Many people focus so much on applying for Office of Personality Management (OPM) disability retirement that they fail to consider what comes afterward. That’s only understandable, considering the arduous application process and the extensive waiting periods. The day you discover you were approved for OPM disability retirement is a good day. Congratulations!
However, your story isn’t over. There’s still more to consider, and you will have to plan your next moves carefully. You might also have questions. Do you want to work? Can you still contribute to your Thrift Savings Plan? What happens after you are approved for federal disability retirement? We’ll take those questions head-on so you can decide your path ahead.
Are you looking for more assistance? Don’t worry. Our experienced OPM disability retirement lawyers at Pines Federal are ready to help you overcome any legal issue. Contact us online or call (800) 801-0598 today to set up a consultation.
I Was Approved for Disability Retirement. Now What?
It might sound surprising, but we receive this question often. Clients are frequently at a loss after they receive a disability retirement. Let’s break down some of the typical events on the post-approval timeline.
First Payments and Ongoing Benefits
OPM begins paying your benefits while it processes your retirement application. These interim payments are only a portion of your final benefit amount. Once OPM approves your application, you need to familiarize yourself with the specifics of your disability retirement benefits. Pay close attention to what you will receive and when your payments will start.
Also, keep in mind that OPM will adjust these benefits for inflation or other reasons over time. However, this can take some time. Part of the process from this time forward is for OPM to reach out to your Agency and acquire your Last Day of Pay (LDOP) to be used to calculate your back pay and benefits.
While OPM is supposed to pay you an estimated amount immediately this does not always occur as timely as it should. In addition, sometimes your Agency delays getting back to OPM with your LDOP further extended the time to receive disability benefits.
Taxes
Your tax liability will significantly shift once you go on disability retirement. However, not all portions of your retirement benefits are tax-free. Furthermore, OPM only withholds federal income tax, which means you may have a higher tax bill when you prepare your tax return. It’s wise to consult a tax advisor soon after going on disability retirement to get an idea of your tax liability.
Benefits
One key benefit most federal retirees want to retain is their Federal Employees Health Benefits (FEHB) insurance. You can keep your FEHB plan if you enrolled at least five years before retiring. Nonetheless, it’s vital to check the requirements to maintain your coverage and any changes in your contributions.
While you cannot change your health benefit plan on a whim, you may still change your plan enrollment during the annual open season. You can cancel your FEHB enrollment at any time, but you cannot re-enroll once you opt out of the program.
If you have Federal Employees’ Group Life Insurance (FEGLI), you should review your policy and decide whether you want to continue paying for it. You may not increase your FEGLI insurance after retiring. Furthermore, your FEGLI premiums will increase significantly as you get deeper into your retirement years.
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Maintaining Your Eligibility for Disability Retirement
OPM disability retirement is not permanent. There are several ways you can lose these benefits. The most common way is an improvement in your condition. If your condition improves significantly, you may have to inform your retirement system and come out of disability retirement. Keep regular appointments with your healthcare provider to monitor your condition.
In addition, be ready to provide medical updates to OPM. Approximately every year, OPM will inquire about the status of your condition. You will have to provide significant medical evidence showing that there has been a continuation or a worsening of your condition. Failing to cooperate with OPM’s inquiries can result in losing your benefits.
On that same note, stay informed about the changes to federal retirement laws. Congress makes adjustments to your benefits to account for inflation and other factors. They may significantly overhaul certain policies as time goes on. It’s wise to keep abreast of these developments.
Can I Work After Going on Federal Disability Retirement?
Believe it or not, pursuing employment in the private sector can be an option after going on disability retirement. For many retirees, it represents a viable way to stay engaged and supplement your income. That said, there are important rules and limitations to be aware of to ensure you do not jeopardize your retirement benefits.
For one, you have to inform OPM of your earnings if you start working after you begin receiving disability retirement benefits. This typically involves submitting an annual report that details your income from private-sector employment. As a federal disability retirement recipient, you must stay under a certain earnings limit.
Usually, this limit is around 80% of the salary you received in your last federal position. If you breach that limit, then OPM will conclude you have had a medical recovery and terminate your benefits.
Second, your private sector job should be significantly different from your federal job. You should also take care that your private sector work respects the medical limitations you reported to OPM. If the duties of your private sector position suggest that you could return to your federal position or a similar one, OPM may reevaluate your eligibility for continued benefits.
Survivor Annuity
Yet another choice you will face after retiring is whether to elect a survivor annuity. By taking 10% off of your annuity payments, you can leave a 50% benefit to your spouse. In doing so, you can guarantee that your spouse will enjoy a degree of financial security if you pre-decease them. Many people find that peace of mind justifies the investment.
However, there are downsides to having a survivor annuity. First, it reduces your retirement benefit. Second, only your spouse can benefit from the annuity. Children and grandchildren cannot be annuity recipients. Third, you will not receive your money back if your spouse passes away before you.
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Obtaining Social Security Disability Insurance While on Federal Disability Retirement
Another common question that retirees ask is whether federal disability retirement qualifies them for Social Security Disability Insurance (SSDI) benefits. The short answer is no. In fact, part of the Federal Disability Process requires you to apply for SSDI benefits whether you want to or not. It is important to note that the definitions of who is disabled and the benefits for OPM and SSDI are significantly different.
For one, the definition of disability under SSDI is much more difficult to acquire than OPM’s definition. For SSDI, you must be unable to perform any occupation, while for federal disability retirement, you need to be unable to perform the job you have been assigned to or your own occupation. Practically, this means many, if not the majority of people who apply for disability will receive OPM but not SSDI.
It is extremely important to note that if you are receiving SSDI benefits, you may have to offset the earnings from SSDI if you are paid OPM disability benefits without an offset. In other words, you are not entitled to SSDI benefits and OPM disability benefits at the full rate at the same time. If the Social Security Administration approves your application, then OPM will reduce your disability retirement dollar for dollar according to the amount of your SSDI benefit.
This can create a very large overpayment problem for people who receive OPM Disability while receiving SSDI for which OPM will require you to pay them back money they paid out and they will not have mercy on you for collecting and keeping both. If you are receiving SSDI benefits in full and OPM benefits without an offset it behooves you to either tell OPM about your SSDI or to set aside funds to pay OPM back for your overpayment.
Have Other Questions About Life on Federal Disability Retirement? Let Us Be Your Guide
The dedicated team at Pines Federal is committed to providing support, education, and advocacy for federal employees. That applies to all facets of federal disability, including what actions you should take after receiving federal disability retirement. No issue is too small for us. Our goal is to guarantee that you get the most out of your federal retirement benefits.
Reach out to Pines Federal for unparalleled legal support. Our attorneys boast a wealth of experience in representing federal employees across a spectrum of legal challenges. We’re ready to guide you through any issue so that you can maximize your quality of life and enjoy peace of mind.
If you’re seeking guidance on managing your benefits, reach out to Pines Federal today.
Call us at (800) 801-0598 or send an online message to get started.