional research.

About 85 percent of all claims filed under FECA are approved by DOL. That is more than twice the approval rate for Social Security disability benefits.

Once federal workers are on the long-term disability rolls, there's little reason for them to ever come off, according to a series of reports from the GAO, various inspectors general and congressional testimony.

"If you are motivated in such a way to take advantage of the system, you can come up with a way to get hurt as a federal worker and get 75 percent of your pay for the rest of your life, tax free, and keep your other benefits," said Sen. Tom Coburn, R-Okla.

Coburn is a staunch reform advocate and ranking Republican on the Senate committee that deals with federal workforce issues. "You have to err a little bit on the side of giving the benefit of a doubt. But you don't have to be completely stupid about it," he said.

FECA was passed in 1916 in an attempt to ensure federal workers injured on the job maintain their income as they recover. They are supposed to return to work, either in their old jobs if possible or on some other duty that will accommodate their disabilities.

The law has changed little in almost a century, with the last significant revision coming more than 35 years ago. FECA costs taxpayers about $3 billion annually.

Like other workers' compensation plans offered by states and private employers, it provides cash benefits, medical treatment and vocational retraining to help the employees return to work.

Disabled employees qualify for two-thirds of their pre-injury pay if they have no dependents. That is the standard rate for similar plans offered to government workers in most states and the District of Columbia.

The similarities end there. Federal workers get a boost if they have a dependent, including a spouse, to 75 percent of their gross wages. More than 70 percent of disabled federal workers are paid the higher rate.

Only a few states offer any enhancement for dependents, and none is as generous as the federal government, said Gregory Krohm, research consultant and former executive director of the International Association of Industrial Accident Boards and Commissions, a non-profit trade association of government workers' compensation authorities.

The federal government's high compensation rate coupled with the tax-free status means for many workers, particularly those with higher incomes, take-home pay is higher under FECA than regular wages, according to labor department and GAO studies.

Most state plans also have more aggressive anti-fraud provisions and time limits to get workers back on the job, which are lacking in the federal system.

"It's generous in terms of benefits and I would rate it unsatisfactory in terms of incentivizing people to get them back to work," Krohm said of FECA. "It unnecessarily promotes disability in the legal sense. People who could find a job are not doing so because there is a financial incentive for them to stay out of work.

"You don't want to ever create an incentive for a person to stay out of work because they are just as well off staying at home pursuing their hobby than going back to work."

About 250,000 people are drawing benefits under FECA, which can include full or partial disability, medical care or vocational retraining. Most workers return to the job within a year or two.

But about one in five people in the system is on long-term disability, meaning there is little prospect of them returning to the job. A third of those on the long-term rolls, roughly 15,000 people, are at least 66 years old, according to congressional reports.

The benefits of staying on FECA are even greater once a federal worker reaches retirement age. Retirement pay under the two main federal plans amounts to about 60 percent of the annual average of the worker's three highest years of wages, and most of that income is taxed, according to the labor department.

With the top FECA rate at 75 percent, untaxed, the program created as a financial bridge while injured employees recover has become a "de facto retirement plan," DOL's inspector general has warned since 2002.

"While eligible employees under FECA have the right to elect coverage under their retirement plan, there is little incentive to do so because the workers' compensation benefits far exceed those benefits available under employees' retirement plans," Christine Griffin, then-deputy director of the U.S. Office of Personnel Management told a Senate committee in 2011.

An OPM spokeswoman said Griffin's assessment remains the agency's position, but referred additional questions to the labor department.

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