When Life Takes an Unexpected Turn

What to do when an unanticipated health problem derails your future retirement plans.

One of the “what-if’s” of any career is that an unanticipated health problem could derail your future retirement plans. This has happened to many federal employees who, due to an illness or injury, are no longer able to perform their federal job, but they’re also not yet eligible to retire.

For some, recovery is possible and the time spent away from work can be covered by sick leave or some other benefit. The government does not offer short term disability protection specifically, but offers a wide range of leave options and workplace flexibilities to assist employees who need to be away from the workplace. These include annual leave, sick leave, advanced annual or sick leave, leave under the Family and Medical Leave Act, leave without pay, alternative work schedules, credit hours under flexible work schedules, compensatory time off and telework. Agencies may also have a voluntary leave bank program. It is important for the employee to remain on the payroll for as long as possible so that, upon recovery, they can return to normal duties and continue to plan for retirement when they are financially and mentally ready. If an employee dies prior to retirement, certain family members would be entitled to survivor’s benefits, including a surviving spouse, an eligible former spouse and dependent children. Beneficiary designations or the federal standard order of precedence will determine any lump sum benefits that may be payable.  

When the time away from work is going to last longer than a year or the employee will not be able to return to work, then disability retirement becomes a consideration. Unfortunately, many employees are not prepared financially or mentally for this, which can add stress to an already stressful situation.

Where to Start

Those contemplating retirement under the disability provisions should receive pre-retirement counseling by their agency retirement specialist. This should include an estimate for both a disability retirement and a voluntary retirement, if eligible for both. Information should be available for applying for Social Security Disability and withdrawal and tax information related to the Thrift Savings Plan, including In-Service Financial Hardship Withdrawals.

According to the Office of Personnel Management, you must meet all of the following conditions to qualify for disability retirement under the Federal Employees Retirement System (most employees currently employed under the Civil Service Retirement System are eligible for voluntary retirement, but there are also disability retirement benefits available under the older retirement system):

  • You must have completed at least 18 months of federal civilian service which is creditable under the FERS. The service requirement under CSRS is five years of federal civilian service.
  • You must, while employed in a position subject to FERS, have become disabled, because of disease or injury, for useful and efficient service (that means fully successful performance of the essential elements of the position—or the ability to perform at that level—and satisfactory conduct and attendance) in your current position.
  • The disability must be expected to last at least one year.
  • Your agency must certify that it is unable to accommodate your medical condition in your present position and that it has considered you for any vacant position in the same agency at the same grade or pay level, within the same commuting area, for which you are qualified for reassignment.
  • You, or your guardian or other interested person, must apply before your separation from service or within one year thereafter. This time limit can be waived only if you were mentally incompetent on the date of separation or within one year of this date.
  • You must apply for Social Security disability benefits (this is not a requirement under CSRS). If the application for social security disability benefits is withdrawn for any reason, OPM will dismiss the FERS disability retirement application.

Be prepared to fill out a number of forms. The most important one is the Standard Form 3112, Application in Support of Disability Retirement Application. This form has five parts, including the applicant’s statement of disability, a supervisor’s statement, a physician’s statement, agency certification of reassignment and accommodation efforts, and the disability retirement application checklist. Each of these sections contains detailed requirements, so gather your patience along with the documentation.

Once the case is assembled, along with a form SF 3107 (FERS) or SF 2801 (CSRS), Application for Immediate Retirement, the agency will submit the claim to OPM if the employee is still employed or has been separated for less than 31 days. The employee may submit the forms directly to OPM if they have been separated from the agency for 31 days or longer, but must be received with one year of the employee’s separation from federal service. If the employee is also enrolled in Federal Employees’ Group Life Insurance, then a form  SF 2818 (Continuation of Life Insurance Election) is also required. Your employing office will note your current health plan enrollment code in the remarks section of the preliminary Individual Retirement Record that will accompany your disability retirement application. It will not send any health benefits forms from your Official Personnel Folder to the retirement system with the preliminary Individual Retirement Record, even if you are enrolled and eligible to continue the enrollment.

If your disability retirement application is denied, your office doesn't need to take any further action unless you are separated. If your application is approved, your agency will provide you with an SF 2810 (Notice of Change in Health Benefits Enrollment) to indicate the transfer of health insurance to OPM.

Below are answers to some common questions, provided by an OPM spokesman:

How long does it take, on average, to process a disability retirement claim?

Processing time varies depending on the complexity of the claim and the extent to which additional medical documentation is needed to make a final decision. Once received, a case is sent to the OPM Retirement Operations Center in Boyers, Pennsylvania, where it is assigned a number and a search is done for records on file with OPM from previous federal employment. From there, the case is sent back to OPM in Washington where a customer service specialist will check to be sure it is complete. Any missing records are sought, then once the case is complete, it is assigned to a legal administrative specialist for review. If approved, the last day of employment is determined and the claims department will begin benefits payments. If the claim is denied, the employee may file a reconsideration request.   

Is there a difference in processing a CSRS versus a FERS disability?


How many disability retirement applications does OPM receive?

OPM receives between 7,000 and 9,000 applications each year.  

Why do some claims take longer than others to process?

The application is incomplete and lacks medical documentation.

Are disability applicants typically put into interim pay while the application is in process?

Interim pay begins after the approval decision has been made and the last day of pay information has been retrieved from the applicant’s last agency.

If applicants are also eligible for optional retirement, are they notified regarding the differences in the benefit?

Employees should be counseled by their agency’s human resource office regarding their entitlement, and should be provided an estimate based on each scenario.