Federal Employees' Compensation Act: Benefit Adjustments Needed to Encourage Reemployment and Reduce Costs

摘要

Increasing numbers of long-term disability cases among Federal employees have contributed significantly to rising costs under the Federal Employees' Compensation Act. Many long-term disabled beneficiaries are, in effect, retired. The act's benefit structure creates incentives for workers to retire on compensation and results in inequities among beneficiaries. In some instances, benefits are higher than preinjury take-home pay. Department of Labor proposals for legislation to resolve these problems are being considered by the Office of Management and Budget. Labor's proposals would subject Federal workers' compensation benefits to Federal income tax, eliminate increased benefits for dependents, and provide for transfer of beneficiaries to the Civil Service retirement program. However, Labor should revise the proposals to provide (1) additional economic incentives to return to work and (2) for transfer to retirement before age 65.