Many federal workers who now draw job-related injury benefits equal to as much as 75 percent of salary would take a big cut under legislation approved by the House. The sweeping changes in the Federal Employees Compensation Act (FECA) are included in the complex budget package cleared by the House in late June.
The senate budget does not contain the FECA changes approved by the House without hearings. It is one of many items where the Senate and House differ, items that will be worked out in a joint conference that begins this week.
Under the present FECA program injured workers can get up to 75 percent of their salary in the form of tax free benefits while they are unable to work. Under the House-cleared changes, individuals under the FECA would be subject to a new benefits formula. It would limit them to 80 percent of their "predisability spendable earnings" -- that is, 80 percent of the net amount of their federal paycheck after deductions are made for such items as fedeal income tax, insurance and the like. Under that formula, many of the 40,000-plus people now drawing FECA benefits could have their annual earnings cut anywhere from $2,000 to $6,000.
Herbert Doyle, assistant to the president of the National Association of Letter Carriers and former head of the FECA program at the Labor Department, says the proposed changes could mean a major income cutback for disabled FECA beneficiaries. He cites the example of an employe with four dependents whose salary is $20,000. Under the current FECA rules, that employe's benefit would be worth about $15,000. If the 80 percent formula is adopted, the $15,000 payment to the individual would be cut back to about $11,200, Doyle figures.
An individual with a $14,000 salary who goes under FECA gets a benefit of around $10,500. If the new formula is adopted that same person now getting around $10,500 would have benefits reduced to around $8,200, depending on deductions for taxes, insurance, retirement and the like. The person disabled with a gross salary of $28,000 who now gets compensation of $21,000 would draw about $14,800.
The changes approved by the House would also affect workers injured in the future (there are 100,000 reported injuries each year, about half of them from the postal service). Presently injured workers keep getting their paychecks for 45 days to provide income while FECA benefits are being approved. The changes would abolish that interim period of income, and could leave some injured workers without pay or benefits for an extended period of time.
Individuals under FECA would, under the House changes, be shifted over to the federal retirement system automatically when they hit their 65th birthday.
In justifying the FECA changes, the administration said it would provide an incentive for workers whose injuries are not serious to return to work, or go into rehabilitation programs. Benefits for survivors of persons under FECA would not be changed, and some benefits would actually be improved. But the big impact for persons already under the program would be income cutbacks resulting from the new 80 percent formula.
Federal and postal unions oppose the FECA changes and thought the plan would be stricken from the budget bill. But the House bought it as a Republican substitute in that historic (some say hysteric) Friday session when the president's budget reconcilliation package was approved.
White House aides believe the changes are good for the taxpayers and the FECA program because it provides incentives for feds who are able to go back to work to go back to work. It is a major financial item to real people, one that seems to deserve public hearings so that Congress will know what it is doing before it does it.