OWCP or OPM annuity
You can’t collect both. But you should apply for both.
Don’t take a refund of your retirement contributions while on OWCP. It permanently ends your annuity rights and your survivors’.
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1. The rule
Under 5 CFR 844.105, if you are eligible for both a FERS annuity and workers' compensation for disability covering the same period, you must elect one. You can't collect OWCP wage-loss compensation and an OPM annuity at the same time.
You make the election with the Office of Workers' Compensation Programs, part of the Department of Labor, and OWCP tells OPM. They are two separate systems with two separate applications.
There is one important exception. A scheduled award — a payment for the permanent loss or loss of use of a specific body part or function — can be paid alongside a FERS annuity. It is the wage-loss compensation that forces the choice.
2. What each one pays
| OWCP wage loss | FERS disability annuity | |
|---|---|---|
| Rate | 66⅔% of pay, or 75% with dependents | 60% of high-3 in year one, 40% after |
| Taxable? | No | Yes |
| SSDI offset | Different rules | Reduced by Social Security disability |
| Requires a work-related injury? | Yes | No |
| Survivor benefit | Only if death results from the work injury | Survivor annuity, if elected |
For most people OWCP pays more, and because it isn't taxed the gap after tax is wider still. That is why the usual pattern is to stay on OWCP while it lasts. The disability annuity mechanics, including the Social Security offset, are in FERS disability retirement and stacking FERS disability, SSDI and VA.
3. Why you should file for retirement anyway
Choosing OWCP doesn't mean skipping the retirement application. Filing it is usually the smarter move, for three reasons:
- It protects your survivors. OWCP survivor benefits are generally paid only if your death results from the work injury. A FERS survivor annuity doesn't depend on that. OPM notes that applying for retirement is what preserves your and your survivors' right to a future annuity.
- It gives you a fallback. OWCP benefits can be reduced or ended. An approved annuity is ready to switch to.
- There's a deadline. A disability retirement application generally must be filed within one year of separation. Miss it, and the option is gone.
Stay on OWCP while it pays more, but get the disability retirement approved as a backup. Your accommodation record matters here, as it does for any disability claim — see the accommodation record.
4. Switching between them
The election isn't permanent. If your workers' compensation stops for any reason, you can ask OPM to start paying your annuity, provided you are still eligible.
The timing can run the other way too. If OPM approves your annuity first and starts paying, and OWCP later approves your claim and you elect it, the annuity already paid has to be repaid. OWCP usually handles that by withholding the amount from its first payment, which is retroactive to the date you went off the employment rolls.
Tell OPM promptly whenever your OWCP status changes — for example, if a scheduled award becomes a wage-loss award. Dual payment for the same period becomes an overpayment you'll have to repay; see OPM overpayments and waivers.
5. The mistakes that cost the most
- Taking a refund of your FERS contributions. If you elect OWCP, you may be offered a lump-sum refund. Taking it ends your annuity rights and your survivors'. See taking the FERS refund.
- Never filing for retirement, and missing the one-year deadline.
- Collecting both for the same period without telling OPM, creating an overpayment.
- Assuming OWCP will last. It is designed around your ability to return to work, and it can be reduced as that changes.
6. Frequently asked questions
Can I receive OWCP and a FERS annuity at the same time?
Generally no. You cannot receive workers’ compensation for total or partial disability from the Office of Workers’ Compensation Programs and a CSRS or FERS annuity covering the same period. You must elect one. The main exception is a scheduled award, a payment for permanent loss of use of a body part, which can be paid alongside an annuity.
Which pays more, OWCP or a disability annuity?
Usually OWCP. Wage-loss compensation under the Federal Employees’ Compensation Act is generally 66 and two-thirds percent of your pay, or 75 percent if you have dependents, and it is not taxable. A FERS disability annuity is 60 percent of your high-3 in the first year and 40 percent after that, reduced by Social Security disability benefits, and it is taxable.
Should I still apply for disability retirement if I’m taking OWCP?
Usually yes. Applying for retirement is what preserves your right, and your survivors’ right, to a future annuity. OWCP survivor benefits are generally payable only if your death results from the work injury, so without a retirement application your survivors may have no annuity. An approved annuity also gives you something to switch to if your OWCP benefits end.
Is the election permanent?
No. You make the election with OWCP, which notifies OPM. If your workers’ compensation stops for any reason, you can ask OPM to pay your annuity instead, as long as you remain eligible for it.
What happens if OPM paid me before OWCP approved my claim?
If you then elect OWCP, the annuity already paid must be repaid to OPM. OWCP usually handles this by withholding the amount from its first, retroactive payment, since that payment reaches back to the date you went off the employment rolls.
General information, not legal advice. OWCP and disability retirement decisions are fact-specific; consider consulting an attorney experienced in federal workers’ compensation and retirement before electing.