Workers' comp again in the bull's eye

A House panel on May 20 held a hearing to examine possible reforms to the Federal Employees’ Compensation Act (FECA), which many in Congress and the administration alike believe is designed in a way that encourages beneficiaries to stay onboard even when their disability has passed.

“When you’re talking about a program of this size and cost, making sure that it is operating as efficiently and effectively as possible is imperative,” said Rep. Tim Walberg (R-Mich.), who chairs the House Education and Workforce Committee's Subcommittee on Workforce Protections. “Concerns have been raised that FECA benefits are too generous and can discourage an employee’s return to work. So we are here today to explore how Congress can modernize the FECA program, to ensure taxpayer dollars are being used in a smart and responsible way, and to make certain this program is serving federal employees as intended.”

Among the witnesses who testified before the subcommittee was Leonard Howie III, director of the Office of Workers’ Compensation Programs (OWCP), which oversees the disability benefits dispensed under FECA. Howie described the key concerns over the program.

"As currently structured, FECA creates direct disincentives to return to work in two significant ways," Howie testified. "The first and most far-reaching is that, while the basic rate of FECA compensation is 66 2/3 percent, a majority of federal employees receive an augmented benefit of 75 percent, reflecting at least one dependent. ... In addition, the 75 percent compensation rate can result in benefits greater than the injured worker’s usual take home pay. The administration’s proposal would establish a single compensation rate, reducing work disincentives, simplifying simplify administration and claims processing, and eliminating potential overpayments that can occur due to changes in dependency status."

"A second significant disincentive to return to work is created by the disparity that exists between the level of retirement benefits, provided by the OPM, received by most federal employees and the level of long-term FECA benefits for retirement age FECA recipients," he said. "Under current law, the thousands of long-term FECA beneficiaries who are over normal retirement age have a choice between federal retirement system benefits and FECA benefits, but they overwhelmingly elect the latter because FECA benefits are typically more generous."

Howie cited reforms proposed by the Labor Department that would  do away with the 66 2/3 percent and 75 percent compensation rates and instead provide all fully disabled employees with 70 percent of their pre-injury salaries. Those reforms also would cut the FECA benefit to 50 percent of pre-injury salary when an employee reaches Social Security retirement age.

Those proposed changes have met the strong opposition of labor groups.

"Just because a proposal saves money does not make it a good idea," Richard Thissen, the president of the National Active and Retired Federal Employees Association, said in testimony submitted to the panel.

"The FECA  reductions proposed by DOL undermine a core principle of the program—to provide injured  workers who have been deprived the ability to work with compensation on par with what they would have received had they not been injured and been able to continue to work," Thissen said. "For this reason, NARFE wholeheartedly opposes these proposals."