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Postal Employees’ Disability Compensation
Although there are some minor differences in how the Postal Service is handled compared to other federal agencies, postal employees and other federal employees receive workers’ compensation benefits under the Federal Employees’ Compensation Act (FECA). The Act was first adopted in 1916 and was most recently substantially amended in 1974. Currently, FECA provides for five basic types of benefits: disability compensation, medical benefits, schedule awards (money paid to injured employees for the loss of function of body parts), vocational rehabilitation and death compensation.
The FECA differs from most state and private workers’ compensation systems in several costly ways, including:
- Most state programs have some kind of waiting period before wage-loss benefits kick in. Under FECA, however, injured employees may receive Continuation of Pay (COP) at their regular pay rates for up to 45 calendar days without such a waiting period.
- Most state programs pay compensation at a set rate of 66 2/3 percent, with a set maximum weekly amount. However, FECA establishes two different rates – 66 2/3 percent for employees without dependents and 75 percent for those with dependents.
- FECA is a “nonadversarial” system that contains only an informal process by which claims may be challenged. Most state programs have formal challenge procedures.
- Most state programs allow workers’ compensation programs to be self- administered or contracted out to a third-party administrator.
Beyond the structural problems with FECA, there are other elements of the federal workers’ compensation system that also work against the USPS. For administering benefits to postal employees, the Office of Workers’ Compensation Programs (OWCP) charges the Postal Service an administrative fee ($30 million in 2001). Furthermore, payments made by OWCP on behalf of injured postal employees are charged back to the USPS. Other federal agencies are able to include such expenses in their budget requests, an option not available to USPS. PIA believes that reform of the federal workers’ compensation system, particularly as it relates to the Postal Service, is crucial toward maintaining the long-term fiscal solvency of the USPS. Specifically, we support efforts to implement some kind of waiting period before wage-loss compensation is paid and to eliminate the 75 percent compensation rate. We also believe that disability compensation should not be a lifetime benefit, but should be adjusted when the worker reaches retirement age to a tax-free amount equal to what a retiree would receive. Finally, we support initiatives to control medical costs by making them subject to a fee schedule.