Federal Employees' Compensation Act:

Percentages of Take-Home Pay Replaced by Compensation Benefits

GGD-98-174: Published: Aug 17, 1998. Publicly Released: Aug 25, 1998.

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Pursuant to a congressional request, GAO provided information on workers' compensation benefits for lost wages provided to workers with job-related injuries under the Federal Employees' Compensation Act (FECA), focusing on: (1) the percentages of take-home pay that FECA benefits replaced for beneficiaries on the long-term rolls who were receiving full benefits; (2) career patterns of workers in selected occupations that were the same as the occupations of FECA beneficiaries; and (3) beneficiaries' characteristics such as current age, age when injured, compensation benefits paid in 1997, and pay at the time of injury adjusted to 1997 pay levels.

GAO noted that: (1) for the more than 23,250 beneficiaries on the long-term rolls for whom GAO developed replacement rates, GAO estimated that FECA benefits replaced, on average, over 95 percent of the take-home pay beneficiaries would have received had they not been injured; (2) estimated replacement rates ranged between about 76 and 136 percent; (3) compensation benefits equaled between an estimated 80 and 99 percent of take-home pay for about 70 percent of these beneficiaries and amounted to 100 percent or more in 29 percent of the cases; (4) under assumptions GAO needed to make to compute beneficiaries' income taxes and retirement contributions, replacement rates tended to be higher for beneficiaries who: (a) received higher amounts of pay before their injury; (b) were injured before 1980; (c) received the FECA dependent benefit; and (d) lived in states with an income tax; (5) using different assumptions to show their effect on replacement rates, beneficiaries with more exemptions or deductions for income tax purposes would have had lower replacement rates because these rates generally decrease as taxable income decreases; (6) beneficiaries with a spouse who had taxable income would have higher replacement rates because replacement rates generally increase as spousal income increases; (7) single and married beneficiaries who had no income subject to income taxes while working--generally those with low incomes--would have replacement rates of about 73 and 82 percent, respectively; (8) GAO's analyses showed that about 70 percent of all beneficiaries were over 40 years old when they were injured, and the average adjusted pay of beneficiaries in the selected occupations approximated the average pay of active workers in the same occupations; (9) GAO was unable to determine the extent to which beneficiaries' career prospects were diminished by their on-the-job injuries because GAO's analyses were limited to readily available data; (10) the career patterns of individuals depended on a multitude of personal employment factors as well as the specific jobs in which individuals are employed, according to agency officials familiar with career patterns of workers; (11) about 65 percent of the 30,000 beneficiaries identified by GAO were over 55 years old, and the average age of beneficiaries was 61, as of June 1997; and (12) in June 1997, their annual compensation averaged $26,220, and their average gross pay at the time of injury adjusted to 1997 pay levels was $34,833.

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