Injured workers get nearly full replacement pay

Long-term beneficiaries of the Federal Employees Compensation Act are receiving on average of more than 95 percent of the take-home pay they would have received if they had not been injured, a new General Accounting Office report has concluded.

GAO studied 23,000 employees who received benefits under FECA because of injuries suffered on the job. Their salary replacement rates ranged from 76 percent to 136 percent, according to the report, "Federal Employees' Compensation Act: Percentages of Take-Home Pay Replaced by Compensation Benefits." Compensation benefits equaled an estimated 80 percent to 99 percent of take-home pay for about 70 percent of the beneficiaries and amounted to 100 percent or more in 29 percent of the cases.

A 1972 report by the National Commission on State Workmen's Compensation Laws recommended that workers' weekly benefits should replace at least 80 percent of their after-tax weekly earnings. At the time of the report, workers' compensation benefits jumped, and ignited the issue of whether benefits were so high that injured employees might not want to return to work.

GAO's analysis of today's replacement trends indicated that income replacement rates were higher for beneficiaries who received higher amounts of pay before their injuries, were injured before 1980, received the FECA dependent benefit and lived in states with an income tax.

After analyzing beneficiary profiles, GAO concluded that 70 percent of all FECA beneficiaries were more than 40 years old when they were injured. The average adjusted pay of the beneficiaries in selected occupations was the same as the average pay of active workers in the same occupations. These characteristics, GAO said, suggest that the beneficiaries were not in the early stages of their careers at the time of their injuries. GAO, however, was unable to determine how beneficiaries' career prospects were diminished by their on-the-job injuries.

The Department of Labor's Office of Workers' Compensation Programs administers FECA and adjudicates claims submitted by injured workers. For the year ending June 1997, FECA costs totaled about $1.9 billion --$1.3 billion for compensation benefits, $444 million for medical benefits and $125 million for death benefits.