The Federal Employees’ Compensation Act of 1916 was never intended to be a retirement plan, but critics say for thousands of government employees, that’s just what it’s become.
That’s because under the federal system, disabled employees unable to return to work get to choose between receiving higher-paying workers’ compensation benefits or the lower-paying federal retirement plan.
For most, the choice is clear.
The money is almost always better under the workers’ compensation program, which pays up to 75 percent of the employees’ salaries tax-free, compared with the 60 percent they would receive under the retirement system.
Across government, more than 7,000 injured employees continue to collect workers’ compensation after retirement age, and a few have even gotten payouts lasting decades well into their 90s, government records show.
Recent legislation by Sen. Susan Collins, Maine Republican, proposes to transfer workers’ compensation recipients to the retirement system when they reach retirement age.
“These individuals aren’t out on workers’ comp for a period of time to recover from their injuries and then returning to work,” she said at a recent Senate hearing, citing as an example 132 U.S. Postal Service employees age 90 or older continuing to currently receive workers’ compensation.
“These individuals should be switched to the retirement system. They’re never going to return to work over age 90.
“In most states, this could not happen,” she added. “I would mention this is a reform we should implement governmentwide, and it would have real savings for the federal government and for the Postal Service,” she said.
Dan Adcock, legislative director for the National Active and Retired Federal Employees Association, said the organization opposes such a move. He said forcing employees into retirement represents a broken promise to injured workers, who in deciding to take workers’ compensation payments have given up their rights to sue the government over their injuries.
He also said because of the injuries and time out of work, workers likely would not receive the retirement benefits they would be entitled to had they not been injured in the first place.
Government watchdog organizations welcome the move.
“Allowing the government to move workers’ comp recipients to the retirement system would make fiscal sense even in a strong economic and fiscal situation, but under the current circumstances, it is imperative,” said Pete Sepp, executive vice president of the National Taxpayers Union.
“There may not be huge savings at stake relative to the overall financial picture, but there’s no reason to let this opportunity to slip by when the bottom line looks so terrible.”
Moving workers’ compensation recipients into retirement isn’t a new idea.
In 1996, the General Accounting Office (since renamed the Government Accountability Office), the investigative arm of Congress, pointed out that a 1981 proposal by the Reagan administration included a provision to convert workers’ compensation benefits to retirement benefits at age 65, but the measure did not become law.
In 2004, Shelby Hallmark, director of the Office of Workers’ Compensation Programs at the Department of Labor, testified to Congress about the problem.
“Under current law, the thousands of long-term FECA (Federal Employees’ Compensation Act) beneficiaries who are over normal retirement age have a choice between federal retirement system benefits and FECA benefits, but they overwhelmingly elect the latter because FECA benefits are typically far more generous,” he said.
In a prepared statement to The Washington Times, the Labor Department said, “Language addressing this issue and other reform measures was put forth in the President’s (fiscal) 2011 budget submission to Congress.”
David Williams, vice president of policy for the Citizens Against Government Waste, a watchdog organization, said, “It’s ridiculous to give people a choice” between receiving retirement benefits or collecting workers’ compensation.
“It’s just another example of why people are frustrated with the government,” he said.
Over the years, several little-noticed government reports have raised concerns about the issue.
A 2005 audit by the Office of Inspector General for the Veterans Administration found that beneficiaries can remain on workers’ compensation rolls until they die.
Citing Labor Department figures, the office estimated annual savings across the government of nearly $500 million by moving workers into a retirement system.
In 2003, the U.S. Postal Service’s inspector general cited potential savings of $19 million over 10 years if only 255 totally disabled postal employees were required to retire.
That same report found there were 81 employees who had been collecting workers’ compensation payments for between 40 and 50 years.
A spokesman for the Postal Service said the agency doesn’t have any control over the federal workers’ compensation system.
A 2007 report by the Congressional Budget Office (CBO) summed up both sides of the issue.
Under the current system, “FECA (the Federal Employees’ Compensation Act) provides what could be considered a windfall for permanently disabled employees who otherwise would be retired, indefinitely paying them benefits that are higher than those offered by their retirement plans,” the CBO noted.
On the other hand, the CBO pointed out that injured workers who reached retirement age might have higher living expenses than their non-injured counterparts “and thus need higher compensation.”
According to the Labor Department, there are roughly 50,000 workers across government on the so called “periodic roll” of federal employees who haven’t returned to work and who are receiving ongoing wage-loss payments.
Among those 50,000 recipients, about 7,200 workers who have been judged to have no potential to return to work are over the age of 65, according to the department.
“If an injured worker can demonstrate through medical evidence that he or she is still unable to work because of the original work-related injury, he or she continues to be eligible for FECA benefits annually adjusted for inflation for as long as that medical status continues, or until death,” the department said in a statement.