Federal Employees' Compensation Act:

Benefits for Retirement-Age Beneficiaries

GAO-12-309R: Published: Feb 6, 2012. Publicly Released: Feb 6, 2012.

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What GAO Found

In 2010, 31,880—or 10 percent—of all FECA beneficiaries were long-term, full-time beneficiaries and 10,873 of those—or 34 percent—were at full retirement age, as defined under the Social Security Act. Of the $1.9 billion total in cash benefits paid to FECA beneficiaries, over half (58 percent) went to long-term, full-time beneficiaries. Of that half, long-term, full-time beneficiaries at or above full Social Security retirement age received 21 percent. This analysis covered all FECA beneficiaries, including USPS and non-USPS employees.

Compared to their federal CSRS retired counterparts, non-USPS long-term, full-time FECA beneficiaries typically received higher benefits in 2010. The median annual FECA benefit of $35,614 was about 26 percent higher than the median annual annuity received by retirees, which was $28,289, after adjusting for the effects of taxes. The difference between FECA benefits and CSRS annuities is typically larger when the FECA beneficiary was injured after fewer years of service. The differences between annual FECA and Civil Service Retirement System (CSRS) benefits in our comparison are largely explained by the benefit calculation formulas used for each set of benefits. The CSRS formula generally awards a smaller percentage of salary than the FECA formula for most workers, except those with long tenure.

It is important to note that our finding regarding the difference in benefits levels does not allow us to conclude whether such a difference exists for USPS employees or for current or future annuitants under FERS, a population that is increasing given that FERS covers federal employees first hired in 1984 or later. USPS employees were not included in this analysis because USPS could not provide sufficient data to reliably determine its employees’ work histories for the years covered by our analysis.

We examined the experiences of four states that limit state workers’ compensation benefits based on retirement age: Kentucky, Minnesota, Montana, and Tennessee. State officials and attorneys in those states highlighted several aspects of their experiences with these provisions, including cost savings, legal challenges, and financial hardships for some beneficiaries. For example, a workers’ compensation board official from Kentucky stated there has been a decrease in workers’ compensation costs since the retirement-age limitation went into effect; however, their office could not attribute the savings to this provision because they lack statistical data since private insurance carriers pay the benefits rather than the state.

Why GAO Did This Report

In 2010, the Federal Employees Compensation Act (FECA) program paid approximately $2.8 billion in total cash and medical benefits to federal employees who sustained injuries or illnesses while performing federal duties; about $1.9 billion of that was for cash benefits. U.S. Postal Service (USPS) has the largest number of FECA beneficiaries. The Department of Labor (Labor), which oversees the program, categorizes FECA beneficiaries into groups based on their ability to work, length of time receiving benefits, and type of injury. There are some beneficiaries who have been receiving benefits for longer than 90 days, and are completely unable to work. We refer to this group as long-term, full-time beneficiaries. Because there are no time or age limits for receiving FECA benefits, long-term, full-time beneficiaries include people at or older than retirement age.

We examined (1) the characteristics and associated compensation costs of long-term, full-time FECA beneficiaries, for USPS and non-USPS employees; (2) how wage compensation benefits for retirement-age, long-term, full-time FECA beneficiaries compare with federal retirees’ annuities (not including USPS employees); and (3) the experiences of states that limit state workers’ compensation benefits for workers at retirement age. For the first question, we could include USPS employees because Labor provided us with data on FECA beneficiaries for all federal agencies, including USPS. However, we could not include USPS employees in answering the second question. Our analysis required determining the work histories for FECA beneficiaries and retired annuitants, using an Office of Personnel Management (OPM) database to obtain these work histories. USPS employees are not included in the OPM database. We subsequently obtained data from USPS; however, the data were missing a significant amount of information necessary to determine the work histories employees for the years covered by our analysis. According to USPS officials, they changed data systems in 1995 and some key data were not available.

For more information, contact Andrew Sherrill at (202) 512-7215 or sherrilla@gao.gov or Phillip Herr at (202) 512-2834 or herrp@gao.gov..

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