DI 52130.010 Federal Employees' Retirement System (FERS) Disability Benefits
FERS disability benefits are paid by the Office of Personnel Management (OPM) to disabled federal employees covered under the FERS. FERS began 01/01/1987 and all FERS employment is covered under Social Security. FERS disability benefits are paid monthly.
A. Applying offset to FERS disability benefits
FERS disability benefits are not offsettable unless the individual also worked in non-covered Civil Service Retirement System (CSRS) employment. The FERS disability benefit is reduced due to the individual's entitlement to DIB. However, this reduction is not a recognized reverse offset plan. Therefore, if offset applies, offset the gross amount of the FERS disability benefit prior to any deductions.
NOTE: Election of a survivor annuity reduces the FERS disability benefit. Some documents submitted as proof show a higher amount that the individual would have received had he or she not elected the survivor annuity. This is only a hypothetical amount. Do not use it for offset purposes.
B. When to offset FERS disability benefits
1. Entire Federal career is covered employment
Do not offset if the individual never had non-covered earnings under CSRS.
NOTE: All federal employment for individuals hired on or after 01/01/1984 is covered under Social Security.
2. Federal employment under both CSRS and FERS
Federal employees hired prior to 1984 could switch from CSRS to FERS. Therefore, their federal employment includes both non-covered (CSRS) and covered (FERS) earnings. If the DIB onset is 05/01/86 or later and the period of service used to determine eligibility to or compute the amount of the PDB is based on at least 85 percent covered earnings, the PDB is not offset. (For DIB onset prior to 05/01/1986, see DI 52130.001B.)
The highest three years of earnings used to compute the PDB amount are years of covered employment (at least 31 out of those 36 months), but the majority of the earnings record in non-covered employment:
At least 85 percent of the 3-year period which the PDB is "based on" is covered employment (31/36 = 86.11 percent);
The "all or substantially all" (85 percent) test is met by this period;
The PDB is excluded from offset.
It does not matter that earnings from years not within this 3-year period are non-covered employment.
C. Determining whether covered service exclusions are met
Review the earnings history on the Detailed Earnings Query (DEQY):
If there is no non-covered (CSRS) employment, stop. The 85 percent covered service exception is met. Do not offset.
If there is some CSRS employment and it appears that the pension may be offsettable but cannot be determined from the DEQY, develop for proof per DI 52130.001 in this section.
If the covered-service exclusions in DI 52130.001 do not apply, verify the FERS benefit amount and offset the gross benefit amount before any deductions.
Input the case via the Modernized Claims System (MCS) or the Interactive Computations Facility (ICF), and show the WC/PDB type as “FM”. Code the CSPDB indicator per the instructions in DI 52130.025.
D. FERS disability terminating events and discontinued service pensions
FERS disability pensions can terminate due to death, medical improvement or restoration of earnings capacity. Following the termination, the individual may receive a discontinued service pension based only on length of service and not disability. Terminate offset when the FERS disability pension terminates. Do not offset discontinued service pensions.
E. FERS benefit reduced after one year
If the individual is under age 62, FERS disability will decrease after one year. If the FERS disability payment is offsettable, diary for re-contact eleven months after the FERS disability payments began. When the diary matures, verify the new gross FERS benefit amount and adjust offset accordingly.
F. Age 62 FERS recomputation and the retirement insurance benefit (RIB) option
Recompute the offset at age 62 if the FERS disability is offsettable. This is because OPM recomputes the FERS disability benefit when the individual attains age 62, possibly resulting in a higher FERS benefit. The processing center (PC) should take the following step:
Verify the recomputed FERS benefit amount.
Adjust the offset accordingly.
Consider the RIB option per DI 52150.030 if the RIB will be higher than the DIB amount payable after offset.
G. FERS Cost of Living Adjustment (COLA)
If the FERS is offsettable, the FERS COLAs are also offsettable. FERS COLAs are separate from and generally lower than CSRS COLAs.
For FERS disability recipients under age 62, no COLA is paid for the first twelve months. After the first twelve months, OPM applies the CSRS COLA to any portion that is due to CSRS employment and the FERS COLA to the remainder. Therefore, merely applying the standard FERS COLA to the previous year’s FERS benefit will not yield the correct Federal PDB amount. Verify the FERS amounts by contacting the individual or OPM directly whenever possible.