Reports: Federal Workers’ Comp Benefits Costly

If workers’ compensation benefits were reduced to 50 percent of a U.S. Postal Service employee’s monthly pay at retirement age, the Postal Service could save $378 million within 10 years.

This finding confirms prior audits that found Postal Service workers’ compensation liability is significantly higher than that of comparable private sector companies, according to a recent 14 page report released by The Office of Inspector General for the United States Postal Service.

The findings suggest that postal employees utilize workers’ compensation benefits as an alternative to retirement because the current benefits outweigh their pension plan benefits.

Data taken from a September 2010 injury compensation periodic roll indicated approximately 14,900 Postal Service employees are currently receiving workers’ compensation benefits. Of that figure, 2798 were over the age of 65, 705 were over the age of 80, and three were 98 years old.

Eighty-two percent over the age of 65 were classified as having no re-employment potential or permanent or prolonged disabilities.

The Federal Employers Compensation Act (FECA) provides comprehensive federal workers’ compensation coverage to civilian federal employees who sustain injuries as a result of their employment.

Four types of benefits are provided under the act:

• Medical

• Compensation

• Death

• Nursing and rehabilitation services

Compensation benefits are also provided to qualified survivors of a work-related injury or disease that causes an employee’s death. Compensation benefits are tax-free with a base rate of 66 and 2/3 percent of the injured employee’s salary or 75 percent, if there is at least one dependent. More than 70 percent of FECA claimants are paid at the 75 percent rate.

According to the report, the Postal Service, as the largest FECA participant, reimbursed more than $1 billion in benefits and $61 million in administrative fees in 2010 to the Department of Labor (DOL), Office of Workers’ Compensation Programs, the administrator of FECA.

FECA, considered one of the largest workers’ compensation systems in the world, covers 2.7 million federal employees.

In 2010, FECA reportedly spent $1.88 billion in wage loss compensation, impairment, and death benefits with an additional $898.1 paid out for medical and rehabilitation services and supplies.

In a related report released May 12 by the United States Government Accountability Office, a similar review of older beneficiaries within the federal workers’ compensation program mirrored findings within the Postal Service report.

The report noted the federal workers’ compensation benefit structure hasn’t been changed in over 35 years, despite proposals introduced over the years to address changes to the program.