Public Employee Retirement vs. Social Security Disability Insurance

Posted on Legal

Introduction

Federal employees who suffer from a medical condition that impacts their ability to work may qualify for federal public employee disability retirement.  The federal government allows employees who are unable to work for medical reasons to retire under a disability retirement program, but it should be considered a last option to be used only when attempts have been made to preserve an individual’s employment, but those attempts have failed.

Social Security Disability Insurance (SSDI) is a Federal program that provides assistance to people with disabilities. This program is administered by the Social Security Administration and only individuals who have a disability and meet medical criteria may qualify for benefits under it. Social Security Disability is not the same thing as Supplemental Security Income (SSI), another program that pays benefits based on financial need.
Definition & Restrictions

Public Employee Disability Retirement

Public Employee Disability Retirement is a benefit that is part of the total employment package an individual receives when they become a federal employee. Federal employees who were hired before 1984 are likely part of the CSRS (Civil Service Retirement System), while FERS (Federal Employees Retirement System) became mandatory for new federal workers in 1984.

According to Federal law, to be eligible for a disability retirement annuity under FERS or CSRS, a Federal employee must have:

  • Completed a minimum of 18 months of federal service (for FERS employees) or five years for CSRS employees
  • Have become disabled because of a medical condition that resulted in a lack in performance, conduct, or attendance, or, without such deficiency, the medical condition must be conflicting with either useful and efficient service or retention in the position
  • A disabling medical condition that is expected to continue for at least one year

In addition, accommodation of the disabling medical condition in the employee’s former position or in an existing open position must have been unable to be accomplished by the agency for which the employee worked.

Social Security Disability Insurance

Social Security Disability Insurance pays benefits to an individual and certain members of their family if they are “insured,” meaning that they worked long enough and paid Social Security taxes.

As provided by Federal law, Social Security benefits are paid to people who cannot work because they have a medical condition that is expected to last at least one year or end in death. Social Security does not provide benefits to those with partial or short-term disabilities. Certain family members of disabled workers also can receive money from Social Security.

To get disability benefits, under Social Security law, individuals must meet two different earnings tests:

1. A recent work test based on their age at the time they became disabled; and

2. A duration of work test to show that they worked long enough under Social Security provisions

Certain blind workers have to meet only the duration of work test.

Filing and Payment Procedures

Public Employee Disability Retirement

Those applying for disability retirement must complete two forms, the SF 3107, Application for Immediate Retirement, and SF 3112, Documentation In Support of Disability Retirement. The employing agency of the individual will typically help complete the forms and will send the completed forms to the Office of Personnel Management (OPM).

A Federal employee does not need to be separated from service in order to file for federal disability retirement.  However, if they have been separated from service, that employee has only one year to file for federal disability retirement benefits or the right to apply for disability retirement benefits is lost.

If a separation of service occurs, former employees may negotiate with the Agency where they worked to have the separation characterized as one based upon a medical reason either explicitly or implicitly. Including a reference to the medical condition that caused the separation will usually prove to be helpful in obtaining disability retirement benefits.

Social Security Disability Insurance

An individual should apply for Social Security Disability benefits as soon as they become disabled, as it can take the Social Security Administration three to five months to process applications. To apply, an application for Social Security Benefits and a Disability Report will need to be completed, either online or at a local Social Security office. Appointments can also be made to file a disability claim over the telephone.

One way to speed up the process is to provide the SSA with all the information they need, including Social Security number; birth or baptismal certificate; names, addresses, and phone numbers of treating medical providers, and dates of service; names and dosages of all medication; copies of medical records; lab and test results; a summary of employment and the type of work performed; and a copy of the most recent W-2 form, or if the applicant is self-employed, a copy of their most recent tax return. The Social Security can help applicants gather the information.

Social Security disability benefits are paid once a month, and are based upon a worker’s average lifetime earnings.  The statement that employees receive each year shows their lifetime earnings and provides an estimate of what Social Security disability benefits would be. If a person is receiving other government benefits, they may see a reduction in the amount of their Social Security disability benefits.  Social Security disability recipients receive a yearly cost of living allowance, or “COLA.”  The COLA rate for 2013 was 1.7%.

Reviews and Other Factors

Public Employee Disability Retirement

Public employee retirement does not restrict the federal employee from pursuing another career in a different occupation. The statutes and regulations governing disability retirement annuity payments allow for an individual to become employed in another job as long as the new job:

  • Is substantially different from the previous job which the employee is now unable to perform
  • Pays no more than 80% of what the prior Federal job currently pays

Depending upon the medical condition, periodic medical reviews may be conducted to determine whether or not disability retirement benefits should continue.

Social Security Disability Insurance

The Social Security Administration routinely conducts periodic reviews of disability cases to make sure the person with the disability continues to meet SSA disability rules. The Social Security Administration performs two types of reviews, a medical continuing disability review and a work continuing disability review. A medical review of disability determines whether or not an individual is meeting the medical requirements to collect disability benefits. If the person does not meet the requirements, SSA may discontinue disability payments.

State & Regional Influences/Factors 

Public Employee Disability Retirement

Most states also offer a disability retirement plan for their employees, with requirements and benefits varying from state to state. Federal employees are eligible for federal public employee retirement benefits, not those offered to state employees.

Social Security Disability Insurance

Applications for Social Security Disability are reviewed by the Social Security Administration, a Federal agency. If basic requirements are met regarding years worked and current work activities, the application is forwarded to the Disability Determination Services office in the applicant’s home state. This state agency completes the disability decision by reviewing the medical evidence presented to determine the medical condition, when it began, how it limits the applicant’s activities, what medical tests have shown, and the treatment received.

A five-step process is used to determine whether or not the applicant is disabled. This process includes determinations regarding:

  • Whether or not the individual is working
  • Whether or not the medical condition is severe (limits the ability to perform basic work activities for at least one year)
  • Whether or not the medical condition is included on the List of Impairments kept by the state agency,
  • Whether or not the applicant can perform the work he did before
  • Whether or not the applicant can perform any kind of work

When the state agency reaches its decision, they will send the applicant a letter. If the application is approved, the letter will list the amount of the benefit awarded and when the payments will begin. If the application is denied, the letter will explain why and provide options for those who wish to appeal the decision.

Key Differences  

Public Employee Disability Retirement is a program available to federal and state employees as part of their employee benefit package. To be able to collect benefits under the program, an employee must have a medical condition that prevents him from performing the duties of his job. A person that receives public employee disability benefits is free to pursue other employment, as long as the duties of the new job are different from the federal one and it pays no more than 80 percent of what the prior Federal job currently pays.

Conclusion

Federal employees may be eligible for public employee retirement if they become disabled to a medical condition that does not have to be work-related. They can receive federal employee disability benefits and even pursue another career, as long as the job duties are substantially different from the ones they performed in their federal job.

Applicants for Social Security Disability Insurance must meet specific criteria, including having a disability that is expected to last at least one year or result in death. Benefit amounts are based upon the recipient’s lifetime earnings. As a rule, those who receive Social Security Disability Insurance will lose their benefits if they work, and if they fail to report earnings while receiving SSDI, they may face fraud charges.