Q & A Session – Early Out vs. Disability Retirement


Ask the Lawyer received the following question (paraphrased for easier reading and clarity) from a reader on a legal matter that might be of interest to the entire audience.


I was a federal employee for 11 years and had an on the job injury in 2003. For the past year, I have not been working due to the reoccurrence of my injury. Would you suggest an early out or disability retirement? If I selected an early out, would this relieve the government of future medical responsibilities?


Unless you have other federal service, you do not appear to meet the minimum service qualifications of an early retirement (at least 50 years of age with at least 20 years of service or any age with 25 years of service).

Early Out:  If you do qualify for an early out retirement, the computation between FERS and CSRS varies.  If under CSRS, employees under 55 years old have a permanently reduced annuity for every month that the employee is under 55 or 2 percent per year.   If under FERS, there is no age reduction on the FERS early retirement benefit if the early retirement is involuntary.  This is also known as a discontinued service retirement.

Disability Retirement:  Your annuity would be computed under the disability retirement rules.  If approved for disability retirement under FERS, you would receive 60 percent of your high-3 average salary for the first 12 months, minus 100 percent of any Social Security disability benefit. After that you would get 40 percent of your high-3, minus 60 percent of any Social Security disability benefit.

At age 62, if you are still on the disability rolls, your annuity will be recomputed as if you had actually worked to age 62.  Under CSRS, disability retirement payments are similar to regular retirement except there is a minimum payment and there is no reduction for being less than 55 years of age.

Employees retiring in conjunction with a VERA or Voluntary Separation Incentive Payment (VSIP) authority must have been covered under the FEHB Program (1) for the last 5 years of their Federal civilian service in order to continue such coverage in retirement, or (2) if less than 5 years, for all service since the employee was eligible for these benefits unless these requirements are waived.  To meet this requirement, computation starts the date you started receiving compensation benefits.

With regard to future medical responsibilities, the cost of all medical treatment required for the effects of the injury may be paid by OWCP even though the employee elects Civil Service retirement benefits.

Bill Bransford is managing partner of Shaw, Bransford & Roth, PC.

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