Social Security Disability Benefits vs. Federal Disability Retirement

How Social Security Disability Benefits Differ from a Federal Disability Retirement

Any Federal worker who becomes disabled after at least 18 months of civil service is eligible for a disability retirement from the federal government. There is often confusion surrounding the differences between Social Security disability benefits and a disability retirement from Federal Service. While disability benefits provided by the Social Security Administration are classified as a “total” disability benefit, the features of the FERS and CSRS disability retirement are considered “occupational.”  What this means is that you can work in the private sector and simultaneously collect disability retirement, unlike standard social security disability benefits. The new salary cannot be more than 80% of the recipient’s former pay, however, plus there are other conditions and restrictions.

An additional feature about disability retirement from the federal government is that it can function in tandem with, or separate from, the disability payments from social security available to numerous American workers suffering from a debilitating ailment.  The benefits paid by Social Security have stricter, and typically longer, approval processes than the FERS and CSRS disability retirement. If someone were to qualify for both, the income from the federal disability retirement would be offset by the Social Security benefits as follows: 100% in the first year, 60% in the second year, and then 40% of the Social Security disability payment amounts are subtracted from the federal disability retirement benefit every year thereafter.

Earlier this year in October, the Social Security Administration added more conditions that would qualify a beneficiary for the compassionate allowances program, which creates a “fast-track” for approval. Five more maladies are now included on the list, which contains serious health issues such as pancreatic cancer, ALS, and Neonatal Adrenoleukodystrophy. Since its inception, more than 500,000 applicants have been approved under the program.

                               Until Next Time,

                                                **Written by Benjamin Derge, Financial Planner. The information has been obtained from sources considered reliable but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Benjamin Derge and not necessarily those of RJFS or Raymond James. Links are being provided for information purposes only. Expressions of opinion are as of this date and are subject to change without notice. Raymond James is not affiliated with and does not endorse, authorize, or sponsor any of the listed websites or their respective sponsors.