» Earnings From Other Employment

Can I work in another job after I retire from my government job on disability?

ANSWER: Yes. Although you may be unable to render "useful and efficient service" in your government job and are therefore disabled from it, you may be able to perform in a non-government job, and if you can, you are perfectly free to do so.

Example: Fern, an accountant, suffers from continuing bouts of clinical depression in part as a result of government job duties and long hours. Her symptoms include early morning crying spells, which often make her late for the daily staff meetings which are an integral part of one of the critical elements of her job. After she is awarded disability retirement, Fern finds a new job as an accountant in private business with duties and hours that she can handle. Fern is disabled from her government employment, and if she meets the other requirements, the fact that she can perform the private sector job does not prevent her from receiving disability retirement.

Is there an earnings limitation in that other job?

ANSWER: Yes. The law allows you to collect your full disability retirement annuity so long as you are not "restored to earning capacity." You are considered "restored to earning capacity" if in any calendar year your earnings from wages, self-employment, or both (but not passive investments) reaches or exceeds 80% of the current rate of basic pay of the position you occupied immediately before retirement. The rule is very strictly construed and you will be stripped of your annuity even if you exceed the 80% ceiling by even a single penny. If you think that you may fall within the scope of this rule, be very sure to find out precisely how it is applied by OPM. For instance, OPM may include in its definition of income, earnings that IRS may exclude from its definition of income.

If you are "restored to earning capacity," you will lose your entire disability retirement annuity, not just some percentage of it. Loss of your annuity will also mean loss of other benefits, including loss of your group health insurance, which will always be more favorable than the individual conversion policy to which you may thereafter be entitled. Persons over 60 years of age are exempt from this 80% earnings limitation.

If I lose my disability annuity by earning too much, can I ever get it back?

ANSWER: Yes. Although you will lose your disability retirement annuity if you are "restored to earning capacity," you may reapply. On reapplication, you will have to demonstrate not only that your earnings have diminished for an entire calendar year below the 80% ceiling, but also that you are still disabled from your old government job (and not some other job) by the same disability (and not some other disability) that disabled you before. This can be very tricky. The best advice: make sure that you keep your earnings under the 80% ceiling.

Will OPM check up on me to see if I am still disabled or if I have been restored to earning capacity? If so, how, and how often?

ANSWER: Yes, they will check up on you, but the experience of most of my clients is that they will not harass you to get you off disability retirement. This policy, by the way, is different from that of the Department of Labor, which has a reputation for unrelentingly harassing employees in an effort to get them off workers' compensation. The disability retirement law requires OPM to check on your medical condition at least once a year and also permits them to check up on you whenever they so desire. The results are uneven and sporadic. Some employees are contacted within a few months of going on disability retirement while others are not contacted for years. Although OPM has the power to send annuitants to government-appointed physicians, it usually requires you to have your own physician answer a series of questions, which may be the same or similar to those previously asked on the "Physician's Statement." As to monitoring for restoration of earning capacity, that is done on an annual basis through a questionnaire, and you may, in addition, be required to provide copies of your tax returns.

Is it true that legally I may be able to earn more while on disability retirement than I did while working in my old government job?

ANSWER: Yes. By keeping your earnings in your new job just below the 80% ceiling and combining these earnings with your disability annuity, you can, without any penalty, earn more than you formerly did when you were healthy and employed by the government. Nor is there anything illegal or unethical about purposely keeping your earnings below the 80% ceiling and as a consequence, earning more on disability than you earned previously.

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