Cutting workers’ comp

The Bush administration is concerned that workers' compensation benefits for injured federal employees are overly generous compared with the same benefits for injured private sector workers. As a result, the administration proposed two benefits cuts for injured federal workers in its fiscal 2003 budget plan that could take effect as early as October. Under the first proposed cut, federal workers who wind up on disability for the rest of their lives would see their benefits reduced at age 65. Current law provides disabled federal employees who can't return to work with tax-free benefits amounting to two-thirds or three-fourths of their pre-disability pay for their entire lives. Those amounts are, on average, about 25 percent more generous than standard federal retirement benefits, according to the Bush administration. "For future [workers' compensation] beneficiaries, the budget proposes to change the program so that individuals over age 65 receive the same benefits as are available under federal retirement programs," the Bush budget proposal says. Current beneficiaries would not be affected. The details of the benefits cuts have yet to be worked out, said Shelby Hallmark, director of the Labor Department's Office of Workers' Compensation Programs (OWCP), which processes workers' comp claims for all federal workers. The Labor Department officials will develop a proposal, which will then be vetted by Office of Management and Budget reviewers and circulated for comments among other federal agencies, Hallmark said. The second proposed benefit cut could affect employees whose work-related injuries keep them off the job for 14 days or less. Most private sector workers, who are paid workers' comp under state laws, must wait for three or seven days, starting the day after they are injured, before they start receiving checks under workers' compensation. They don't get paid during the waiting periods, unless their injuries keep them out of work beyond a certain point (depending on state law, seven days to six weeks after the injury takes place). If they have to stay out of work that long, then they retroactively get the pay they would have received during the waiting period. In contrast, only federal workers whose injuries keep them out of work for between 46 and 58 days are subject to a three-day waiting period. Under federal law, those workers would not receive pay for their 46th, 47th and 48th days off the job. The waiting period applies to a small percentage of injured federal workers, Hallmark said. The Bush administration's plan would make the federal waiting period more like state waiting periods. Hallmark said the details are still being worked out, but one possibility is that injured workers would not be paid for the first three days off the job if their injuries keep them off the job for fewer than 14 days. Workers could be allowed to use sick time to make up for the lost wages. Workers whose injuries keep them out of work for more than 14 days would receive pay for those three days retroactively. In recent years, the Labor Department's inspector general and the Washington-based Heritage Foundation have pushed the two benefit cuts included in the Bush budget, which could save the federal government millions of dollars each year. But Ron Oberg, national OWCP representative for the National Air Traffic Controllers Association, says the benefit cuts are bad ideas. Older workers' compensation beneficiaries already get less money than retirees under the normal retirement system, because their benefits are based on their pay at the time of injury and because they are subject to inflation-based adjustments rather than the increases that working employees receive each year, which have been higher than inflation-based adjustments in recent years. "If this reform proposal were to pass, the injured employee would not receive anywhere near what a noninjured employee would be receiving under the retirement system," Oberg said. Oberg said the current rule providing 45 days of pay to injured workers reduces the stress associated with on-the-job injuries. Injured workers already have to deal with long waits for service from the OWCP, he said. "There is often a great amount of frustration associated with pursuing benefits under the program, not to mention the anxiety a claimant experiences when injured on the job," Oberg said. "Why add to this burden?" Two additional administration proposals aim to reduce opportunities for fraud and to rein in the costs of the $2 billion-a-year federal workers' compensation program.

• Require agencies to pay a surcharge on workers' compensation benefits to cover OWCP's costs of administering the program. The surcharge would probably be about 4 percent of benefits costs, Hallmark said. Some semi-autonomous agencies, such as the Postal Service and the Tennessee Valley Authority, already pay the surcharge. The change would bolster agencies' "incentive to improve workplace safety," the Bush budget says.
• Subject workers' compensation claims to closer scrutiny to prevent overpayments.