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entitled 'Disability Benefits: Benefit Amounts for Military Personnel 
and Civilian Public Safety Officers Vary by Program Provisions and 
Individual Circumstances' which was released on April 7, 2006. 

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Report to Congressional Committees: 

United States Government Accountability Office: 

GAO: 

April 2006: 

Disability Benefits: 

Benefit Amounts for Military Personnel and Civilian Public Safety 
Officers Vary by Program Provisions and Individual Circumstances: 

GAO-06-4: 

GAO Highlights: 

Highlights of GAO-06-4, a report to congressional committees: 

Why GAO Did This Study: 

Military personnel, as well as civilian public safety officers (PSO), 
risk their lives and face the prospect of incurring disabilities as 
they protect and defend the general public on a daily basis. To help 
assess the appropriateness of disability benefits available to military 
personnel, Congress mandated that GAO study the disability benefits 
available to federal, state, and local government employees who serve 
the public in high-risk occupations and are injured in the line of 
duty. 

In response, GAO compared the disability benefits available to military 
personnel with the disability benefits available to civilian PSOs at 
the federal level, and in six states and six cities that were selected 
to illustrate the range of benefits provided. This study focuses on 
benefits provided to law enforcement officers and firefighters at the 
federal level, to state police at the state level, and to firefighters 
at the local level. For each program included in the review, GAO 
identified the benefits available for temporary disability, permanent 
partial disability, and permanent total disability, and then calculated 
the lifetime present value of the benefits provided to various 
hypothetical individuals in different circumstances. 

Cognizant agency officials provided only technical suggestions, which 
were incorporated as appropriate. 

What GAO Found: 

Neither military personnel, nor any of the civilian PSOs included in 
this study, consistently have more line-of-duty disability benefits 
available to them in all situations. This report highlights the 
variation in the type and amount of benefits provided across programs, 
depending on specific program provisions and individual circumstances. 
For example, during the initial period of treatment, recovery, and 
evaluation, program provisions governing the availability of 
continuation of pay and temporary disability benefits offer certain 
advantages for military servicemembers compared with the selected 
civilian PSOs. When disabilities are permanent, however, the amount of 
benefits provided over a lifetime for permanent partial or totally 
incapacitating disabilities are sometimes greater for military 
veterans, and sometimes greater for the selected civilian PSOs, 
depending on such variables as the type and degree of impairment and 
the individual’s pre-injury salary level. The figure below illustrates 
how these and other variables would affect lifetime compensation and 
disability retirement benefits for military personnel, federal PSOs, 
and selected state PSOs in two scenarios—a permanent partial disability 
(leg amputation) and a permanent total disability (quadriplegia)—for a 
hypothetical individual age 35, with 12 years of service and an annual 
salary of $60,000. 

Comparison of Lifetime Benefits for One Hypothetical Individual in Two 
Different Scenarios: 

[See PDF for image] 

[End of figure] 

GAO is not taking a position on how disability benefits should be 
modified. However, GAO believes that any deliberations on this topic 
should include an examination of how such changes would affect ensuring 
adequate and appropriate benefits for those who serve their country, as 
well as the long-term fiscal well-being of the nation. 

www.gao.gov/cgi-bin/getrpt?GAO-06-4. 

To view the full product, including the scope and methods, click on the 
link above. For more information, contact Cristina Chaplain at (202) 
512-7215 or chaplainc@gao.gov. 

[End of section] 

Contents: 

Letter: 

Results in Brief: 

Background: 

Temporary Disability Program Provisions Offer Certain Advantages for 
Military Personnel Compared with Civilian PSOs: 

Permanent Partial Disability Benefits Are Greater over a Lifetime for 
Military Personnel or Civilian PSOs, Depending on Individual 
Circumstances: 

Permanent Total Disability Benefits Are Greater over a Lifetime for 
Military Veterans or for Civilian PSOs, Depending on the Type of 
Impairment: 

Concluding Observations: 

Agency Comments: 

Appendix I: Disability Compensation Benefit Programs: 

Appendix II: Disability Retirement Benefits Programs: 

Appendix III: Other Disability Benefit Programs: 

Appendix IV: Hypothetical Scenarios and Calculation of Lifetime 
Disability Benefits--Methods and Results: 

Appendix V: Impact of Varying Salary Levels on Monthly Benefit 
Payments: 

Appendix VI: Federal Income Tax Treatment of Disability Benefits: 

Appendix VII: Progression of Disability Benefits Following a Line-of-
Duty Injury, by Occupation: 

Appendix VIII: Definitions of Total Disability: 

Appendix IX: GAO Contacts and Staff Acknowledgments: 

Related GAO Products: 

Tables: 

Table 1: Continuation of Pay Provisions: 

Table 2: Basic Monthly Compensation Rates for VA Disability in 2005: 

Table 3: Temporary Compensation Payment Formulas and 2005 Payment Caps 
for Selected Civilian PSOs: 

Table 4: Time Limits on Temporary Disability Benefits: 

Table 5: Time Limits on Compensation for Permanent Partial 
Disabilities: 

Table 6: Disability Retirement Benefit Formulas for Military Personnel 
and Selected PSOs: 

Table 7: Concurrent Receipt Provisions for Permanent Partial 
Disabilities: 

Table 8: Post-Retirement Employment and Earnings Restrictions on 
Receipt of Disability Retirement Benefits: 

Table 9: Basic Total and SMC Rates for VA Disability in 2005: 

Table 10: Benefits Provided for Tinnitus: 

Table 11: Benefits Provided for a Leg Amputation: 

Table 12: Benefits Provided for Quadriplegia and Other Permanent Total 
Disabilities: 

Table 13: Base Annual Starting Salaries by Occupation and Experience 
Level, 2000: 

Table 14: Monthly Temporary Compensation Payments Based on Actual 
versus Hypothetical Salary Levels: 

Table 15: Monthly Disability Retirement Payments Based on Actual versus 
Hypothetical Salary Levels: 

Figures: 

Figure 1: Progression of Disability Benefits Following a Line-of-Duty 
Injury: 

Figure 2: Military and Civilian Temporary Monthly Compensation Benefits 
in Two Contrasting Scenarios (2005 Payment Rates): 

Figure 3: Military and Civilian Temporary Monthly Benefits for 40 
Percent Disability Ratings, including Temporary Disability Retirement 
Benefits for Servicemembers (2005 Payment Rates): 

Figure 4: Comparison of Present Value of Compensation Benefits over a 
Lifetime for Tinnitus: 

Figure 5: Comparison of Present Value of Combined Disability Benefits 
over a Lifetime for a Leg Amputation: 

Figure 6: Comparison of Present Values of Combined Disability Benefits 
over a Lifetime for Quadriplegia and Other Permanent Total 
Disabilities: 

Abbreviations: 

AMA: American Medical Association: 

COLA: cost-of-living adjustment: 

DOD: Department of Defense: 

DROP: Deferred Retirement Option Plan: 

FECA: Federal Employees' Compensation Act: 

FERS: Federal Employees' Retirement System: 

GS: General Schedule: 

OWCP: Office of Workers' Compensation Programs: 

PSO: public safety officer: 

SMC: special monthly compensation: 

SSDI: Social Security Disability Insurance: 

VA: Department of Veterans Affairs: 

[End of section] 

United States Government Accountability Office: 

Washington, DC 20548: 

April 7, 2006: 

Congressional Committees: 

Since the September 11, 2001, terrorist attacks, the United States has 
increased the deployment of military forces in armed conflict and the 
use of both military and civilian personnel in national preparedness 
and fighting terrorism. As with military personnel on active duty 
status, civilian public safety officers (PSO), including law 
enforcement officers and firefighters, also risk their lives and face 
the prospect of incurring disabilities as they protect and defend the 
general public on a daily basis.[Footnote 1] GAO's designation of 
federal disability programs as a high-risk area requiring urgent 
attention and modernization, combined with the heightened risk of 
disability for both military personnel and civilian PSOs, underscores 
the importance of ensuring that those who serve our nation and who 
sustain injuries in the line of duty have fair and appropriate benefits 
available to them.[Footnote 2] At the same time, any discussion of 
modernizing federal disability programs or changing the benefit 
structure for military servicemembers or federal civilian PSOs will 
take place within the context of the large fiscal imbalances facing the 
federal government.[Footnote 3] 

As part of an ongoing, multi-faceted effort to assess the 
appropriateness of disability benefits available to military personnel, 
the National Defense Authorization Act for Fiscal Year 2005 mandated 
that GAO identify the disability benefits available to federal, state, 
and local government employees who serve the public in high-risk 
occupations and are injured in the line of duty.[Footnote 4] In 
response, this report compares the service-connected disability 
benefits provided military personnel with the benefits provided for 
line-of-duty injuries to civilian PSOs at the federal, state, and local 
level, focusing on the benefits provided for three main categories of 
disability: (1) temporary disability, (2) permanent partial disability, 
and (3) permanent total disability. 

To compare the disability benefits available, we examined the major 
programs providing compensation and disability retirement benefits for 
military personnel, for civilian PSOs at the federal level, and for 
civilian PSOs at the state and local level in six states and six 
cities. Active-duty military servicemembers generally have access to 
disability benefits under program provisions that apply to all the 
various services, and federal PSOs (including federal law enforcement 
officers and firefighters) generally have access to disability benefits 
for this group of employees under program provisions that apply to all 
the various federal agencies. However, disability benefit program 
provisions vary widely for state and local PSOs depending on the 
specific occupation and location. At the state level, we focused on 
benefits available to state police officers (such as highway patrol or 
state troopers) in a nonprobability sample of six states. To illustrate 
the range of benefits available, we selected these states based on 
various indicators of benefit levels[Footnote 5] and geographic 
diversity. At the local level, we focused on benefits available to 
firefighters in six large cities, one within each of the selected 
states. The six states and six cities we selected are: California and 
Los Angeles; Florida and Miami; Indiana and Indianapolis; Montana and 
Billings; New Jersey and Newark; and Texas and Houston. The programs 
selected provide examples of a wide range of policies and practices for 
determining disability benefits; however, they may not be 
representative of the full extent of the variation nationwide. 

We documented and compared program provisions for compensation and 
disability retirement benefits for military personnel, federal PSOs, 
and the selected state and local PSOs, relying primarily on statutes, 
regulations, and agency guidance and reports. (For descriptions of 
disability compensation benefit programs, see app. I. For descriptions 
of disability retirement benefit programs, see app. II. For 
descriptions of other disability benefit programs, see app. III.) To 
gain an initial understanding of how disability programs work, we 
conducted site visits with federal program officials at the Department 
of Defense (DOD), Department of Veterans Affairs (VA), Department of 
Labor, and Office of Personnel Management in Washington, D.C; and with 
state and local program officials in California and New Jersey. We 
interviewed officials at all other agencies and locations by phone. 

To demonstrate the effect of different types of injuries and other 
individual characteristics on the provision of benefits under each 
program, we constructed hypothetical scenarios for military personnel 
and the selected civilian PSOs at different ages, lengths of service, 
and salary levels. (For more detailed descriptions of these 
hypothetical scenarios, see app. IV.) We requested cognizant agency 
staff to review our characterization of program provisions and 
calculation of hypothetical benefit amounts to ensure the validity of 
our information. To compare different types of benefits, such as lump- 
sum and monthly payments, we calculated the present value of the 
lifetime disability benefits available, including disability 
compensation and disability retirement benefits, for each of our 
hypothetical scenarios. (See app. IV for a more detailed discussion of 
our methods for calculating present values.) 

Our analysis focused on cash disability benefits that include 
government contributions rather than on other benefits and services 
such as medical care and vocational rehabilitation services, or 
benefits that are solely employee-or privately-funded. We did not 
include benefits from programs in which employees may or may not choose 
to participate and that provide variable benefits depending on how much 
an employee chooses to contribute (such as life insurance plans, 
savings plans, and alternative retirement options).[Footnote 6] In 
addition, our analysis focused on the differences in how benefits are 
calculated given equal salaries, rather than on the differences in 
salary levels across locations for comparable jobs and years of service 
or on the differences in administrative processes for obtaining 
benefits. (For a more detailed discussion of the difference in benefit 
calculations based on the hypothetical salary levels compared with 
actual salary levels, see app. V.) We conducted our research from March 
2005 to November 2005 in accordance with generally accepted government 
auditing standards. 

Results in Brief: 

During the initial period of treatment, recovery, and evaluation, 
program provisions for temporary disability benefits offer certain 
advantages for military personnel compared with provisions for the 
civilian PSOs we reviewed. For example, whenever an active-duty 
servicemember incurs an injury or becomes ill and is found unfit for 
duty, the injury or illness almost always qualifies as line-of-duty, 
enabling the servicemember to receive compensation benefits. The injury 
can occur at any time, 24 hours a day, 7 days a week. The coverage for 
civilian PSOs we reviewed is not considered around-the-clock in this 
way. To be considered a line-of-duty injury eligible for compensation, 
usually the injury must occur during working hours when the PSO is 
performing assigned duties. In addition, the military generally has 
more flexibility in its provision of 100 percent salary replacement 
(referred to as continuation of pay) than do most of the civilian 
programs we reviewed, because unlike the provisions for PSOs, the time 
limit on this benefit for servicemembers is not fixed in law. In 
addition, servicemembers can have temporary access to disability 
retirement benefits as well as VA compensation benefits for up to 5 
years in some cases. In contrast, on the civilian side, federal PSOs 
and the selected state and local PSOs we reviewed generally have access 
only to temporary compensation payments, not disability retirement, 
during this phase of benefit receipt. 

When a partial disability incurred in the line of duty is determined to 
be permanent, the timing and amount of benefits provided over a 
lifetime varies, depending on the individual's circumstances. In most 
cases of permanent partial disability, servicemembers and civilian PSOs 
are eligible to receive compensation benefits, and in some cases, they 
also may be eligible to receive disability retirement benefits, but the 
criteria for benefit receipt and amount of benefits provided vary 
across programs. In some circumstances, when a permanent partial 
disability still allows a return to duty, the civilian PSOs we reviewed 
generally can receive compensation benefits immediately in addition to 
their salaries, whereas military personnel cannot receive compensation 
benefits until they are released from service through separation or 
retirement. Nevertheless, because the compensation benefits for 
permanent partial disabilities for the selected PSOs are generally time-
limited, whereas compensation benefits for military veterans are for 
the remainder of life, the present value of the compensation benefits 
available over a lifetime for veterans can be substantially greater 
than the present value of benefits available for the PSOs. In other 
circumstances, when a permanent partial disability prevents a return to 
duty, disability retirement benefits are often provided in addition to 
compensation benefits. We found that the present value of the combined 
compensation and disability retirement benefits available over a 
lifetime for veterans is sometimes higher and sometimes lower than the 
combined benefits available for the civilian PSOs we reviewed, 
depending on the specific provisions for calculating benefits and for 
the concurrent receipt of both types of benefits. In addition, if the 
individual is able to work at another job, the military and several 
disability retirement programs we reviewed require post-injury 
employment to be under a different retirement system, but most programs 
do not place any limits on the amount of post-retirement earnings. 

When the disability incurred in the line of duty is severe enough to be 
determined to be permanent and total, the amount of benefits provided 
over a lifetime is greater for military veterans in some cases, and for 
civilian PSOs in others, depending on the specific program provisions 
and the type of impairment. In cases of permanent total disability, 
military veterans and civilian PSOs have access to a range of benefits 
that are enhanced compared with those available for permanent partial 
disability. These may include enhanced compensation and disability 
retirement benefits, a special lump-sum benefit available only to 
civilian PSOs, or additional benefits such as Social Security 
Disability Insurance (SSDI). Benefits received over a lifetime for 
permanent total disability are greater for military veterans than for 
the selected civilian PSOs in some situations and not in others, 
depending on such factors as the program's provisions for concurrent 
receipt of compensation and disability retirement benefits, and whether 
the veteran's type of injury qualifies for special compensation. 

Cognizant agencies reviewed a draft of this report and provided only 
technical suggestions which were incorporated as appropriate. 

Background: 

Government-provided disability benefits for military personnel and 
civilian PSOs generally fall into two broad categories: disability 
compensation benefits and disability retirement benefits. (See fig. 1.) 

Disability compensation. Under workers' compensation and veterans' 
compensation programs, benefits typically include medical treatment for 
the injury, vocational rehabilitation services, and a cash payment to 
replace a percentage of the individual's loss in wages while injured 
and unable to work. Disability compensation benefits are exempt from 
federal income tax. 

Disability retirement. Disability retirement programs typically provide 
benefits that allow qualified individuals who are unable to return to 
work to retire earlier and/or to retire with a higher percentage of 
their pre-injury salary level than would otherwise be permitted with 
normal retirement based on age and length of service at the time of 
injury. Disability retirement benefits generally are not exempt from 
federal income tax, but there are exceptions. (For details, see app. 
VI.) 

Figure 1: Progression of Disability Benefits Following a Line-of-Duty 
Injury: 

[See PDF for image] 

Note: For a more comprehensive summary of disability benefits 
available, by occupation, see app. VII. 

[End of figure] 

When an individual is eligible to receive both disability compensation 
and disability retirement benefits, programs sometimes place limits on 
the combined amount of benefits received. Some programs do not allow 
both types of benefits to be received concurrently, instead requiring 
the individual to choose which one to receive. Other programs may allow 
both types of benefits to be received, but they reduce (offset) either 
all or a portion of one of the benefits.[Footnote 7] 

For military personnel who incur a service-related disability, VA 
provides service-connected disability compensation benefits and DOD 
provides disability severance or retirement benefits, depending on 
level of disability and length of service. Military personnel found 
unfit for duty are evaluated and assigned disability ratings ranging 
from 0 to 100 percent, in 10 percentage-point increments. Those who 
have a disability rated at 20 percent or less and who have served at 
least 6 months, but less than 20 years, may be entitled to a lump-sum 
disability payment (disability severance). Those who have a disability 
rated 30 percent or more, or who have served 20 years or more, may be 
entitled to disability retirement. Once released from service through 
separation or retirement, military veterans can receive monthly VA 
compensation payments based on their disability rating, with added 
amounts for particularly severe injuries (referred to as special 
monthly compensation). In fiscal year 2004, VA provided about $20.6 
billion in cash disability compensation benefits to more than 2.5 
million veterans and their dependents, and DOD spent $1.25 billion on 
disability retirement benefits for approximately 93,000 recipients. 

When military personnel are eligible for both VA compensation and DOD 
disability retirement benefits, in most cases, the retirement benefit 
is offset dollar-for-dollar by the amount of the compensation 
benefit.[Footnote 8] Exceptions to this offset are provided for those 
who are eligible for normal retirement based on 20 years or more of 
service and who have either a disability rating of 50 percent or more, 
or combat-related disabilities.[Footnote 9] Military personnel with 20 
years or more of service and with a disability rating of 50 percent or 
more can qualify for Concurrent Retirement and Disability Payments. 
Under this program, the offset is being phased out over a 10-year 
period that began on January 1, 2004; thus, by January 1, 2014, 
veterans who qualify will be able to receive the full amount of their 
VA compensation and DOD disability retirement benefits concurrently 
with no offset. Alternatively, military personnel with 20 years or more 
of service and with combat-related disabilities can qualify for Combat- 
Related Special Compensation. Under this program, which became 
effective in May 2003, a special tax-exempt benefit is provided equal 
to the amount of the offset.[Footnote 10] 

On the civilian side, federal PSOs receive workers' compensation 
benefits under the Federal Employees' Compensation Act (FECA), and 
those with at least 18 months of service may be eligible for disability 
retirement benefits under the Federal Employees' Retirement System 
(FERS).[Footnote 11] Benefits are generally the same as for all other 
civilian employees of the federal government, except that federal law 
enforcement officers and firefighters belong to a special group of 
employees who can take normal retirement at an earlier age and have 
their retirement benefits calculated differently.[Footnote 12] 

At the state and local level, all 50 states and the District of 
Columbia have workers' compensation statutes that cover virtually all 
industrial employees, and in many states this coverage is extended to 
public employees such as PSOs. Moreover, nearly all employees in state 
and local governments participate in employment-based retirement plans 
that generally include provisions for disability retirement. Among the 
PSOs included in our study, we found that disability compensation 
benefits were provided under the states' workers' compensation programs 
in all but one state: Indiana.[Footnote 13] We also found that the 
provisions that govern workers' compensation benefits for PSOs at the 
state level are, in general, the same as those at the local level. In 
addition, among the state and local governments we reviewed, all 
provide some type of disability retirement benefits to qualified PSOs 
injured in the line of duty if the injury prevents a return to work. 

At all levels of government, compensation and disability retirement 
programs often provide added benefits in cases of permanent total 
disability. Among the programs included in our study, most define 
permanent total disability as a disability that prevents an individual 
from engaging in any substantial gainful activity.[Footnote 14] VA 
defines total disability as a disability rated at 100 percent;[Footnote 
15] however, a total disability rating may also be assigned when a 
veteran is unable to secure or follow a substantially gainful 
occupation as a result of service-connected disabilities.[Footnote 16] 
Of the veterans being compensated at the 100 percent disability level 
in 2004, just under half qualified on the basis of individual 
unemployability. 

In addition, other agencies and organizations may provide other cash 
benefits in cases of permanent total disability. For example, military 
personnel and civilian PSOs who participate in the Social Security 
system may be eligible to receive SSDI benefits. Also, the Department 
of Justice administers a Public Safety Officers' Benefits Program that 
provides a lump-sum benefit to civilian PSOs at the federal, state, and 
local level when totally incapacitated in the line of duty. In fiscal 
year 2005, this lump-sum benefit was set at $275,658. 

Temporary Disability Program Provisions Offer Certain Advantages for 
Military Personnel Compared with Civilian PSOs: 

During the initial period of treatment, recovery, and evaluation 
following a line-of-duty injury, temporary disability benefit 
provisions for military personnel offer certain advantages compared 
with provisions for the civilian PSOs we reviewed. When a military 
servicemember or civilian PSO is injured, the first and most immediate 
concern is to ensure that appropriate medical treatment is provided. If 
the servicemember or PSO is unable to return to duty, however, another 
concern soon follows: ensuring that lost wages are replaced during the 
period of treatment, recovery, and evaluation. All programs reviewed 
provide benefits to replace a portion of lost wages for individuals 
injured in the line of duty up until the time the injury is determined 
to be permanent and/or the individual can return to duty. However, 
compared with program provisions following a line-of-duty injury to a 
civilian PSO, injuries to servicemembers are more likely to qualify as 
line-of-duty injuries; continuation of pay provisions for 
servicemembers are generally more flexible; and, unlike civilian PSOs, 
servicemembers can have access to temporary disability retirement 
benefits in some cases. 

Injuries to Military Personnel Are More Likely to Qualify as Line-of- 
Duty Injuries: 

In the military, whenever an active-duty servicemember incurs an injury 
or becomes ill and is found unfit for duty, it is almost always 
considered a line-of-duty injury that would enable the servicemember to 
receive service-connected disability benefits. The injury or illness 
can occur at any time, 24 hour a day, 7 days a week, and does not have 
to occur while the servicemember is engaged in a duty-related activity. 
A pre-existing injury or illness also can be covered if it becomes 
aggravated during service.[Footnote 17] Even a non-line-of-duty injury 
that is similar to the line-of-duty injury may be included in the 
determination of the disability level in some cases.[Footnote 18] For 
the most part, the only exceptions to coverage are when the injury or 
disease is a result of the servicemember's own willful misconduct or 
abuse of alcohol or drugs,[Footnote 19] or if the servicemember 
received a dishonorable discharge from the military for the period of 
service giving rise to the injury. Moreover, federal statutes and 
related regulations governing VA compensation benefits specify that 
many chronic diseases and other conditions are presumed to be caused by 
military service once the servicemember has served for 90 days. These 
presumptive conditions include, for example, arteriosclerosis, diabetes 
mellitus, epilepsy, leukemia, multiple sclerosis, and tuberculosis, 
among others.[Footnote 20] 

Federal PSOs' coverage for injuries and illness is not considered line- 
of-duty around-the-clock as in the military. Usually the injury or 
illness must occur during working hours when the PSO is performing 
assigned duties or engaging in an activity that is reasonably 
associated with employment. In addition, there are no presumptive 
conditions specified. All claims must establish a link between the 
injury or illness and employment. But similar to the provisions for 
servicemembers, federal PSOs are provided line-of-duty disability 
benefits for any pre-existing injury or disease that is aggravated, 
accelerated, or precipitated by employment, and similar exceptions to 
coverage apply if the injury is caused by willful misconduct, 
intoxication, or the employee's intention to harm himself or others. 

The selected state and local PSOs have similar coverage--and exceptions 
to coverage--as described above for federal PSOs. Provisions governing 
line-of-duty disability benefits for PSOs typically specify that any 
injury or disease arising out of employment is covered. Unlike at the 
federal level, however, some states have established some illnesses as 
presumptive conditions for PSOs. We found this to be the case in 
California, Florida, and New Jersey.[Footnote 21] 

Continuation of Pay Provisions for Military Personnel Are Generally 
More Flexible: 

Following a line-of-duty injury, the military's provisions for allowing 
servicemembers to continue to receive their full pre-injury salary, 
whether or not they are able to return to duty, are generally more 
flexible than the policies for the civilian PSOs we reviewed. In the 
military, and across all the selected civilian PSO programs, agency 
officials indicated that in most cases, they encourage individuals to 
return to work during the period of treatment, recovery, and evaluation 
to the extent their medical conditions allow; and that even if the 
individual is only able to work in a light-duty capacity, the full pre- 
injury salary is still provided. Moreover, the full pre-injury salary 
generally continues to be provided for a period of time, even if the 
individual cannot return to duty, through explicit continuation of pay 
policies or special sick leave allocations. The length of time this 
benefit is provided varies, but, in general, we found the military's 
continuation of pay policy to be more flexible than most of the 
civilian programs we reviewed. 

The military will replace 100 percent of the servicemember's salary 
until the individual either returns to duty or is released from service 
through separation or retirement. DOD instructions call for cases to be 
referred for evaluation no later than 1 year following injury, but this 
time frame may be extended in some cases. For example, DOD officials 
told us that extensions may be provided when there is an indication the 
servicemember may be able to return to duty within a foreseeable amount 
of time. They also noted that continuation of pay is extended to cover 
the time between evaluation and final disposition, which can take up to 
90 days. 

Federal PSOs and most state and local PSOs we reviewed all have some 
type of continuation of pay provisions, either explicitly or through 
special sick leave allocations, but the length of time this benefit is 
provided varies widely. For example, federal PSOs have continuation of 
pay for up to 45 days in cases of traumatic injury. Among the state and 
local programs with these provisions, some have a 1-year time limit, 
but others range from 90 days to 2 years. (See table 1.) In most cases, 
these time limits are set in state statutes, and as a result, are less 
flexible than in the military; however, we found that some programs 
were willing to make extensions. For example, according to a Montana 
Highway Patrol official, although continuation of pay generally is 
provided for up to 1 year, in one recent case it was provided for 2 
years before it was determined that the officer would not be able to 
return to duty. 

Table 1: Continuation of Pay Provisions: 

Occupation: Military personnel; 
Availability of continuation of pay (100% salary replacement) for line-
of-duty injuries: Yes: Until return to duty or release from service. 

Occupation: Federal PSOs; 
Availability of continuation of pay (100% salary replacement) for line-
of-duty injuries: Yes: 45 days maximum (for traumatic injury only).[A]. 

Occupation: Selected state and local PSOs: California Highway Patrol 
and Los Angeles Firefighters; 
Availability of continuation of pay (100% salary replacement) for line-
of-duty injuries: Yes: 1 year maximum for state Highway Patrol and for 
Los Angeles Firefighters. 

Occupation: Selected state and local PSOs: Florida Highway Patrol and 
Miami Firefighters; 
Availability of continuation of pay (100% salary replacement) for line-
of-duty injuries: Yes: 2 year maximum for State Police;[B] 210 days 
maximum for Miami Firefighters. 

Occupation: Selected state and local PSOs: Indiana State Police and 
Indianapolis Firefighters; 
Availability of continuation of pay (100% salary replacement) for line-
of-duty injuries: No, but 365 days per year of sick leave provided for 
State Police; 90 days per year for Indianapolis Firefighters, and can 
be extended.[A]. 

Occupation: Selected state and local PSOs: Montana Highway Patrol and 
Billings Firefighters; 
Availability of continuation of pay (100% salary replacement) for line-
of-duty injuries: Yes: Generally 1 year and can be extended for state 
Highway Patrol and Billings Firefighters. 

Occupation: Selected state and local PSOs: New Jersey State Police and 
Newark Firefighters; 
Availability of continuation of pay (100% salary replacement) for line-
of-duty injuries: No, but State Police and Newark Firefighters may take 
up to a year of sick leave, with extensions in some cases. 

Occupation: Selected state and local PSOs: Texas State Troopers and 
Houston Firefighters; 
Availability of continuation of pay (100% salary replacement) for line-
of-duty injuries: Yes: 1 year maximum for State Troopers;[C] also 1 
year for Houston Firefighters, with possible extensions up to 2 years. 

Source: GAO analysis of state statutes and policies, and interviews 
with cognizant agency officials. 

[A] These leave allocations for federal PSOs, Indiana State Police, and 
Indianapolis Firefighters are in addition to normally accrued sick 
leave. 

[B] For Florida Highway Patrol and Miami Firefighters to qualify for 
these benefits, the injury must be a "malicious injury caused by 
another person." According to agency officials, this requirement is 
interpreted very broadly. 

[C] The Texas statute providing continuation of pay for law enforcement 
officers became effective June 17, 2005. 

[End of table] 

Military Personnel Have Access to Temporary Disability Retirement 
Benefits in Some Cases: 

When an individual's ability to return to duty is still uncertain after 
a period of continuation of pay or sick leave expires, some types of 
prolonged temporary benefits often are provided. In the military, a 
servicemember can be temporarily released from service and have access 
to temporary disability retirement benefits for up to 5 years, as well 
as disability compensation benefits, in some cases. In contrast, the 
civilian PSOs included in our study generally have access only to 
temporary disability compensation benefits, not disability retirement. 
The different way compensation benefits are calculated, combined with 
the availability of temporary disability retirement benefits, results 
in higher monthly payments for servicemembers in some cases, and lower 
monthly payments in others, when compared with the benefits provided 
selected civilian PSOs. Specifically, we found that the monthly 
payments for servicemembers with either higher disability ratings or 
with 20 years or more of service are generally higher than the monthly 
payments for the selected PSOs in similar circumstances, while the 
monthly payments for servicemembers with either lower disability 
ratings or less than 20 years or service are generally lower. However, 
the length of time temporary benefits can be provided varies widely 
across programs. 

The basis for calculating compensation benefits for military personnel 
is different from that used for calculating civilian compensation 
benefits. Servicemembers are provided VA service-connected disability 
compensation benefits determined on the basis of the degree of injury, 
not salary level. VA evaluates the level of injury and assigns a 
disability rating ranging from 0 to 100 percent, in 10 percentage point 
increments, and each rating level corresponds to a fixed monthly 
payment amount, adjusted annually.[Footnote 22] (See table 2.) 
Additional benefits are provided for each dependent if the disability 
is rated 30 percent or more; for certain types of severe injuries such 
as the loss of use of a limb or sensory organ; and for various special 
circumstances such as the need for attendant care, inability to 
maintain gainful employment, having a spouse with a disability, or 
having a child age 18 or older attending school. In addition, VA can 
reassess a veteran's condition over time and may increase or decrease 
the disability rating as health deteriorates or improves.[Footnote 23] 

Table 2: Basic Monthly Compensation Rates for VA Disability in 2005: 

[See PDF for image] 

Source: Department of Veterans Affairs. 

[End of table] 

On the civilian side, federal PSOs receive temporary disability 
compensation benefits under FECA, and state and local PSOs generally 
receive temporary disability compensation benefits under state workers' 
compensation statutes, with payments determined on the basis of a 
percentage of pre-injury salary up to a set maximum. Among the state 
and local PSOs included in our study, we found that all are provided 
workers' compensation benefits, with payments based on a percentage of 
their salary up to a cap, except in Indiana. (See table 3.) As noted 
earlier, in Indiana, both the Indiana State Police and the Indianapolis 
Fire Department have opted to provide disability benefits only from 
their pension funds. 

Table 3: Temporary Compensation Payment Formulas and 2005 Payment Caps 
for Selected Civilian PSOs: 

[See PDF for image] 

Source: GAO analysis of state statutes and policies. 

[A] Payment caps for federal PSOs are based on the pay level for a 
General Schedule (GS)-15, step 10, position, which was $116,517 per 
year ($9,710 per month) in 2005. 

[B] For all of the selected state and local PSOs that have access to 
temporary disability compensation benefits, payment caps are based on a 
percentage of the state's average weekly wage. 

[End of table] 

Thus, if an individual is temporarily unable to work due to a line-of- 
duty injury or illness, compensation payments for servicemembers are 
based on the disability rating, regardless of salary level; in 
contrast, compensation payments for the selected civilian PSOs are 
based on salary level, regardless of disability level. As a result, as 
illustrated in figure 2, if an individual has more severe injuries and 
lower wages, VA compensation payments are generally higher than the 
PSOs' compensation benefits. But if an individual has less severe 
injuries and higher wages, VA compensation payments are generally lower 
than the PSO's compensation benefits. 

Figure 2: Military and Civilian Temporary Monthly Compensation Benefits 
in Two Contrasting Scenarios (2005 Payment Rates): 

[See PDF for image] 

Note: Calculations are based on the assumption that the individual is 
temporarily unable to return to duty due to a line-of-duty injury or 
illness. In such circumstances, payments for the selected PSOs are 
based on a percentage of salary regardless of disability rating. 

[A] Indiana State Police and Indianapolis Firefighters are not included 
in the figure because they are not provided prolonged temporary 
compensation benefits following the period of special sick leave 
allocation. 

[B] California state statutes call for PSOs to have their benefits 
calculated based on the maximum allowable average weekly wage, 
regardless of actual earnings. 

[C] Florida payment amounts shown here are based on the higher benefit 
rate allowed for the first 6 months. (After 6 months, the benefit 
levels would drop to $1,111 for the individual earning $20,000, and to 
$2,821 for the individuals earning $60,000 and $85,000.) 

[D] Payment amount is based on a cap. 

[End of figure] 

However, unlike the civilian PSOs included in our study, military 
personnel whose ability to return to duty remains uncertain after the 
period of continuation of pay expires also may have access to DOD 
temporary disability retirement benefits. As with permanent disability 
retirement payments, servicemembers are eligible to receive temporary 
disability retirement payments if they are found unfit for duty and 
they have either (1) a disability rating of 30 percent or more, or (2) 
20 years or more of service. Those who qualify may elect to have their 
temporary disability retirement payments calculated based on: 

* basic pay times 50 percent, 

* basic pay times the percentage of disability, or: 

* basic pay times 2.5 percent times years of service.[Footnote 24] 

Regardless of which calculation method is used, the maximum temporary 
disability retirement payment that can be received is 75 percent of 
basic pay. 

When servicemembers are eligible to receive VA compensation benefits 
and DOD disability retirement benefits at the same time, the amount of 
the retirement payment is reduced (offset) dollar-for-dollar by the 
amount of the VA compensation payment, unless they have at least 20 
years of service and can qualify for an exception to this offset due to 
a disability rating of 50 percent or more, or combat-related 
disabilities. (See earlier background section for further details.) 
Nevertheless, the added increment available from disability retirement, 
even with applicable offsets, can increase servicemembers' monthly 
benefits significantly. As illustrated in figure 3, if a servicemember 
with a 40 percent disability rating has an annual salary of $60,000 and 
12 years of service, including the increment for temporary disability 
retirement boosts the temporary monthly payment above that of some of 
the comparable civilian PSOs included in our study. With an annual 
salary of $85,000 and 32 years of service, the increment boosts the 
monthly payment above that of all the comparable PSOs. 

Figure 3: Military and Civilian Temporary Monthly Benefits for 40 
Percent Disability Ratings, including Temporary Disability Retirement 
Benefits for Servicemembers (2005 Payment Rates): 

[See PDF for image] 

Note: Calculations are based on the assumption that the individual is 
temporarily unable to return to duty due to a line-of-duty injury or 
illness. In such circumstances, payments for the selected PSOs are 
based on a percentage of salary regardless of disability rating. 

[A] Indiana State Police and Indianapolis Firefighters are not included 
in the figure because they are not provided prolonged temporary 
compensation benefits following the period of special sick leave 
allocation. 

[B] California state statutes call for PSOs to have their benefits 
calculated based on the maximum allowable average weekly wage, 
regardless of actual earnings. 

[C] Florida payment amounts shown here are based on the higher benefit 
rate allowed for the first 6 months. (After 6 months, the benefit 
levels would drop to $1,111 for the individual earning $20,000, and to 
$2,821 for the individuals earning $60,000 and $85,000.) 

[D] Payment amount is based on a cap. 

[E] Disabilities are assumed not to be combat related; thus, there is 
no exception to the offset. 

[End of figure] 

As was the case with continuation of pay, provisions regarding the 
length of time that temporary disability payments are provided while an 
individual's condition remains uncertain also vary widely across 
programs. Military servicemembers may receive these payments for up to 
5 years after the period of continuation of pay expires.[Footnote 25] 
At the federal level, PSOs may receive compensation payments 
indefinitely, as long as they are unable to work. At the state and 
local level, if the injured PSO's condition is still uncertain 
following the period of continuation of pay or use of sick leave, 
temporary compensation payments are generally provided only up to a set 
time limit, even if the ability to return to duty remains unclear. 
Among the state and local programs we reviewed, these time limits 
ranged from 104 weeks (2 years) to 400 weeks (7.7 years) (see table 
4).[Footnote 26] Only in Montana did officials indicate that temporary 
compensation benefits would be provided indefinitely until maximum 
medical improvement was achieved, similar to the benefits for federal 
PSOs. 

Table 4: Time Limits on Temporary Disability Benefits: 

[See PDF for image] 

Source: GAO analysis of state statutes and policies. 

[A] For federal PSOs to qualify indefinitely, the individual must be 
unable to work at any job, not just the previous position held pre- 
injury. 

[B] In California, benefits can be extended for up to a total of 240 
weeks over 5 years for certain disabilities, such as hepatitis, 
amputations, severe burns, HIV, high velocity eye injuries, chemical 
burns to the eyes, pulmonary fibrosis, and chronic lung disease. 

[C] In Florida and Montana, these benefits run concurrently with 
continuation of pay. 

[End of table] 

Permanent Partial Disability Benefits Are Greater over a Lifetime for 
Military Personnel or Civilian PSOs, Depending on Individual 
Circumstances: 

Once a line-of-duty injury is determined to be permanent, program 
provisions governing the benefits available for partial disabilities 
sometimes result in greater benefits for military personnel, and at 
other times result in greater benefits for the civilian PSOs we 
reviewed, depending on an individual's circumstances. Key factors 
affecting the amount of benefits provided over a lifetime include the 
type and degree of impairment, and whether the impairment prevents the 
individual from returning to duty. In most cases of line-of-duty 
permanent partial disability, servicemembers and civilian PSOs can 
receive disability compensation benefits. If unable to return to duty, 
they may also be eligible to receive disability retirement benefits. 
However, we found the criteria for benefit receipt, the way benefits 
are calculated, and the combined amount of benefits provided over a 
lifetime vary widely across programs for individuals with the same age, 
years of service, and salary level. 

Degree of Impairment Affects Benefits for Permanent Partial 
Disabilities in Different Ways across Programs: 

For both military personnel and the selected civilian PSOs, the type 
and degree of impairment are key factors in determining the amount of 
compensation benefits for permanent partial disabilities. In addition, 
whether the type and degree of impairment prevents an individual from 
returning to duty is the key factor in determining eligibility for 
disability retirement benefits. But the specifics of how benefits are 
calculated vary considerably across programs. 

Disability compensation benefits for permanent partial disability: 

Compensation benefits for permanent partial disability are based on the 
type and degree of impairment for both military personnel and for 
civilian PSOs. However, the way the impairment level is factored into 
the calculation of benefits for military personnel differs 
significantly from the way it is factored into the calculation of 
benefits for the civilian PSOs we reviewed. 

For military personnel with permanent partial disabilities, the degree 
of impairment determines the monthly VA compensation payment amount, 
the same as described earlier for temporary VA compensation benefits. 
These compensation payments for permanent disabilities are provided 
only after the servicemember has been released from service through 
separation or retirement. But the payments are provided for the 
remainder of life, adjusted annually, as long as the impairment 
persists. 

Civilian PSOs with permanent partial disabilities also receive 
compensation based on the degree of impairment (sometimes referred to 
as an impairment or schedule award). In contrast with military 
personnel, however, the degree of impairment does not affect the amount 
of the recurring compensation payments, but rather the length of time 
the payments are provided. The amount of the monthly payment is 
generally based on a percentage of the pre-injury salary up to a cap 
and, among the programs we reviewed, is generally the same as the 
monthly payment provided for temporary compensation. The payments for 
permanent disabilities are provided immediately, once the disability is 
determined to be permanent, regardless of whether or not the individual 
returns to duty. But the length of time payments are provided varies 
widely, depending on degree of impairment. A relatively minor 
impairment may result in benefits for a few weeks, while a more severe 
impairment may result in benefits for several years. In addition, some 
programs provide wage loss benefits based on a percentage of the 
difference between pre-injury and post-injury salary levels.[Footnote 
27] 

In general, civilian workers' compensation programs use one of two 
basic methods to determine the length of time to provide compensation 
benefits for permanent partial disabilities. The first method relies on 
a schedule of weeks that benefits are to be paid for specific types of 
impairments. This is the method used for federal PSOs. The second 
method uses one or more of the following factors to determine a 
disability rating: (1) the physical or psychological impairment, (2) an 
estimate of future wage loss, and/or (3) actual wage loss. In assessing 
the physical or psychological impairment, many state workers' 
compensation programs require physicians to use the American Medical 
Association (AMA) Guides to the Evaluation of Permanent Impairment, 
while other states have developed guides unique to their states. An 
initial impairment rating based on the AMA Guides or its equivalent is 
then used, either directly or indirectly, to determine the disability 
rating that is correlated with a specific length of time compensation 
benefits will be provided. This is the method generally used by the 
selected state workers' compensation programs included in our study. 
Table 5 describes the maximum length of time compensation payments can 
be provided for permanent partial impairments among the programs we 
reviewed. 

Table 5: Time Limits on Compensation for Permanent Partial 
Disabilities: 

[See PDF for image] 

Source: GAO analysis of program provisions. 

[A] In Indiana, both the Indiana State Police and the Indianapolis Fire 
Department have opted to provide disability benefits only from their 
pension funds following a period of special sick leave. 

[B] Alternatively, in Texas, when the permanent impairment rating is at 
least 15% and the post-injury wage is less than 80% of the pre-injury 
wage, supplemental benefits may be received for up to 401 weeks (7.7 
years), including weeks of benefit receipt for temporary, impairment, 
and supplemental benefits combined. 

[End of table] 

Disability retirement benefits for permanent partial disability: 

The eligibility criteria for disability retirement benefits due to a 
line-of-duty injury or illness vary across programs. In most programs 
reviewed, line-of-duty permanent partial disabilities that prevent 
individuals from returning to duty in their current jobs generally 
would enable them to receive disability retirement benefits. In the 
military, servicemembers who are unfit for duty are eligible for 
disability retirement benefits if they have a disability rating of 30 
percent or more regardless of length of service, or if they have 20 
years or more of service regardless of disability rating.[Footnote 28] 
Federal PSOs must be unfit for duty and have 18 months of service under 
FERS to qualify for disability retirement benefits. Among the selected 
state and local PSOs we reviewed, most would have access to disability 
retirement benefits regardless of length of service if they are found 
unfit for duty.[Footnote 29] In Florida, however, in addition to being 
unfit for duty in the current position, in order to qualify for 
disability retirement benefits, Highway Patrol Officers must be unable 
to be gainfully employed by any employer. 

Programs generally calculate disability retirement benefits based on a 
percentage of salary. In the military, servicemembers may elect to have 
their disability retirement benefit calculated using length of service 
or their disability rating,[Footnote 30] whichever is greater, up to a 
cap of 75 percent.[Footnote 31] Among the civilian PSOs we reviewed, 
some programs use different formulas for calculating disability 
retirement benefits, depending on the individual's circumstances, such 
as length of service, or the type or degree of impairment. For example, 
as shown in table 6, programs for federal PSOs, and for PSOs in Montana 
and Texas, use a higher percentage for calculating disability 
retirement benefits for those with 20 years or more of service compared 
to those with fewer years of service.[Footnote 32] Other programs, such 
as for Indianapolis and Houston Firefighters, use different 
calculations depending on the type or degree of disability sustained. 
For example, benefits for Indianapolis Firefighters are calculated 
differently based on whether the disability is due to injury or 
disease. Benefits for Houston Firefighters are calculated differently 
depending on whether the disability prevents them from returning to 
duty as a firefighter, or prevents them for engaging in any gainful 
employment. 

Table 6: Disability Retirement Benefit Formulas for Military Personnel 
and Selected PSOs: 

Occupation: Military personnel; 
Disability retirement benefit formulas: The greater of: 2.5% of basic 
pay or high 36-month average, as applicable, at the time of injury for 
each year of service or; basic pay or high 36-month average, as 
applicable, multiplied by the percent of impairment; Benefits are 
capped at 75% of basic pay regardless of calculation method. 

Occupation: Federal PSOs; 
Disability retirement benefit formulas: If under age 50 with fewer than 
20 years of service: 60% of average high-3 salary for first year of 
disability; 40% of average high-3 salary thereafter, until the 
individual reaches age 62. Benefits are recalculated at age 62 based on 
the normal retirement formula for regular federal employees (not PSOs); 
If age 50 or over with 20 years of service, or any age with 25 years of 
service: 1.7% of average high- 3 salary for each year of service up to 
20, plus 1.0% of the average high-3 salary times years of service 
exceeding 20. 

Occupation: Selected state PSOs: California Highway Patrol; 
Disability retirement benefit formulas: The greater of: 50% of the 
employee's final compensation or; 3% of final compensation for each 
year of service; Benefits are capped at 90% of final compensation 
regardless of calculation method. 

Occupation: Selected state PSOs: Florida Highway Patrol; 
Disability retirement benefit formulas: 65% of average final 
compensation. 

Occupation: Selected state PSOs: Indiana State Police; 
Disability retirement benefit formulas: 70% of the officer's average 
high-3 salary for first 2 years of receipt, 50% of the officer's 
average high-3 salary thereafter, until eligible for normal retirement; 
Benefits end when the individual is eligible for normal retirement, 
based on 25 years of service (including years receiving disability 
retirement), and normal retirement benefits are then provided instead. 

Occupation: Selected state PSOs: Montana Highway Patrol; 
Disability retirement benefit formulas: If fewer than 20 years of 
service: 50% of average highest salary; If 20 years of service or more: 
2.5% of average highest salary for each year of service. 

Occupation: Selected state PSOs: New Jersey State Police; 
Disability retirement benefit formulas: 66-2/3% of salary at the time 
of injury. 

Texas State Troopers; 
Disability retirement benefit formulas: If fewer than 20 years of 
service: 50% of average highest salary; If 20 years of service or more: 
2.8% of average highest salary for each year of service. 

Occupation: Selected local PSOs: Los Angeles Firefighters; 
Disability retirement benefit formulas: 30% to 90% of final salary, 
depending on the level of disability (but no less than 2% for each year 
of service); Benefits are capped at 90% of final average salary. 

Occupation: Selected local PSOs: Miami Firefighters; 
Disability retirement benefit formulas: 66-2/3% of salary at the time 
of injury or highest salary, whichever is greater. 

Occupation: Selected local PSOs: Indianapolis Firefighters; 
Disability retirement benefit formulas: If duty-related disability due 
to injury: 55% to 90% of base salary, depending on the degree of 
impairment. Benefits are capped at 90% of a first-class firefighter's 
monthly salary; If duty-related disability due to disease: 22% of base 
salary, plus 0.5% for each year of service up to 30 years, plus an 
additional amount based on the degree of impairment. Benefits are 
capped at 82% of a first-class firefighter's monthly salary; At age 52, 
benefits are recalculated based on the formula for normal service 
retirement: 50% of base salary, plus 1% for each 6 months of active 
service over a 20-year period. Benefits are capped at 74% of base 
salary. 

Occupation: Selected local PSOs: Billings Firefighters; 
Disability retirement benefit formulas: If fewer than 20 years of 
service: 50% of average highest salary; If 20 years of service or more: 
2.5% of average highest salary for each year of service. 

Occupation: Selected local PSOs: Newark Firefighters; 
Disability retirement benefit formulas: 66-2/3% of salary at the time 
of injury. 

Occupation: Selected local PSOs: Houston Firefighters; 
Disability retirement benefit formulas: If injury prevents employment 
as a firefighter (occupational disability), the greater of: 50% of 
average monthly salary or; 50% of average monthly salary for 20 years 
of participation, plus 3% of average monthly salary for each year of 
participation over 20 years; If injury prevents any gainful employment 
(general disability), the greater of: 75% of average monthly salary or; 
50% of average monthly salary for 20 years of participation, plus 3% of 
average monthly salary for each year of participation over 20 years; 
Benefits are capped at 80% of average monthly salary. 

Source: GAO analysis of selected disability retirement provisions. 

[End of table] 

Concurrent receipt provisions for permanent partial disability: 

When an individual with permanent partial disabilities is eligible to 
receive both compensation and disability retirement benefits, we found 
that offset provisions among the programs we reviewed represent the 
range of possible policies: concurrent receipt permitted with an 
offset, concurrent receipt permitted with no offset, and concurrent 
receipt not permitted. For example, DOD disability retirement benefits 
generally are reduced (offset) dollar-for-dollar when VA disability 
compensation benefits are received; however, military veterans with 20 
years or more of service and a disability rating of 50 percent or more 
are having this offset phased out over a 10-year period, and those with 
20 years or more of service and combat-related disabilities may be 
eligible for a special benefit equal to the offset. (See earlier 
background section for further details.) 

On the civilian side, federal PSOs may receive disability retirement 
benefits and compensation benefits with no offset in some situations, 
but not in others, depending on the type of benefits. Two types of 
compensation benefits are available to federal PSOs with permanent 
partial disabilities: impairment awards (referred to as schedule 
awards) and wage loss benefits (which are provided after the schedule 
award expires if an individual is unable to earn as much as could be 
earned pre-injury). Schedule awards may be received concurrently with 
disability retirement benefits with no offset. In contrast, wage loss 
benefits may not be received concurrently with disability retirement 
benefits. 

As summarized in table 7, offset provisions also vary among the 
programs providing benefits to the state and local PSOs we reviewed. 
For example, California Highway Patrol Officers can receive 
compensation benefits for permanent partial disability and disability 
retirement benefits without an offset, but Los Angeles Firefighters 
cannot. In Miami, an offset comes into effect only if the total 
combined benefits exceed the amount of the PSO's pre-injury salary. 

Table 7: Concurrent Receipt Provisions for Permanent Partial 
Disabilities: 

[See PDF for image] 

Source: GAO analysis of program provisions. 

[A] In general, military disability retirement benefits are reduced 
dollar-for-dollar for any compensation benefits received; however, this 
offset is being phased out for veterans with a disability rating of 50% 
or more and with 20 years or more of service. (See app. II, military 
personnel, for details.) 

[B] For federal PSOs, Montana Highway Patrol, and Billings 
Firefighters, concurrent receipt is allowed with no offset for an 
impairment award, but concurrent receipt is not allowed with wage loss 
benefits. 

[C] Florida is not included in the table because disability retirement 
benefits are provided only for permanent total disability. Indiana is 
not included in this table because compensation benefits are not 
provided to Indiana State Police. 

[D] In New Jersey and Newark, disability retirement benefits are 
reduced dollar-for-dollar for any compensation benefits received. 

[E] Indianapolis is not included in this table because compensation 
benefits are not provided to Indianapolis Firefighters. 

[F] Not only is concurrent receipt not allowed, when Los Angeles 
Firefighters take disability retirement, they must repay any 
compensation payments received for any disability incurred throughout 
their careers. 

[G] In Miami, workers' compensation is offset to prevent benefits from 
totaling more than 100 percent of pre-injury income. 

[End of table] 

When Able to Return to Duty, Compensation Benefits for Military 
Personnel Are Not Paid Immediately, but Amount Received over a Lifetime 
Is Generally Greater: 

When servicemembers or civilian PSOs are able to return to duty in 
their previous position with a permanent partial impairment, such as 
may be the case with tinnitus (ringing in the ears), disability 
retirement benefits would not be available, but disability compensation 
payments generally would be provided. The selected state and local PSOs 
we reviewed can receive compensation benefits for permanent 
disabilities immediately, whereas servicemembers cannot receive VA 
compensation benefits until they are released from service through 
separation or retirement. Nevertheless, because the PSOs' benefits are 
generally time limited, whereas military veterans can receive benefits 
for the remainder of life, our analysis shows that veterans often would 
receive a greater amount of compensation benefits over a lifetime, even 
when the monthly benefit payment is substantially lower and receipt of 
benefits is delayed for several years. 

With respect to our hypothetical scenarios, officials administering 
disability programs for servicemembers and PSOs told us that in most 
circumstances, an individual with tinnitus would not be found unfit for 
duty.[Footnote 33] In the military, no disability compensation would be 
paid until the servicemember is released from military service. Once 
released from service, however, a servicemember with tinnitus would be 
assigned a 10 percent disability rating, which corresponds to a VA 
compensation benefit amount of $108 per month based on rates effective 
in 2005. This benefit then would be provided for the remainder of life, 
adjusted annually. 

On the civilian side, according to the AMA Guides, up to 5 percent can 
be added to a disability rating for tinnitus in the presence of 
measurable hearing loss if it affects activities of daily living. Some 
program officials--such as from the U.S. Department of Labor and from 
California's Labor and Workforce Development Agency--indicated that 
they most likely would not provide any compensation for tinnitus alone. 
However, to compare benefits across programs, we asked program 
officials to assume that civilian PSOs with tinnitus are rated by 
physicians as having a 5 percent impairment due to hearing loss (which 
can be rated and compensated independently) and to calculate 
compensation benefits at a 5 percent level. 

Among the civilian PSOs we studied, an individual with a 5 percent 
impairment rating from a physician would receive compensation benefits 
for set periods of time ranging from 2.3 months (10 weeks) in Florida 
and New Jersey to 9.8 months (just over 42 weeks) for more senior 
California PSOs (that is, those age 55 with 32 years of service). 
Despite equal hypothetical salaries across programs, the payment 
amounts vary due to different formulas and caps. For example, 
compensation payments for PSOs with an annual salary of $85,000 ranged 
from $770 per month in New Jersey to $4,722 per month for those in 
federal law enforcement, based on payment rates effective in 
2005.[Footnote 34] In addition, unlike the payments for servicemembers, 
these payments would begin immediately upon the determination that the 
injury is permanent, even when the PSOs return to duty and receive 
their salaries at the same time. 

To compare the compensation benefits available to military veterans 
with the benefits available to the selected civilian PSOs, we 
calculated the present value of the lifetime payments that would be 
provided for tinnitus to five individuals with varying ages, lengths of 
service, and salary levels (see fig. 4). Because we are assuming the 
injury is not sufficient to prevent an individual from returning to 
duty, when the servicemember chooses to leave the military is an 
important factor in determining the lifetime present value of benefits 
for military personnel as VA compensation benefits would not be 
available until the servicemember is released from service. Therefore, 
in one scenario, we assume that the servicemember chooses to separate 
from service at the earliest opportunity.[Footnote 35] In a second 
scenario, we assume that the servicemember chooses to leave the 
military only after reaching 20 years of service. As illustrated in 
figure 4, in the first scenario, when leaving service at the earliest 
opportunity, military veterans receive more benefits over a lifetime 
than the selected civilian PSOs by a substantial margin due to the 
longer period of time they would receive benefits. In the second 
scenario, when leaving after 20 years of service, military veterans 
still receive more benefits than the PSOs, but by a smaller margin. 

Figure 4: Comparison of Present Value of Compensation Benefits over a 
Lifetime for Tinnitus: 

[See PDF for image] 

Note: Calculations for federal PSOs, and the selected state and local 
PSOs, are based on the assumption that tinnitus is rated by physicians 
as a 5% hearing impairment that can be rated and compensated 
independently. See app. IV for details on methods and table 10 for more 
detailed data for the selected state and local PSOs. 

[A] We assume that the servicemembers, though still fit for duty, 
choose to leave the military at the earliest opportunity. We assume 
that the servicemember with only 1 year of service must complete 2 
years of service before being able to choose to separate. For all 
others, we assume that the servicemembers' tours of duty are such that 
they can choose to separate immediately upon the determination of a 
permanent disability. 

[End of figure] 

When Unable to Return to Duty, Amount of Disability Benefits over a 
Lifetime for Military Veterans Is Sometimes More and Sometimes Less 
than the Amount of Benefits for the Selected PSOs: 

Due to the physical demands of military service, law enforcement, and 
firefighting, individuals in these occupations who sustain a permanent 
partial disability often are not able to return to duty in their 
previous positions. In such circumstances, disability retirement 
benefits may be provided in addition to compensation benefits. We found 
that when servicemembers and the civilian PSOs we reviewed are unable 
to return to duty due to a permanent partial disability, such as a leg 
amputation, the combined compensation and retirement benefits provided 
to military personnel over a lifetime are sometimes more, and sometimes 
less, than the combined benefits provided to the selected PSOs we 
reviewed. In addition, although servicemembers and PSOs who sustain a 
permanent partial disability may not be able to return to duty, they 
may still be able to be gainfully employed in another type of job. We 
found that disability retirement programs for servicemembers and most 
of the selected PSOs we reviewed require post-injury employment to be 
under a different retirement system, but most do not place any limits 
on the amount of post-retirement earnings. 

With respect to our hypothetical scenarios, officials administering 
disability programs for servicemembers and PSOs told us that in most 
circumstances, an individual with an amputated leg would be found unfit 
for duty. In the military, once found unfit, a leg amputated below the 
knee would be assigned a 40 percent disability rating, thus entitling a 
servicemember to DOD disability retirement benefits, and VA monthly 
compensation benefits of $466, plus $84 per month in special 
compensation for this type of injury, based on rates effective in 2005. 
Total VA compensation benefits of $550 per month, adjusted annually, 
would be provided for the remainder of life, in addition to disability 
retirement benefits, taking into account any applicable offsets. The 
added increment for military disability retirement benefits would vary 
based on the servicemember's salary and years of service. 

On the civilian side, according to the AMA Guides, a leg amputated 
below the knee less than 3 inches would be rated at 32 percent. Among 
the civilian PSOs we studied, a 32 percent impairment rating from a 
physician would correlate with compensation benefits being provided for 
set periods of time ranging from just under 22 months (just under 2 
years) for Texas PSOs, to 73.7 months (just over 6 years) for more 
senior California PSOs (that is, those age 55 with 32 years of 
service). Despite equal hypothetical salaries across programs, monthly 
compensation payment amounts would vary due to different formulas and 
caps, as was the case with tinnitus. In addition, most of the PSOs 
included in our study would be eligible for disability retirement 
benefits, except for Florida Highway Patrol Officers.[Footnote 36] The 
added increment for civilian disability retirement benefits varies 
based on the program's concurrent receipt provisions, and the PSO's 
age, length of service, and salary level. 

To compare the combined compensation and disability retirement benefits 
available to military veterans with the benefits available to the 
selected civilian PSOs, we calculated the present value of the combined 
payments that would be provided over a lifetime for a leg amputated 
below the knee to five individuals with varying ages, lengths of 
service, and salary levels, taking into account the relevant concurrent 
receipt and offset provisions. Although these individuals could not 
return to duty in their previous positions, we assumed that they secure 
employment with an alternative employer and earn 75 percent of their 
previous pay. As illustrated in figure 5, the combined benefits 
received over a lifetime for military veterans are more than the 
combined benefits for some of the selected PSOs, but less than others, 
in these circumstances. For example, Florida Highway Patrol Officers 
and Texas State Troopers generally would receive less combined benefits 
than comparable military veterans, whereas Indianapolis and Houston 
Firefighters generally would receive more combined benefits than 
comparable military veterans. (For detailed data for the selected state 
and local programs, see app. IV, table 11.) 

Figure 5: Comparison of Present Value of Combined Disability Benefits 
over a Lifetime for a Leg Amputation: 

[See PDF for image] 

Note: See app. IV for details on methods and table 11 for more detailed 
data for the selected state and local PSOs. 

[End of figure] 

A key factor affecting the combined benefits amounts illustrated above 
is whether or not the programs place restrictions on post-retirement 
employment and earnings. When servicemembers or civilian PSOs are 
unable to return to their previous positions due to permanent partial 
disabilities, they may still be capable of gainful employment in other 
positions or occupations. If disability retirement programs place 
restrictions on post-retirement employment and earnings, such 
restrictions can have an impact on an individual's benefit amounts and 
ability to earn future income. As shown in table 8, several programs we 
reviewed require post-injury employment to be under a different 
retirement system, but most do not place any limits on the amount of 
post-retirement earnings. Those that do limit earnings include programs 
for federal PSOs, and for state PSOs in California, Florida, Montana, 
and Texas. 

Table 8: Post-Retirement Employment and Earnings Restrictions on 
Receipt of Disability Retirement Benefits: 

[See PDF for image] 

Source: GAO analysis of program provisions. 

[A] Restrictions for military veterans include federal judgeships and 
certain types of employment with foreign governments. 

[B] In Florida, disability retirement benefits are available only for 
officers with total and permanent disabilities. 

[C] In California, an officer's earnings, when combined with disability 
retirement, are offset if they exceed 100% of maximum earnings of the 
pre-injury occupation. 

[D] Houston Firefighters receiving general disability benefits (for 
total disability) may not maintain any gainful employment. 

[End of table] 

Permanent Total Disability Benefits Are Greater over a Lifetime for 
Military Veterans or for Civilian PSOs, Depending on the Type of 
Impairment: 

When a permanent injury is severe enough to be deemed a total 
disability,[Footnote 37] military veterans may receive more or less 
benefits than civilian PSOs, depending on the type of impairment and 
individual circumstances. The military and civilian programs we 
reviewed provide various enhanced benefits for certain cases of 
permanent total disability, including increased disability compensation 
benefits, concurrent receipt of compensation and disability retirement 
benefits with no offset, or special lump-sum benefits for certain 
civilian PSOs. The amount of the combined benefits over a lifetime for 
military veterans and civilian PSOs with permanent total disabilities 
depends on the extent to which individuals qualify for these various 
enhanced benefits. 

Military Veterans and Civilian PSOs with Total Disabilities Have Access 
to a Range of Enhanced Benefits: 

In cases of permanent total disability, military veterans and the 
selected civilian PSOs we reviewed have access to a range of enhanced 
benefits. Depending on an individual's specific circumstances, these 
benefits may include higher disability compensation and retirement 
payments, a special lump-sum benefit for civilian PSOs only, or several 
other types of additional benefits, including SSDI. 

Disability compensation benefits for permanent total disability: 

Among the programs we reviewed that provide disability compensation 
benefits, all provide greater benefits for permanent total disability 
than for permanent partial disability.[Footnote 38] For military 
veterans, the monthly payment for total disability is increased 
substantially over the amounts available for partial disabilities. For 
instance, the $2,299 monthly payment in 2005 for a 100 percent 
disability rating is over $900 per month more than the payment for a 90 
percent disability rating (see earlier table 2). In addition, VA 
provides an enhanced set of compensation payments for certain severe 
injuries above and beyond the compensation provided for permanent total 
disability with a 100 percent rating. These higher special monthly 
compensation (SMC) payments are for military veterans who sustain 
particularly severe injuries, such as amputations, blindness, or other 
loss of use of organs and extremities. As described in table 9, the SMC 
rates are designed to account for attendant care or other special needs 
deriving from the disability. 

Table 9: Basic Total and SMC Rates for VA Disability in 2005: 

Basic Total Disability Compensation Rate: Disability rating: 100%; 
Monthly payment: $2,299. 

SMC Rate Category Description: SMC-L: Loss of use of more than one 
extremity (hand or foot), blindness, permanently bedridden, or in need 
of regular aid and attendance; 
Monthly payment: $2,860. 

SMC Rate Category Description: SMC-M: Loss of use of extremities (hand 
or foot) with complications, or more severe blindness, rendering need 
for regular aid and attendance; 
Monthly payment: $3,155. 

SMC Rate Category Description: SMC-N: Loss of use of extremities (arms 
or legs) and unable to use prostheses, or even more severe blindness; 
Monthly payment: $3,590. 

SMC Rate Category Description: SMC-O/P: More severe injuries, or 
multiple injuries each entitled to special compensation; 
Monthly payment: $4,012. 

SMC Rate Category Description: SMC-R.1: Any injury entitled to special 
compensation in categories SMC- N or SMC-O/P and in need of regular aid 
and attendance; 
Monthly payment: $5,734. 

SMC Rate Category Description: SMC-R.2: Any injury entitled to special 
compensation in categories SMC- N or SMC-O/P and in need of a higher 
level of care; 
Monthly payment: $6,576. 

SMC Rate Category Description: SMC-S: Multiple injuries, one rated at 
100% plus another rated at 60% or more, or injuries causing the veteran 
to be permanently housebound; 
Monthly payment: $2,573. 

Source: Department of Veterans Affairs. 

Note: Plus, SMC-K provides for an added $84 for each loss due to 
certain types of injuries (such as anatomical loss of use of certain 
organs or extremities), up to a total maximum monthly payment of 
$4,012, not including dependents. Added increments are also provided 
for each dependent if the disability is rated 30% or more (with the 
amount of the increment varying by level of injury and type of 
dependent). 

[End of table] 

For civilian PSOs, the monthly payment amounts for total disability are 
generally the same as for permanent partial disability, but are 
provided for life rather than for a limited time period.[Footnote 39] 
Civilian payment rates are not increased to account for attendant care; 
however, federal PSOs may be eligible for an additional attendant 
allowance--up to $1,500 per month during 2005--if such care is needed. 
This amount is not incorporated into the compensation payment, but 
rather is provided separately to the care provider. Among the state and 
local programs we reviewed, it is possible that attendant care costs 
may be covered as a medical expense, but state and local statutes and 
program rules do not address such costs specifically. 

Disability retirement benefits for permanent total disability: 

In addition to disability compensation, military veterans and nearly 
all the selected civilian PSOs we reviewed have access to disability 
retirement benefits for permanent total disability (see earlier table 6 
for disability retirement benefit formulas).[Footnote 40] Military 
veterans who retire due to permanent total disability may receive 
enhanced benefits compared with veterans who retire due to permanent 
partial disabilities rated at 70 percent or less, but payments are the 
same as those with partial disabilities rated at 80 percent or more 
because DOD disability retirement payments are capped at 75 percent of 
the individual's basic pay. 

Most of the disability retirement programs for the civilian PSOs we 
reviewed do not offer enhanced disability retirement benefits due to 
permanent total disabilities, but there are some exceptions. For 
example, Florida Highway Patrol Officers may retire on disability only 
if they are unable to perform any gainful employment. Thus, for Florida 
Highway Patrol Officers, disability retirement is itself an enhanced 
benefit, provided only to those with permanent total disabilities. 
Other examples include state police officers in Indiana and Texas, who 
can receive an enhanced disability retirement payments if they have 
permanent total disabilities: 100 percent of monthly salary in certain 
cases of total disability, compared with 50 percent in most cases of 
partial disability.[Footnote 41] In addition, disability retirement 
benefits for firefighters in Indianapolis and Los Angeles are based in 
part on the degree of impairment; therefore, those with permanent total 
disabilities may receive higher disability retirement benefits than 
those with partial disabilities. 

Concurrent receipt provisions for permanent total disability: 

The provisions for concurrent receipt of disability compensation and 
disability retirement benefits in cases of permanent total disabilities 
are similar to the provisions in cases of permanent partial 
disabilities (see earlier table 7). As with partial disabilities, most 
military veterans have their DOD disability retirement reduced (offset) 
dollar-for-dollar by the amount of their VA compensation, except those 
with 20 years or more of service. However, as of January 1, 2005, those 
with a 100 percent disability rating were allowed concurrent receipt of 
both benefits with no offset immediately, whereas those with 20 years 
or more of service and disability ratings between 50 and 90 percent are 
having this offset phased out over a 10-year period.[Footnote 42] 

On the civilian side, disability compensation programs for federal 
PSOs, Montana Highway Patrol, and Billings Firefighters include 
provisions that specify that total disability benefits--like wage loss 
benefits--cannot be received concurrently with disability retirement 
benefits. These PSOs must choose which type of benefit to receive. 
Provisions for concurrent receipt for Florida Highway Patrol, who must 
have a total disability to be eligible to receive disability 
retirement, are similar to the provisions for Miami Firefighters: an 
offset comes into effect only if the total combined benefits exceed the 
amount of the PSO's pre-injury salary. 

Public Safety Officers' Benefits Program: 

Civilian PSOs with permanent and total disabilities also may be 
eligible to receive a certain lump-sum benefit that is not available to 
military veterans. The Public Safety Officers' Benefits Program, 
administered by the Bureau of Justice Assistance in the Department of 
Justice, provides a lump-sum benefit to PSOs at the federal, state, and 
local levels who incur total permanent disabilities in the line of 
duty. Qualifying recipients of the disability benefit must have a 
catastrophic injury, defined as the consequence of an injury that 
permanently prevents an individual from performing any gainful 
work.[Footnote 43] The disability benefit program was established in 
1990 and provides the same cash benefit that a previously-established 
death benefit program provides to the survivors of public safety 
officers killed in the line of duty. During fiscal year 2005, the 
benefit amount was set at $275,658.[Footnote 44] PSOs can receive these 
benefits concurrently with most other benefits with no offset. From 
October 2002 through June 2005, the Bureau of Justice Assistance had 
paid disability benefits to 41 PSOs nationwide. 

Social Security Disability Insurance: 

Another benefit that is available to military veterans and federal PSOs 
with permanent total disabilities, and to some of the selected state 
and local PSOs we reviewed, is Social Security Disability Insurance 
(SSDI).[Footnote 45] SSDI benefits are available to individuals who 
incur a physical or mental impairment that prevents them from 
performing substantial gainful activity and that is expected to last at 
least 1 year or to result in death. The benefit is based on the 
employee's earnings history and lifetime contributions to Social 
Security; therefore the benefit amount varies widely among 
individuals.[Footnote 46] Military veterans and federal PSOs pay into 
Social Security and thus may be eligible to receive SSDI benefits. 
State and local PSOs are eligible to receive SSDI benefits if they 
contribute to Social Security; however, many state and local PSOs do 
not participate in the program.[Footnote 47] Of the selected state and 
local PSOs we reviewed, only Florida Highway Patrol and Texas State 
Troopers pay into Social Security. 

In general, under federal law, public disability benefits, such as 
workers' compensation and disability retirement provided through a 
public retirement system, cannot exceed 80 percent of the pre-injury 
wage when combined with SSDI. When workers' compensation benefits are 
received in addition to SSDI and the combined benefit exceeds 80 
percent of the pre-injury wage, one of the benefits is offset. In most 
states the Social Security Administration reduces the SSDI benefit to 
adhere to the 80-percent limit, while in 14 states the workers' 
compensation benefit may be reduced instead of the SSDI benefit. 
However, when disability retirement benefits are received from federal, 
state, or local government employment in which the employee contributed 
to Social Security, the Social Security Administration does not reduce 
the SSDI benefit to adhere to the 80-percent limit. Nevertheless, the 
retirement programs may opt to reduce the disability retirement benefit 
in such cases. 

Among the programs included in our study, we found that military 
veterans may receive SSDI benefits with no reduction to their VA 
compensation and military disability retirement benefits. Federal PSOs, 
however, have their disability retirement payment reduced when 
receiving SSDI benefits.[Footnote 48] At the state and local level, 
Florida is 1 of the 14 states where workers' compensation benefits may 
be reduced for recipients of SSDI. According to agency officials in 
Florida, workers' compensation benefits are reduced by SSDI if total 
benefits (including workers' compensation, disability retirement, and 
SSDI) exceed 100 percent of the pre-injury average weekly wage. In 
Texas, the SSDI benefit is reduced for those receiving workers' 
compensation benefits, but Texas State Troopers may receive both 
disability retirement and SSDI benefits concurrently with no offset. 

Additional benefits for permanent total disability: 

Finally, there are a number of additional benefits that may be 
available in cases of permanent total disabilities. One such benefit is 
additional compensation for dependents. For example, military veterans 
can receive an added increment to their VA compensation benefit for 
each dependent, and the amount is slightly larger for total 
disabilities than for partial disabilities.[Footnote 49] In 2005, for 
instance, military veterans with a 100 percent disability receive $224 
more for a dependent spouse and one child than if they were single; in 
contrast, military veterans with a 90 percent disability receive $201 
more per month for a dependent spouse and child.[Footnote 50] (Of the 
civilian PSOs we reviewed, federal PSOs and Indiana State Police also 
receive additional benefits for dependents, but they receive the same 
increment for both permanent partial and permanent total 
disability.[Footnote 51]): 

Another additional benefit is educational assistance. Both military 
veterans and civilian PSOs may receive educational benefits for their 
families in cases of total disability. For veterans, the military 
offers a monthly payment for spouse and dependent education, up to $803 
during 2005. For civilian PSOs, the Public Safety Officers' Benefits 
Program also offers a need-based educational benefit to spouses and 
children of recipients, up to $803 per month during fiscal year 2005. 
In addition, California and Indiana provide a tuition-free higher 
education for dependents of PSOs with permanent total disabilities. 

Other additional benefits that military veterans with certain types of 
severe disabilities may be eligible for include VA grants up to $50,000 
for adapting existing housing or purchasing a new home, and grants up 
to $11,000 for modifying a vehicle. Military veterans with a total 
disability rating also are eligible for a waiver of the premium on 
their life insurance costs, up to $10,000. Federal PSOs may be entitled 
to house or vehicle modifications in some cases, but fewer of these 
kinds of benefits are specified for the selected state and local 
civilian PSOs we reviewed. For example, in Texas, according to agency 
officials, the workers' compensation program at the state and local 
level permits modifications to housing if a line-of-duty injury 
requires it. In Montana, by contrast, agency officials told us that 
under state law, housing modifications are not covered by workers' 
compensation benefits. In most civilian programs we reviewed, statutes 
and program rules did not specify such additional benefits. 

Military Veterans with Certain Types of Impairments Receive Greater 
Benefits for Permanent Total Disability over a Lifetime than Most of 
the Selected PSOs: 

When military veterans and civilian PSOs incur injuries that are 
permanently and totally disabling, they may receive monthly disability 
compensation and retirement benefits, and, for civilian PSOs, a lump- 
sum benefit. Our analysis showed that, when veterans with total 
disabilities are receiving the highest VA SMC rates due to the type of 
their impairment, the present value of combined benefits provided over 
their lifetimes is higher than the combined benefits for most civilian 
PSOs. However, many military veterans who are rated as having permanent 
and total disabilities (that is, with a 100 percent disability rating) 
do not receive SMC. Of veterans receiving VA compensation for total 
disability in 2004, 86 percent received payments based on the basic 
monthly compensation rate and 14 percent received payments based on a 
higher SMC rate. When veterans are receiving the basic VA compensation 
for a 100 percent disability rating, the amount of benefits received 
over a lifetime is lower than some of the selected civilian PSOs' 
benefits due to the additional lump-sum benefit available to civilian 
PSOs and the varying provisions for concurrent receipt of benefits. 

With respect to our hypothetical scenarios, officials administering 
programs for military veterans and PSOs told us that in most 
circumstances, quadriplegia would be considered a permanent total 
disability, and that an individual with this impairment would receive 
both permanent total disability compensation benefits and disability 
retirement benefits. Military officials told us that military veterans 
with quadriplegia would qualify for the highest VA special compensation 
rate (SMC-R.2--$6,576 per month in 2005, see earlier table 9) in 
addition to DOD disability retirement benefits. Agency officials in the 
Department of Justice told us that most civilian PSOs in this situation 
would be eligible for the lump-sum benefit under the Public Safety 
Officers' Benefits Program. Federal PSOs would also be eligible for up 
to an additional $1,500 per month for attendant costs that would be 
paid directly to the care provider. 

To compare the different benefit streams for quadriplegia available to 
military veterans and the selected civilian PSOs, we calculated the 
present value of combined payments that would be provided to 
individuals over a lifetime in five scenarios of varied ages, lengths 
of service, and salary levels. These calculations include the combined 
amount of disability compensation and disability retirement payments, 
taking into account the relevant concurrent receipt and offset 
provisions, as well as any lump-sum payments that may be 
available.[Footnote 52] For military veterans, we calculated benefits 
with special compensation, and for federal PSOs, we calculated benefits 
with the $1,500 attendant allowance.[Footnote 53] As illustrated in 
figure 6, military veterans with quadriplegia are eligible for SMC, and 
therefore receive a higher present value of combined payments over a 
lifetime than most of the civilian PSOs we reviewed. Only for the 
hypothetical individual age 35, with 12 years of service and a salary 
of $60,000, do federal PSOs and selected PSOs in California, Texas, and 
Houston receive more benefits than their military counterparts with the 
same age, years of service, and salary level. When incurring a total 
disability at this point in their careers, the present value of 
military veterans' benefits dips because they would not receive 
benefits as long as would younger servicemembers, and do not have 
enough years of service to qualify for concurrent receipt of benefits 
with no offset. 

Figure 6: Comparison of Present Values of Combined Disability Benefits 
over a Lifetime for Quadriplegia and Other Permanent Total 
Disabilities: 

[See PDF for image] 

Note: See app. IV for details on methods and table 12 for more detailed 
data for the selected state and local PSOs. 

[A] Benefits are calculated using VA's highest SMC rate ($6,576 in 
2005). 

[B] Includes $1,500 per month for attendant costs. Benefits are 
calculated using FECA's schedule awards for loss of use of all four 
limbs. 

[C] Benefits are calculated using VA's basic compensation rate for a 
100% disability rating ($2,299 in 2005). 

[D] Does not include $1,500 per month for attendant costs. Benefits are 
calculated using FECA total disability benefits. 

[End of figure] 

We also calculated the benefit streams for permanent total disabilities 
for military veterans without special compensation, and for federal 
PSOs without the $1,500 per month allowance for attendant costs. As 
illustrated in figure 6, when military veterans receive the basic VA 
compensation rate for a 100 percent disability rating (set at $2,299 
per month in 2005), as would be expected, the present value of the 
combined benefits over a lifetime is lower than the present value of 
benefits for veterans who qualify for the higher SMC rates. For the 
hypothetical veterans with fewer than 10 years of service, the amount 
of combined benefits over a lifetime is lower by more than half. 

Compared with the benefit packages provided civilian PSOs with 
permanent total disabilities, military veterans receiving payments 
based on the basic VA compensation rate for a 100 percent disability 
rating would receive benefits over a lifetime that are greater than for 
some of the selected PSOs, but less than for others. Five factors 
account for the higher present value of the civilian benefit packages 
in some cases: 

* The lump-sum benefit that is available only to civilian PSOs. 

* The calculation of compensation payments for PSOs based on salary, as 
opposed to the calculation of VA compensation for military veterans 
based on the degree of injury, which can result in civilian PSOs with 
high salaries receiving higher compensation payments than their 
military counterparts with the same salary for the same 
injury.[Footnote 54] 

* The enhanced disability retirement benefits provided for permanent 
total disability for some PSOs, including Indiana State Police, and 
Indianapolis and Los Angeles Firefighters. 

* The 75 percent cap on military disability retirement payments that is 
more restrictive than the caps placed on payments by several of the 
PSOs' disability retirement programs.[Footnote 55] 

* Provisions allowing the concurrent receipt of disability retirement 
and compensation payments with no offset for some PSOs, but not for 
their military counterparts of the same age and years of service. 

Concurrent receipt provisions are particularly important in determining 
the benefits received over a lifetime. For example, California Highway 
Patrol, Texas State Troopers, and Houston Firefighters all may receive 
both compensation and disability retirement payments concurrently, with 
no offset. The present value of benefits received over a lifetime for 
these three groups is higher than for military veterans who are 
receiving basic VA compensation for a 100 percent disability rating. In 
addition, Florida State Police and Miami Firefighters may receive 
benefits concurrently with no offset up to 100 percent of the pre- 
injury wage, and this contributes in some circumstances to greater 
benefits for these two groups than for military veterans. 

Concluding Observations: 

Neither military personnel, nor any of the civilian PSOs we reviewed, 
consistently have more line-of-duty disability benefits available to 
them in all situations. Rather, our analysis illustrates the variation 
in benefit packages across programs, depending on specific program 
provisions and individual circumstances. In some situations, military 
benefits are greater; in other situations, one or more of the selected 
PSOs' benefits are greater. Provisions that govern continuation of pay 
and temporary disability benefits for servicemembers offer certain 
advantages. But provisions that govern permanent partial disability 
benefits sometimes result in more benefits over a lifetime for military 
personnel, and at other times for the selected civilian PSOs, depending 
on such factors as the type and degree of impairment, and whether the 
impairment prevents the individual from returning to duty. Similarly, 
provisions that govern permanent total disability benefits can result 
in greater benefits for PSOs in some circumstances, and for military 
veterans in others, such as when veterans qualify for special 
compensation. 

The ongoing efforts to assess disability benefits may lead Congress and 
other policymakers to consider modifying disability programs. We are 
not taking a position on how disability benefits should be modified. 
However, we believe that any deliberations on this topic should include 
an examination of how such changes would affect ensuring adequate and 
appropriate benefits for those who serve our country, as well as the 
long-term fiscal well-being of our nation. 

Agency Comments: 

We provided a draft of this report to the Departments of Defense, 
Labor, Justice, and VA; the Social Security Administration; and the 
Office of Personnel Management. All comments received were technical in 
nature and were incorporated as appropriate. 

We are sending copies of this report to relevant congressional 
committees, the Secretary of Defense, the Secretary of Veterans 
Affairs, and other interested parties. The report will also be 
available on GAO's Web site at http://www.gao.gov. If you or your staff 
have any questions regarding this report, please contact me at (202) 
512-7215. Contact points for our Offices of Congressional Relations and 
Public Affairs may be found on the last page of this report. Staff 
acknowledgments are listed in appendix IX. 

Signed by: 

Cristina T. Chaplain: 
Acting Director, Education, Workforce, and Income Security Issues: 

List of Congressional Committees: 

The Honorable John Warner: 
Chairman: 
The Honorable Carl Levin: 
Ranking Minority Member: 
Committee on Armed Services: 
United States Senate: 

The Honorable Larry E. Craig: 
Chairman: 
The Honorable Daniel K. Akaka: 
Ranking Minority Member: 
Committee on Veterans' Affairs: 
United States Senate: 

The Honorable Duncan L. Hunter: 
Chairman: 
The Honorable Ike Skelton: 
Ranking Minority Member: 
Committee on Armed Services: 
House of Representatives: 

The Honorable Steve Buyer: 
Chairman: 
The Honorable Lane Evans: 
Ranking Minority Member: 
Committee on Veterans' Affairs: 
House of Representatives: 

[End of section] 

Appendix I: Disability Compensation Benefit Programs: 

[See PDF for image] 

Source: GAO analysis based on statutes, regulations, program policies, 
and interviews with program officials. 

Military personnel: 

[A] Groups considered to be covered in this definition include Coast 
Guard and Public Health Officers, among others. 

[B] An alternative program, VA Disability Pension, is available for 
veterans of wartime service with low-incomes, and permanent and total 
disabilities, but whose disabilities are not service-connected. 
Payments under this program generally are lower than the compensation 
payable for service-connected disabilities. Veterans cannot receive 
benefits from both programs simultaneously. 

[C] Veterans may be eligible for benefits if released from service only 
on a temporary basis, as when receiving temporary disability retirement 
benefits. See app. II, military personnel, for more details. 

[D] Except when the veteran's compensation is based on an inability to 
secure employment due to a service-connected disability. In such cases, 
earnings may suggest a return to employment and might result in a 
reduction in the compensation payment. 

[E] See app. II, military personnel, for exceptions to the offset 
requirements. 

Federal PSOs: 

[A] There may be deviations from the 28-day cycle in certain 
circumstances. 

[B] When totally disabled due to a traumatic injury, an injured 
employee may receive continuation of pay for a period of up to 45 
calendar days. OWCP considers continuation of pay to be regular pay, 
not workers' compensation, and the salary is subject to the usual taxes 
and payroll deductions. Continuation of pay can run consecutively or 
intermittently. 

[C] Currently, the GS-15, step 10, pay level is $116,517. This maximum 
does not apply to any employee whose disability is a result of an 
assault that occurs during an assassination or attempted assassination 
of a federal official. 

Selected state and local PSOs: 

California: 

[A] State and local safety workers injured in the line of duty are 
entitled, regardless of length of service, to 1 year's leave of absence 
without loss of salary, tax-exempt. 

[B] For most injuries, receipt of temporary disability benefits is 
limited to 104 weeks (2 years). However, benefit receipt can be 
extended for up to 240 weeks over 5 years for hepatitis, amputations, 
severe burns, HIV, high velocity eye injuries, chemical burns to the 
eyes, pulmonary fibrosis, and chronic lung disease. 

[C] For state and local safety workers, the maximum allowable amount of 
average weekly earnings is always used in the calculation, regardless 
of actual earnings. For other non-safety workers, the calculation is 
based on the employee's average weekly earnings prior to injury (up to 
the maximum). 

[D] The disability rating is based on the nature of the physical injury 
or disfigurement, then adjusted based on the employee's occupation, age 
at time of injury, and diminished future earning capacity. 

[E] Vocational rehabilitation services were eliminated effective 
January 1, 2004, and replaced with this job displacement benefit, which 
provides a voucher for training ranging from $4,000 to $10,000 based on 
the employee's level of injury. 

[F] The temporary disability payment rate is adjusted periodically by 
the state legislature to reflect salary increases. Beginning January1, 
2006, the maximum temporary disability payment rate will be adjusted 
annually to reflect the percentage increase in the state average weekly 
wage (or remain at $1,260, whichever is greater). However, an 
individual's payment, once determined, generally does not change. An 
employee must receive temporary disability benefits for 2 years before 
being eligible to have their payment adjusted; therefore, only those 
qualifying for extended benefits (see endnote a above) would be 
eligible for such an increase. Similarly, an individual's permanent 
disability payment, once determined, does not change, except for life 
pensions. 

[G] If no offer of comparable work from previous employer, benefits are 
increased 15% after 60 days. 

Florida: 

[A] Law enforcement officials are covered if they are discharging 
duties under the aegis of the state and in circumstances consistent 
with their responsibilities. 

[B] Members of the special risk class include certain law enforcement 
officers, firefighters, and correctional officers. 

[C] Certain law enforcement officers, including Highway Patrol 
Officers, are eligible to continue in full-pay status if they sustain a 
malicious injury caused by another person. According to officials, 
officers are eligible to receive full pay for up to 2 years. There are 
also provisions for disability leave with full pay, at the employer's 
discretion. Under their collective bargaining agreement, Miami 
Firefighters can receive continuation of pay for up to 210 days, 
depending on the seriousness of the injuries. The clock on these 
benefits runs concurrently with workers' compensation temporary 
disability benefits. 

[D] Average weekly wage is calculated based on the 13 weeks prior to 
the injury. 

[E] Benefits are provided according to the following schedule: 2 weeks 
for each percentage point of disability from 1 to 10%; 3 weeks for each 
percentage point of disability from 11 to 15%; 4 weeks for each 
percentage point of disability from 16 to 20% and 6 weeks for each 
percentage point of disability from 21% and higher. According to agency 
officials, most employees would not receive benefits for the maximum 
length of time. (This schedule is established separately by the state 
of Florida, and incorporates, but expands upon, the AMA Guides.) 

[F] The supplements cease unless the employee is not eligible for 
Social Security benefits (in which case the supplements continue), or 
unless the injury occurred after the age of 70 (in which case benefits 
are payable for a maximum of 5 years after the determination of 
permanent total disability). Florida State Highway Patrol Officers pay 
into Social Security, while Miami Firefighters do not. 

[G] Permanent total disability supplements together with permanent 
total disability may not exceed the statewide average weekly wage. 

[H] For each week that the employee earns income equal to or greater 
than his or her average weekly wage, permanent impairment benefits are 
payable at 37.5% of the average weekly temporary total disability 
benefits. 

[I] There is no offset with permanent impairment benefits. 

Indiana: 

[A] In Indiana, state statutes allow some public employers to opt out 
of the state's workers' compensation program, and we found that both 
the Indiana State Police and the Indianapolis Fire Department had opted 
to provide disability benefits only from their pension funds. 

Montana: 

[A] Montana Highway Patrol Officers and Billings Firefighters have 
continuation of pay for up to 1 year. An official told us this policy 
was flexible with respect to Highway Patrol Officers and that 
extensions can be granted. The clock on these benefits runs 
concurrently with workers' compensation temporary disability benefits. 

[B] Age, education, and manual versus sedentary labor are the other 
factors. 

[C] Or until eligible for either Social Security retirement benefits or 
benefits from an alternative system to Social Security. However, 
Montana Highway Patrol Officers and Billings Firefighters do not pay 
into Social Security, and program officials advised us that there is no 
case law defining an alternative to Social Security. 

New Jersey: 

[A] According to officials from the New Jersey State Police, Division 
of Human Resource, and the Newark Fire Department, there is no 
provision for continuation of pay for State Police Officers or Newark 
Firefighters. However, State Police Officers may take sick leave until 
they are able to return to duty or retire, generally for a maximum of 1 
year, but longer if it appears they will be able to return to duty with 
more time. Newark Firefighters may take up to a year of sick leave for 
any injury (either work-related or non-work-related) that prevents them 
from working. 

[B] A "scheduled" loss is one involving arms, hands, fingers, legs, 
feet, toes, eyes, ears, or teeth. A "non-scheduled" loss is one 
involving any area or system of the body not specifically identified in 
the schedule, such as the back, the heart, or the lungs. 

[C] An additional amount of 30% of the award is added as a lump-sum 
payment for individuals with an amputation of a body member. 

[D] However, workers whose total disabilities occurred prior to 1980 
are entitled to a special adjustment. 

[E] If an injured employee participates in physical or educational 
rehabilitation as ordered, and can show that because of the disability 
it is impossible to obtain wages or earnings equal to those earned at 
the time of the accident, further weekly payments can be made, minus 
the amount the employee is able to earn compared with the wages 
received at the time of injury. If the employee's wages or earnings 
equal or exceed wages received at the time of injury, then the 
compensation rate is reduced to $5.00. 

[F] According to a program officials, if a government worker in New 
Jersey has an accidental disability pension (that is, covering only 
work-related injuries), the pension plan would take the offset. If the 
government worker has an ordinary disability pension (that is, covering 
non-work-related injuries), workers' compensation would take the 
offset. However, the additional lump-sum amount for amputation of a 
body member is not subject to offsets. 

Texas: 

[A] Effective June 17, 2005, a new state law (HB 1428) allows law 
enforcement officers, including State Troopers, injured in the line of 
duty as a result of an "assaultive" offense to receive up to 1 year of 
leave without a reduction in salary before collecting workers' 
compensation benefits. Municipal firefighters injured in the line of 
duty can receive full pay for 1 year, with an extension at the 
discretion of the local governing body. According to officials, the 
Houston City Council can extend this leave up to 2 years in total, with 
proper medical documentation and a clear expectation of the firefighter 
returning to work. 

[B] The average weekly wage equals 13 weeks' pre-injury salary divided 
by 13. 

[C] According to officials, benefit levels are set according to the law 
in effect at the date of injury, and historically do not change for 
those already receiving benefits at the time of a change in the law, 
except for those receiving lifetime income benefits. 

[End of table] 

[End of section] 

Appendix II: Disability Retirement Benefits Programs: 

[See PDF for image] 

Source: GAO analysis based on statutes, regulations, program policies, 
and interviews with program officials. 

Military personnel: 

[A] Injured members continue to draw their regular salary while 
undergoing fitness evaluation until they return to duty or are released 
from service. (Release from service may be due to separation, 
retirement, or placement on the temporary disability retirement list.) 
According to DOD instructions, referral for evaluation shall occur 
within 1 year, but there is no binding time limit for the end of 
continuation of pay. Pay received during this time is taxable, the same 
as pay received pre-injury. Under temporary disability retirement, 
recurring monthly payments are available in situations following the 
period of continuation of pay if the member is still unfit for duty, 
but the disability is not determined to be of a permanent nature and 
stable. Qualifications and payment amounts are the same as for 
permanent disability retirement, except that the minimum payment is 50% 
of basic pay or of the high 3-year average, whichever is applicable. 
Disability can be considered temporary for up to 5 years maximum. After 
5 years, the member must be: (1) placed either on the permanent 
disability retirement list or 20-year (normal service) retirement list; 
(2) separated with disability severance; or (3) returned to active duty 
or reserve service. During temporary disability retirement, the member 
is treated the same as a regular retiree. On the one hand, housing 
benefits are no longer provided, and the time does not count toward a 
regular service retirement. On the other hand, the member is eligible 
to receive VA service-connected compensation benefits (with offset to 
the temporary disability retirement payment, as appropriate). The 
servicemember is subject to medical examination at least once every 18 
months. 

[B] Generally, servicemembers must have 8 years of active service prior 
to the date of disability separation or retirement for any disability 
associated with a pre-existing condition to be covered. 

[C] This applies to servicemembers on active duty for more than 30 
days, and servicemembers on active duty for 30 days or less and reserve 
component members performing inactive-duty training or funeral honors 
duty, with some restrictions. Those who do not meet these requirements 
may be eligible for disability severance: a lump-sum payment for 
servicemembers who have at least 6 months of service and are found 
unfit for duty, but who have fewer than 20 years of service and whose 
disability is rated less than 30%. (According to DOD officials, both 
inactive duty and active duty service can count toward the 6-month 
requirement, the same as computed for entitlement to retirement pay.) 
Disability severance is calculated based on the highest monthly basic 
pay the member would have been entitled to by law, times twice the 
number of years of service (up to 12), or in the case of a reserve 
component member, the equivalent number of years creditable toward a 
reserve retirement. 

[D] For servicemembers with a date of initial entry into military 
service on or after September 8, 1980, the high-3 average of basic pay 
is used in the computation. For reserve component members, it is the 
average of the last 36 months of basic pay as though the member were on 
full-time active duty. 

[E] Only the amount of payment calculated based on basic pay and 
disability rating is tax-exempt. If the actual payment received is 
greater because it is calculated based on length of service, then the 
portion of the payment in excess of the basic pay and disability rating 
calculation is taxable. 

[F] See app. I, military personnel, for details on this program. 

[G] Including reserve retirees eligible to receive retired pay. 

[H] The phase out is taking place over a 10-year period, beginning on 
January 1, 2004, under a program entitled Concurrent Retirement and 
Disability Payments. 

[I] To qualify for this exception to the offset, currently veterans 
cannot be receiving compensation at the 100% disability level due to 
unemployability. However, in 2006, legislation was enacted authorizing 
these veterans to qualify for the exception to the offset as well, 
beginning in fiscal year 2010. 

[J] This benefit, called Combat-Related Special Compensation, is 
provided to servicemembers who have a disability incurred as a direct 
result of armed conflict, especially hazardous service, training 
exercises that simulate war, or caused by an instrumentality of war. 
Servicemembers must have 20 years or more of service (that is, be 
eligible for normal retirement); if part of the reserve component, 
members must be age 60 and have 20 qualifying years of service (that 
is, be eligible for reserve retirement). 

Federal PSOs: 

[A] Unless hired before 1984 and opting to remain under the Civil 
Service Retirement System. FERS generally covers all federal employees 
hired on or after January 1, 1984. 

[B] The disabling injury must be expected to continue for at least 1 
year from the date the application for disability retirement is filed, 
accommodation of the disabling medical condition in the position held 
must be unreasonable, and the individual must not have declined an 
offer of reassignment to a vacant position. 

[C] Average high-3 salary is the average of the greatest 3 consecutive 
years of earned wages in creditable service. If the employee did not 
work for 3 years, the average salary for the total period of creditable 
service is applied. 

[D] If the PSO chooses to take normal voluntary retirement, instead of 
disability retirement, the retirement benefit is calculated the same 
way, but a special retirement supplement is also provided until age 62 
that approximates the Social Security benefit earned in federal 
service. After the PSO reaches the minimum retirement age, if earnings 
from wages or self-employment exceed the Social Security annual exempt 
amount, the supplement will be reduced or stopped. 

[E] The COLA is equal to the Consumer Price Index increase when the 
index increase is between 0 and 2%; the COLA increase is 2% if the 
index increase is between 2 and 3%; the COLA increase is equal to the 
index increase less 1% when the index increase is greater than 3%. The 
COLA does not apply to disability retirees receiving benefits equal to 
60% of their average high-3 salary (that is, in the first year of 
benefit receipt). Those taking disability retirement after normal 
retirement age would begin to receive the COLA immediately. 

[F] The Office of Personnel Management considers income from self- 
employment and earned wages only. 

Selected state PSOs: 

California: 

[A] This benefit is for work-related injuries only. A separate 
disability retirement benefit exists for non-work-related injuries. 

[B] Most non-safety workers only have access to disability retirement 
(not industrial disability retirement) and must have 5 or 10 years of 
service to qualify, depending on the specific provisions relevant to 
the plan for that occupation. 

[C] However, industrial disability retirement payments can be received 
with earnings for up to 960 hours annually, with no limitation or 
offset, if the individual is appointed during an emergency or to 
provide specialized work for a limited duration. 

Florida: 

[A] Members who have previously retired under the normal retirement 
provisions, or who have participated in the Deferred Retirement Option 
Plan, are not eligible for disability benefits. 

[B] Based on the highest 5 years under the Florida Retirement System. 

[C] Members of the special risk class, which includes State Highway 
Patrol Officers, must be age 55 (or age 52 with 25 years of creditable 
special risk service) to retire without having benefits reduced for not 
yet being normal retirement age. 

Indiana: 

[A] The Pension Trust Agreement has two systems: one covers employees 
hired prior to July 1, 1987; the second covers employees hired on or 
after July 1, 1987, and after, or employees hired before July 1, 1987, 
who have elected to receive coverage under the second system. This 
appendix describes the benefits available for employees under the 
second, post-1987 benefit system. 

[B] According to a program manager, officers with line-of-duty 
disabilities are provided sick pay for 365 days, in addition to their 
sick leave normally accrued. 

[C] In cases of permanent and total disability by catastrophic injury, 
an officer's dependents may also attend a state higher education 
institution at no cost. 

[D] If more than 25 years of service, then additional monthly 
retirement benefits are provided as follows: 5% of the basic pension 
amount for each additional year up to 28; plus 6% for each additional 
year up to 30; plus 7% for each additional year up to 32; plus 8% for 
each additional year up to 34, up to a maximum of 78.5% of the average 
monthly salary. 

[E] If the officer has more than 25 years of service at the time of 
retirement, the officer's normal retirement benefits would include 
additional benefits with a higher cap, as noted above. 

New Jersey: 

[A] Multiple types of retirement benefits are available, depending on 
the circumstances. Accidental disability benefits are provided for line-
of-duty injuries caused by a traumatic event. The benefits provided for 
accidental disability are greater than those provided for ordinary (non-
line-of-duty) disability. 

[B] The amount of the adjustment equals 60% of the percentage of change 
between the average Consumer Price Index for the year in which the 
person retired and the average Consumer Price Index for the 12-month 
period ending August 31, immediately preceding the year the adjustment 
is payable. 

[C] The lump-sum compensation payments provided in cases of amputations 
are excluded from this provision and may be received with no offset. 

Texas: 

[A] Program officials noted that no COLAs have been granted for the 
past 3 years, nor are any projected for the next 3 to 5 years. 

[B] Program officials told us that even if an individual is working and 
earning less than the pre-injury wage, disability retirement benefits 
may still be withheld if it is determined that the individual is 
capable--based on training, education, and experience--of earning 
comparable pay to the pre-injury wage. 

Selected local PSOs: 

Los Angeles: 

[A] This summary covers members of Tier 5, which applies, according to 
program officials, to most of the currently-employed firefighters. 
However, some firefighters are covered under other tiers and other 
provisions would apply. 

[B] Once an employee has been on disability retirement for at least 5 
years and is subsequently determined to have recovered, the disability 
pension can be reduced to a minimum of 30%, but it cannot be 
discontinued. 

[C] To determine the level of disability, the Board of Fire and Police 
Pension Commissioners uses a disability rating worksheet developed by 
the Department of Fire and Police Pensions. 

[D] This payback applies to all injuries previously claimed under 
workers' compensation, regardless if the same or different from the 
injury claimed as the basis for disability retirement benefits. The 
payback also includes any attorney fees paid out of workers' 
compensation. 

Miami: 

[A] There is also a lump-sum benefit provided to all firefighters by a 
different state retirement program, the Miami Firefighters' Relief and 
Pension Fund Board. The Pension Fund Board receives funds from state 
taxes on property insurance premiums, and distributes them annually on 
an equal basis to an individual account for each firefighter. Upon 
retirement, a firefighter cashes out of the system and receives the 
amount in the individual account, plus interest. In 2003, Miami 
received $4.4 million from this fund and had approximately 500 active 
firefighters. Therefore, each firefighter received approximately $8,800 
in 2003 in his or her Pension Fund account. According to officials, 
Miami Police Officers receive a similarly-structured benefit through 
another program. 

[B] Final compensation is the compensation rate at the time of injury. 
Applicants are not eligible for additional benefits based on normal 
service retirement eligibility: they must choose to take either normal 
retirement or disability retirement. To take normal retirement, 
applicants must be 50 years old with at least 10 years of creditable 
service, or have combined age and creditable service of 64 years or 
more. Service retirement is calculated at 3% per year of final average 
compensation for the first 15 years of service, and 3.5% per year for 
every year beyond the first 15 years. 

[C] The only restriction on earnings for an individual on accidental 
disability retirement is that, if employed as a firefighter or police 
officer elsewhere, or performing similar duties, the sum of current 
earnings and the disability pension cannot exceed 100% of the pre- 
injury earnings. If it does exceed 100%, then the disability pension 
may be offset for any amount over 100% of the pre-injury earnings. 

Indianapolis: 

[A] Occupational disease is "a disease arising out of and in the course 
of employment." 

[B] Base salary is stipulated in the bargaining contract between the 
union and the city. As of 2005, base salaries ranged from $48,410 for a 
third-year firefighter to $66,688 for a battalion chief. 

[C] According to program officials, there are no internal guidelines to 
differentiate between duty-related and occupational disease, and the 
decision would be made on a case-by-case basis. 

[D] There must be a connection between the conditions under which the 
firefighter performed his or her duties, the disease must be a natural 
incident resulting from exposure during duties, and the job must be the 
proximate cause of the disease. 

Newark: 

[A] Multiple types of retirement benefits are available, depending on 
the circumstances. Accidental disability benefits are provided for line-
of-duty injuries caused by a traumatic event. The benefits provided for 
accidental disability are greater than those provided for ordinary, or 
non-line-of-duty, disability. 

[B] According to a program official, total and permanent disability for 
the Police and Firemen's Retirement System means an inability to 
perform the functions of a firefighter or police officer specifically, 
and does not necessarily preclude future work in alternative 
occupations. 

[C] The amount of the adjustment equals 60% of the percentage of change 
between the average Consumer Price Index for the year in which the 
person retired and the average Consumer Price Index for the 12-month 
period ending August 31, immediately preceding the year the adjustment 
is payable. 

[D] The lump-sum compensation payments provided in cases of amputations 
are excluded from this provision and may be received with no offset. 

Houston: 

[A] The formula for calculating normal service retirement is 50% of 
average monthly salary for 20 years of participation, plus 3% of 
average monthly salary for each year of participation over 20 years up 
to a maximum of 80%. 

[B] The lump-sum payment is not issued to deferred retirees--that is, 
members working 10 to 20 years who do not start receiving their 
pensions until age 50. 

[End of table] 

[End of section] 

Appendix III: Other Disability Benefit Programs: 

[See PDF for image] 

Source: GAO analysis based on statutes, regulations, program policies, 
and interviews with program officials. 

Public Safety Officers' Benefits Program: 

[A] The Public Safety Officers' Benefits Program also provides a death 
benefit that is the same dollar amount as the disability benefit. 

[B] In addition, the program offers an educational benefit, capped at 
$803 per month in fiscal year 2005, to spouses and dependents of PSOs 
who qualify for either the death or disability benefit. 

[C] The availability of the disability benefit is subject to federal 
appropriation. By statute, the payment amount is adjusted annually 
based on the Consumer Price Index. 

[D] Benefits provided by the Public Safety Officers' Benefits Program 
are reduced (offset) by benefits authorized by District of Columbia 
Code § 4-622, and issued by the District of Columbia to employees who 
generally qualify as PSOs. FECA benefits for non-federal law 
enforcement officers who incur total and permanent disabilities 
resulting from law enforcement activities while interceding in crimes 
against the United States are offset by the amount of the Public Safety 
Officers' Benefits Program benefit. 

SSDI: 

[A] There is no requirement that the injury by work-related. 

[B] The Social Security Administration bases quarters of coverage on 
earnings, using work history to determine eligibility for retirement, 
disability benefits, or survivor benefits. Twenty of the quarters of 
coverage must have come within 10 years of the date of onset of the 
disability. In 2005, the Social Security Administration awarded one 
credit for each $920 of earnings, up to the maximum of 4 quarters of 
coverage per year. 

[C] For individuals who are not yet age 31, they must have quarters of 
coverage in at least half the quarters during the period that begins 
with the quarter after attaining age 21 and ends with the quarter prior 
to incurring the disability. 

[D] Individuals may be eligible for Supplemental Security Income 
benefits if they meet income and asset limits. 

[E] According to the commissioner, the amount of the additional 
benefits payable to family members of an individual with disabilities 
varies, but generally does not exceed 50% of the individual's benefit, 
and is limited by law. she noted that in December 2005, the average 
monthly disability benefit paid to an individual without dependents was 
$938, while the average monthly disability benefit paid to an 
individual with dependents (spouse and children) was $1,571. 

[F] This amount assumes the person is at full retirement age and has 
made the maximum earnings contributions. For retirees born in 1939, 
full retirement age is 65 and 4 months; for those born in 1940, it is 
65 and 6 months. Full retirement age will gradually increase to age 67 
for those born in 1960 or later. Added benefits may also be payable to 
eligible family members (see note e above). 

[G] In 14 states, the workers' compensation benefit is allowed the 
offset to adhere to this limit, instead of the SSDI benefit. 

[End of table] 

[End of section] 

Appendix IV: Hypothetical Scenarios and Calculation of Lifetime 
Disability Benefits--Methods and Results: 

This appendix identifies the package of disability benefits available 
to eligible military personnel and selected civilian PSOs injured in 
the line of duty under varying circumstances. To illustrate the 
benefits available to military personnel and civilian PSOs of varying 
ages, lengths of service, and salary levels, we constructed five 
hypothetical profiles of individuals, as follows: 

(1) Age 20, 1 year of service, average salary: $20,000. 

(2) Age 25, 6 years of service, high-3 average salary: $40,000. 

(3) Age 35, 12 years of service, high-3 average salary: $60,000. 

(4) Age 45, 22 years of service, high-3 average salary: $85,000. 

(5) Age 55, 32 years of service, high-3 average salary: $85,000. 

We selected the salary levels to reflect the general range of pay 
provided to those in the military, and to those serving as PSOs across 
the country. These salaries do not reflect the actual pay scales for 
servicemembers or for any specific PSOs. For example, according to the 
military's pay scales for 2005, an enlisted servicemember with 1 year 
of service would have basic pay of $14,822; an officer with 1 year of 
service, $28,124. Entry level salaries for state police officers in 
2000 ranged from a low of $21,063 in Florida to a high of $45,696 in 
Alaska. (See app. V for a more detailed discussion of the impact of 
salary differentials.) 

We selected the various ages and lengths of service to capture 
differences that may exist in the benefits available to those employed 
for only a year, compared with the benefits available to those who 
incur disabilities after being employed long enough to qualify for 
normal retirement based on age and/or years of service. We did this to 
be able to describe more fully how the benefit programs work. No 
distribution of disabilities across the various ages and lengths of 
service should be inferred from the construction of these hypothetical 
profiles. 

In addition, we created scenarios surrounding three different levels of 
injury, as follows: 

Injury level 1: Tinnitus. A ringing, swishing, or other type of noise 
that seems to originate in the ear or head. Only the patient can hear 
the noise. 

* 10 percent VA and DOD disability rating. 

* Up to 5 percent can be added to a disability rating for tinnitus in 
the presence of measurable hearing loss if it affects activities of 
daily living, based on the AMA Guides for whole person impairment. 

* GAO assumption: physician assessment determines that the civilian 
PSOs with tinnitus have a 5 percent impairment due to hearing loss. 

* GAO assumption: physician assessment determines that the individual 
is able to perform a substantial portion of his or her current job 
duties. 

* GAO assumption: able to return to duty in previous position. 

Injury level 2: Leg amputated below the knee. Removal of the lower leg 
and foot due to injury, diabetes, frostbite, arteriosclerosis, or other 
illness. 

* 40 percent VA and DOD disability rating. 

* 32 percent physician disability rating based on AMA Guides for whole 
person impairment. 

* GAO assumption: physician assessment determines that the individual 
is no longer able to perform a substantial portion of his or her 
current job duties, but could be gainfully employed in alternative job. 

* GAO assumption: not able to return to duty in previous position, but 
secures employment with alternative employer (not under same retirement 
system) and earns 75 percent of previous pay. 

Injury level 3: Quadriplegia. Paralysis of all four limbs (both arms 
and both legs) as from a high spinal cord accident or stroke. 

* 100 percent VA and DOD disability rating. 

* 100 percent physician disability rating based on AMA Guides for whole 
person impairment. 

* GAO assumption: physician assessment determines that the individual 
is no longer able to perform the duties of his or her current job and 
could not be gainfully employed in alternative job. 

* GAO assumption: Not able to return to duty in previous position, nor 
secure gainful employment with alternative employer. 

We selected these injuries to illustrate the range of benefits provided 
based on degree of impairment: from a relatively minor injury 
(tinnitus) that generally would not prevent an individual from 
returning to duty; to a more serious injury (leg amputation) that 
generally would prevent an individual from returning to duty, but not 
from being employed in some other type of occupation; to a very serious 
injury (quadriplegia) that generally prevents an individual from any 
type of employment. 

For each occupation and site, we calculated the monthly and lump-sum 
benefits that would be provided for each individual profile at each 
injury level from each relevant program, and had our calculations 
reviewed and confirmed by cognizant agency staff. We then calculated a 
combined monthly benefit amount of compensation and disability 
retirement benefits. We took into account any provisions requiring the 
offset of one benefit against another, which is sometimes required when 
an individual is eligible to receive benefits from multiple sources. 
Although available from some programs, no added increments for 
dependents were included. 

Finally, we calculated the present value of the lifetime benefit stream 
of monthly and lump-sum payments for each scenario. Present value 
analysis relies on two basic assumptions: the expected length of time 
benefits will be received, and the rate at which future payments will 
be discounted (on the basis that a dollar today is worth more than a 
dollar received a year from today). For the first assumption, we used 
Social Security Administration mortality data to estimate how long each 
hypothetical individual would be expected to live. For the quadriplegia 
cases, we used mortality data for males from the SSDI program to 
account for a shorter expected lifespan.[Footnote 56] For the leg 
amputation and tinnitus cases, we used general population mortality 
tables for males.[Footnote 57] In all cases, we used data for males 
only as males account for a sizable majority of both military personnel 
and civilian PSOs.[Footnote 58] 

The second assumption about the discount rate involves assumptions 
about inflation,[Footnote 59] the rate of interest absent inflation, 
and cost-of-living adjustments (COLA). We assumed the rate of interest 
absent inflation (the real interest rate) is 3 percent and that 
inflation is constant at 3 percent annually, resulting in an assumed 
nominal interest rate (which is the sum of the real interest rate and 
inflation) of 6 percent. In specifying a discount rate, our present 
value analysis takes into account whether the program has a COLA 
provision and the specific provisions for how the COLA is calculated. 
If the COLA is equal to the Consumer Price Index, we categorized it as 
full. If the COLA is capped or otherwise limited, we categorized it as 
partial. We assumed that a full COLA is equal to the rate of inflation, 
and that a partial COLA is worth 1 percentage point less. Following the 
rule that a nominal rate of interest is used to discount nominal 
quantities, and that real rates of interest (equal to the nominal rate 
minus inflation) are used to discount real quantities,[Footnote 60] we 
used a discount rate of 6 percent for benefit programs with no COLA, 4 
percent for programs with a partial COLA, and 3 percent for programs 
that provide a full COLA. 

We did not adjust benefit payment, or annuity streams, for various 
survivorship options. We assumed an annuity stream for disability 
retirement payments for the recipient's remainder of life with no 
survivor benefits to follow. 

Table 10: Benefits Provided for Tinnitus: 

[See PDF for image] 

Source: GAO analysis based on program provisions summarized in apps. I 
and II. 

[A] Total compensation benefits for military personnel reflect the 
present value of VA benefits provided over a lifetime, using the 
annuity factors indicated. These annuity factors take into account 
mortality rates, discount rates, and COLAs, as appropriate. 

[B] For purposes of our analysis, we assume that the servicemembers' 
tours of duty are such that, although still fit for duty, they can 
choose to separate immediately upon the determination of a permanent 
disability, with one exception: We assume that the servicemember with 
only 1 year of service must complete 2 years of service before being 
able to choose to separate. 

[C] Upon separation from military service, VA compensation benefits are 
provided for the remainder of life, as long as the impairment persists. 

[D] Under FECA, compensation payments are calculated on a 28-day cycle; 
converted to a monthly payment here to facilitate comparison with other 
programs' payments. 

[E] In California, compensation payments are reduced by 15% if the 
current employer offers comparable employment within 60 days. Payments 
here include this 15% decrease. 

[F] In Indiana, both the Indiana State Police and the Indianapolis Fire 
Department have opted out of providing compensation payments from the 
state workers' compensation program. 

[End of table] 

Table 11: Benefits Provided for a Leg Amputation: 

[See PDF for image] 

Source: GAO analysis based on program provisions summarized in apps. I 
and II. 

[A] Annuity factors take into account mortality rates, discount rates, 
and COLAs, as appropriate. Where different provisions or changes in 
benefits over time require different annuity factors, the factors are 
used proportionately as appropriate. 

[B] Under FECA, compensation payments are calculated on a 28-day cycle; 
converted to a monthly payment here to facilitate comparison with other 
programs' payments. Wage loss benefits reflect assumption that the 
individual secures work with an alternative employer and earns 75% of 
previous pay. 

[C] Under FERS, 18 months of service are required to qualify for 
disability retirement benefits. 

[D] In California, compensation payments are increased by 15% if no 
offer of comparable employment is received from the current employer 
after 60 days. Payments here include this 15% increase. 

[E] In Indiana, disability retirement benefits are provided until the 
date the officer is credited with 25 years of service, including years 
on disability. Then, benefits are recalculated as normal service 
retirement benefits. In this scenario, after the first 2 years, the 
same formula is used to calculate both disability and normal retirement 
benefits. 

[F] In New Jersey, an additional 30% of the normal compensation award 
is added as a lump-sum payment in cases of amputations, and this 
payment can be received concurrently with disability retirement 
benefits with no offset. 

[G] Supplemental benefits reflect assumption that the individual 
secures work with an alternative employer and earns 75% of previous 
pay. 

[H] In Los Angeles, firefighters on disability retirement are required 
to pay back any workers' compensation awards they have received 
throughout their careers. Therefore, lifetime benefits are maximized by 
receiving just disability retirement. 

[I] Miami provides a lump-sum benefit available to firefighters upon 
retirement, in an amount that varies depending on several factors that 
we were not able to estimate; thus, the benefit is not included in 
these calculations. 

[IJ] n Indianapolis, when the former firefighter reaches age 52, 
disability retirement benefits are recalculated based on the formula 
for normal service retirement. If already age 52 or older when applying 
for retirement due to disability, only normal service retirement 
benefits are available. 

[K] Houston provides a lump-sum payment of $5,000 to most firefighters 
retiring on either disability retirement or normal retirement. An 
additional annual retirement benefit is also provided depending on the 
monthly payment and length of time retired. Due to variability from 
year-to-year and person-to-person, this additional benefit is not 
included in these calculations. (See app. II, City of Houston 
Firefighters, for details.) 

[L] Benefits are offset, unless the injury is combat related. (See app. 
II, military personnel, for details.) 

[M] Under FERS, if a PSO qualifies for normal service retirement (age 
50 with 20 years of service, or any age with 25 years of service), the 
disability retirement benefit included here is calculated using the 
same formula as normal service retirement. However, the officer would 
not receive a special retirement supplement provided only to those 
taking normal service retirement. Therefore, a federal PSO age 55 with 
32 years of service would receive greater benefits by taking normal 
retirement rather than disability retirement. 

[N] In Newark, the disability benefit included here does not change 
based on age or length of service. Therefore, a firefighter with 32 
years of service would receive greater benefits by taking normal 
retirement (calculated at 65% of salary plus 1% for each year of 
service over 25, up to 30), rather than disability retirement. 

[End of table] 

Table 12: Benefits Provided for Quadriplegia and Other Permanent Total 
Disabilities: 

[See PDF for image] 

Source: GAO analysis based on program provisions summarized in apps. I 
and II. 

[A] Unless noted otherwise, the lump-sum benefit included below is the 
payment available under the U.S. Department of Justice's Public Safety 
Officers' Benefits Program for PSOs at the federal, state, and local 
levels who incur total permanent disabilities in the line of duty. (See 
app. III for details.) 

[B] Annuity factors take into account mortality rates, discount rates, 
and cost-of living adjustments, as appropriate. Where different 
provisions or changes in benefits over time require different annuity 
factors, the factors are used proportionately as appropriate. 

[C] According to VA officials, a veteran with quadriplegia would 
qualify for the SMC rate of R-2 (the highest compensation rate 
provided) for loss of use of multiple extremities and in need of a high 
level of care. 

[D] Under FECA, compensation payments are calculated on a 28-day cycle; 
converted to a monthly payment here to facilitate comparison with other 
programs' payments. 

[E] Under FERS, 18 months of service are required to qualify for 
disability retirement benefits. 

[F] In Florida, the COLA for permanent total disability compensation 
benefits ends at age 62. 

[G] In Indiana, disability retirement benefits are provided until the 
date the officer is credited with 25 years of service, including years 
on disability. Then, benefits are recalculated as normal service 
retirement benefits. 

[H] Miami provides a lump-sum benefit available to firefighters upon 
retirement, in an amount that varies depending on several factors that 
we were not able to estimate; thus, the benefit is not included in 
these calculations. 

[I] In Indianapolis, when the former firefighter reaches age 52, 
disability retirement benefits are recalculated based on the formula 
for normal service retirement. If already age 52 or older when applying 
for retirement due to disability, only normal service retirement 
benefits are available. 

[J] Houston provides a lump-sum payment of $5,000 to most firefighters 
retiring on either disability retirement or normal retirement. An 
additional annual retirement benefit is also provided depending on the 
monthly payment and length of time retired. Due to variability from 
year-to-year and person-to-person, this additional benefit is not 
included in these calculations. (See app. II, City of Houston 
Firefighters, for details.) 

[K] For federal PSOs, combined compensation and retirement benefits are 
maximized by receiving a schedule award as long as possible (which can 
be received concurrently with no offset), followed by total disability 
(which is greater than the retirement payment under FERS, and cannot be 
received concurrently). The schedule award for quadriplegia is 
calculated as four consecutive awards for each loss of use of a limb: 
312 weeks plus 312 weeks (for each arm) and 288 weeks plus 288 weeks 
(for each leg) equals 1200 weeks total (approximately 23 years). 

[L] Under FERS, if a PSO qualifies for normal service retirement (age 
50 with 20 years of service, or any age with 25 years of service), the 
disability retirement benefit included here is calculated using the 
same formula as normal service retirement. However, the officer would 
not receive a special retirement supplement provided only to those 
taking normal service retirement. Therefore, a federal PSO age 55 with 
32 years of service would receive greater benefits by taking normal 
retirement rather than disability retirement. 

[M] In Indiana, when an officer already qualifies for normal service 
retirement at the time a catastrophic disability occurs, the officer 
receives retirement payments of 100% of pay for 2 years, then benefits 
are recalculated as normal service retirement benefits. However, we 
were unable to confirm with officials whether or not an officer in this 
situation would be provided the added increments for having more than 
25 years of service, as provided under normal service retirement. In 
our hypothetical scenario for the officer age 55 with 32 years of 
service, the added increments for the 7 years of service over 25, plus 
the 2 years receiving disability pay, would increase the monthly 
payment upon retirement from $3,542 to $5,560, and the present value of 
lifetime package of benefits would be $1,058,434. 

[N] In Newark, the disability benefit included here does not change 
based on age or length of service. Therefore, a firefighter with 32 
years of service would receive greater benefits by taking normal 
retirement (calculated at 65% of salary plus 1% for each year of 
service over 25, up to 30), rather than disability retirement. 

[End of table] 

[End of section] 

Appendix V: Impact of Varying Salary Levels on Monthly Benefit 
Payments: 

In our analysis, we held salaries for military personnel and civilian 
PSOs constant to be able to characterize the differences in how payment 
amounts are calculated across the various programs. However, the actual 
salaries vary by occupation, and salaries paid to civilian PSOs in 
comparable occupations vary widely from state to state. The Bureau of 
Justice Statistics collects state-level data on various law enforcement 
occupations, including salary levels. According to the most recent data 
available, for example, annual base salaries for entry level state 
police officers in 2000 ranged from a low of $21,063 in Florida to a 
high of $45,696 in Alaska. Salaries for a police chief or sheriff 
ranged from a low of $40,000 in Montana to a high of $127,000 in New 
York.[Footnote 61] Table 13 summarizes actual salary levels in 2000 for 
three levels of experience for military servicemembers, federal FBI 
agents, and for state police officers in the six states included in our 
review. 

Table 13: Base Annual Starting Salaries by Occupation and Experience 
Level, 2000: 

[See PDF for image] 

Sources: Department of Defense, Office of Personnel Management, and 
Department of Justice. 

[A] For military personnel, the entry level salary is that of an E-2 
enlisted member with less than 2 years of service, the midlevel salary 
is that of a W-1 warrant officer with over 12 years of service, and the 
senior level salary is that of an O-6 commissioned officer with over 26 
years of service. 

To indicate how the difference between hypothetical and actual salary 
levels would affect disability benefits provided, we compared the 
monthly disability compensation and retirement payments generated in 
our hypothetical scenarios for entry level ($20,000), midlevel 
($60,000), and senior level ($85,000) salaries, with the payment 
amounts that would be generated based on the actual salaries in table 
13 (assuming the same age and length of service as in the corresponding 
hypothetical scenario). As shown in table 14, the difference in monthly 
temporary compensation payments based on the hypothetical salary levels 
compared with the actual salary levels is relatively minor, in most 
cases, due to the use of a set amount based on the disability rating 
(as in the military), or due to the imposition of caps on maximum 
payment amounts in several states based on the statewide average wage. 

[End of table] 

Table 14: Monthly Temporary Compensation Payments Based on Actual 
versus Hypothetical Salary Levels: 

[See PDF for image] 

Source: GAO analysis based on data in table 13, program summaries in 
app. I, and the hypothetical scenarios in app. IV. 

[A] VA compensation benefits for military personnel do not 
differentiate between temporary and permanent disability. 

[B] In California, statutes call for PSOs to be paid the maximum 
allowable payment, regardless of actual earnings. 

[C] Based on a payment cap. 

[D] Indiana State Police do not receive compensation payments from the 
state's workers' compensation program. 

[End of table] 

In contrast, disability retirement payments are generally calculated as 
a percentage of pre-injury salary with more generous caps on maximum 
payment amounts, if any. As a result, the difference in disability 
retirement payments based on the hypothetical salary levels compared 
with the actual salary levels is much more significant, as shown in 
table 15. Those earning lower wages than in the hypothetical scenarios 
receive much lower disability retirement payments, and those earning 
higher wages than in the hypothetical scenarios receive much higher 
disability retirement payments. 

Table 15: Monthly Disability Retirement Payments Based on Actual versus 
Hypothetical Salary Levels: 

[See PDF for image] 

Source: GAO analysis based on data in table 13, program summaries in 
app. II, and the hypothetical scenarios in app. IV. 

[A] Military personnel can elect to have their retirement payments 
calculated based on average high-3 salary times either (1) 2.5% for 
each year of service or (2) their disability rating. In this table, we 
assumed the disability rating to be 30%, the lowest rating that 
qualifies for disability retirement. Nevertheless, use of the formula 
with the disability rating provides the higher monthly retirement 
benefit for the entry-level servicemember, and the same monthly benefit 
as the years of service formula for the midlevel servicemember, with 
respect to both the hypothetical and actual salaries. 

[B] Payments shown here for FBI agents are based on 40% of average high-
3 salary, which is the payment level provided after the first year of 
benefits until reaching age 62. (During the first year, payments are 
60% of average high-3 salary; after age 62, payments are 1.0% times 
high-3 average salary times years and months of service.) 

[C] Eligible for enhanced payments due to age or length of service. 

[D] Payments shown here for Indiana State Police are based on 50% of 
average high-3 salary, which is the payment level provided after the 
first 2 years. (During the first 2 years, payments are 70% of average 
high-3 salary.) 

[End of table] 

[End of section] 

Appendix VI: Federal Income Tax Treatment of Disability Benefits: 

Provisions in 26 U.S.C. § 104(a) set forth the types of disability 
benefits that may be excluded from gross income subject to federal 
income tax. These include, among others: 

* amounts received under workmen's compensation acts as compensation 
for personal injuries or sickness and: 

* amounts received as a pension, annuity, or similar allowance for 
personal injuries or sickness resulting from active service in the 
armed forces if due to combat-related injuries.[Footnote 62] 

The federal tax treatment of the disability benefits examined in this 
report is based on whether the benefits received fall within the 
categories set forth in 26 U.S.C. § 104(a), as discussed below. 

Disability Compensation Benefits: 

Amounts received as workers' compensation for an occupational sickness 
or injury are fully exempt from federal income tax if they are paid 
under a workers' compensation act or a statute in the nature of a 
workers' compensation act. Disability compensation payments from VA 
(for military veterans) and from FECA (for federal PSOs) fall under 
this category and are not taxable. Across all programs we reviewed, we 
found workers' compensation benefits and disability compensation 
benefits treated as federally tax-exempt. 

Disability Retirement Benefits: 

Individuals who retire on disability must include as taxable income any 
disability pension received under a plan that is paid for by the 
employer.[Footnote 63] If a disability pension is paid under a statute 
that provides benefits only to employees with service-connected 
disabilities, the part based on level of disability may be considered 
workers' compensation, exempt from tax. The part based on years of 
service, however, is taxable. Since the disability retirement programs 
we reviewed varied as to whether only those with service-connected 
disabilities were included, and whether the benefits were calculated 
based on level of disability or years of service, we found the tax 
treatment of disability retirement benefits varied among the programs. 

In general, military disability retirement pay is subject to federal 
income tax unless the servicemember's disabilities are combat-related. 
In addition military disability retirement pay is not subject to 
federal income tax if the member was entitled to receive a disability 
payment before September 24, 1975; or on active duty, a member of a 
reserve component, or under a binding written commitment to be a member 
on September 25, 1975. Finally, if the veteran would have been entitled 
to receive VA compensation benefits, the amount of retirement benefits 
that would have been received if calculated based on a percentage of 
disability (that is, the amount of VA compensation benefits) is not 
subject to federal income tax. 

The disability retirement program for federal PSOs (FERS) does not 
distinguish between work-related and non-work-related disability, and 
disability retirement benefits are treated as taxable. 

Among the selected state and local PSOs we reviewed, the tax treatment 
of disability retirement benefits varies. Some program officials, such 
as those providing benefits to Montana Highway Patrol Officers, 
Billings Firefighters, and Texas State Troopers, told us that their 
disability retirement payments are subject to federal income tax. Other 
program officials, such as those providing benefits to California and 
Florida Highway Patrol Officers, and Houston and Los Angeles 
Firefighters, told us that the portion of their disability retirement 
payment based on disability is federally tax-exempt, but any additional 
amount based on years of service is taxable. Officials providing 
benefits to Miami Firefighters told us that their disability retirement 
benefits are treated as federally tax-exempt. Still other program 
officials, such as those providing benefits to Indiana and New Jersey 
State Police, and Indianapolis Firefighters, told us that their 
disability retirement benefits are treated as tax-exempt only for the 
period of time until the PSO reaches normal retirement age, at which 
point benefits are treated as federally taxable the same as normal 
retirement benefits. 

Continuation of Pay: 

Pay received from an employer while an employee is sick or injured is 
part of salary or wages and should be included as taxable income. Among 
the programs we reviewed, for the most part, program officials told us 
that continuation of pay and/or sick leave provided following a line of 
duty injury is subject to federal income tax the same as if the injured 
person were still working,[Footnote 64] with one exception. In 
California, program officials providing benefits to State Highway 
Patrol Officers and to Los Angeles Firefighters told us that 
continuation of pay is treated as federally tax-exempt based on a court 
decision and an Internal Revenue Service revenue ruling.[Footnote 65] 

Appendix VII: Progression of Disability Benefits Following a Line-of- 
Duty Injury, by Occupation: 

[See PDF for image] 

Source: GAO analysis based on statutes, regulations, program policies, 
and interviews with program officials. 

[A] No VA compensation benefits are provided until or unless the 
servicemember is released from military service. If receiving temporary 
disability retirement benefits, however, the servicemember is 
considered temporarily released from service, with access to VA 
compensation benefits, with offsets, as applicable. (See earlier 
background section for further details on offsets.) 

[B] A servicemember pending medical separation from the military may 
apply for vocational rehabilitation services in advance of separation, 
but no VA compensation payments are provided until or unless the 
servicemember is released from military service. 

[C] Federal PSOs must have 18 months of service to qualify for 
disability retirement under FERS. Also, they can earn up to 80% of pre- 
injury salary and still qualify. 

[D] Federal PSOs cannot receive wage loss compensation benefits 
concurrently with disability retirement. However, if unable to qualify 
for disability retirement (for example, because cannot meet the 18- 
month service requirement, or because earning more than 80%, but less 
than 100%, of pre-injury salary), FECA will continue to provide a 
percentage of the difference between old and new salaries, with no time 
limit. 

[E] Based on a review of benefits available to selected state and local 
PSOs, including state police officers in California, Florida, Indiana, 
Montana, New Jersey, and Texas; and local firefighters in Los Angeles, 
Miami, Indianapolis, Billings, Newark, and Houston. 

[F] In Indiana, state statutes allow some public employers to opt out 
of providing workers' compensation payments, and we found that both the 
Indiana State Police and the Indianapolis Fire Department had opted out 
of such payments. Instead, after their special allocation of sick leave 
is exhausted, these PSOs receive disability benefits only from their 
pension funds. 

[End of table] 

Appendix VIII: Definitions of Total Disability: 

Definitions are provided for programs reviewed that offer additional 
benefits for total disability. (Programs reviewed that do not 
distinguish between total disability and other types of disability are 
not included.) 

Compensation for Service-Connected Disability, Department of Veterans 
Affairs: 

"Total disability will be considered to exist when there is present any 
impairment of mind or body which is sufficient to render it impossible 
for the average person to follow a substantially gainful occupation." 
Permanent total disability is presumed for loss or loss of use of both 
hands, both feet, one hand and one foot, sight in both eyes, or 
permanently helpless or bedridden. Any disability or combination of 
disabilities that rates 100 percent on the Schedule of Rating 
Disabilities qualifies for total disability. A total rating can also 
occur if injuries are less than 100 percent, if it is "determined that 
the service-connected disabilities are sufficient to produce 
unemployability without regard to advancing age." (38 C.F.R. §§ 3.340, 
3.341.) 

Federal Employees' Compensation Act: 

Permanent total disability is presumptively loss of use of both hands, 
arms, feet, legs, eyes. "Temporary total disability is defined as the 
inability to return to the position held at the time of injury or earn 
equivalent wages, or to perform other gainful employment." Disability 
is always presumed temporary unless it fits under the definition of 
permanent total disability. (20 C.F.R. § 10.400.) 

Social Security Disability Insurance: 

"Disability means…inability to engage in any substantial gainful 
activity by reason of any medically determinable physical or mental 
impairment which can be expected to result in death or which has lasted 
or can be expected to last for a continuous period of not less than 12 
months" (42 U.S.C. § 423(d)(1)(A).) 

Public Safety Officers' Benefits Program, Bureau of Justice Assistance: 

Permanent and total disability is "medically determinable consequences 
of a catastrophic, line-of-duty injury that permanently prevent a 
former public safety officer from performing any gainful work." 
Catastrophic injury is one in which the "consequences of an 
injury…permanently prevent an individual from performing any gainful 
work." (28 C.F.R. § 32.2(h); 42 U.S.C. § 3796b.) 

Workers' Compensation, California: 

"Permanent total disability" means a permanent disability with a rating 
of 100 percent permanent disability only." Loss or loss of use of both 
eyes, both hands, total paralysis, or severe brain injury are 
presumptively total and permanent. "In determining the percentages of 
permanent disability, account shall be taken of the nature of the 
physical injury or disfigurement, the occupation of the injured 
employee, and his or her age at the time of the injury, consideration 
being given to an employee's diminished future earning capacity." (Cal. 
Lab. Code §§ 4452.5, 4662, 4660(a).) 

Workers' Compensation, Florida: 

To qualify for permanent total disability benefits, an employee must be 
"not able to engage in at least sedentary employment." (Fla. Stat. Ann. 
§ 440.15(1)(b).) 

Disability Benefits, State Police, Indiana: 

Disability pension equal to full salary is provided for a 
"catastrophic" injury that "permanently prevents the Employee from 
performing any gainful work." (Ind. Code Ann. § 10-12-2-5(d).) 

Workers' Compensation, Montana: 

Permanent total disability benefits are available when there is a 
"physical condition resulting from injury…in which a worker does not 
have a reasonable prospect of physically performing regular 
employment." (Mont. Code Ann. § 39-71-116(25).) 

Workers' Compensation, New Jersey: 

Permanent total disability benefits are available for "physical or 
neuropsychiatric total permanent impairment caused by a compensable 
accident or compensable occupational disease, where no fundamental or 
marked improvement in such condition can be reasonably expected." 
Agency officials interpret this as a person who cannot perform any 
occupation. (N.J. Stat. Ann. § 34.15-36.) 

Disability Retirement for Law Enforcement, Texas: 

An enhanced benefit of 100% of average monthly compensation is provided 
where "occupational disability makes the person incapable of 
substantial gainful activity solely because of the disability and is 
considered a total disability under federal social security law." (Tex. 
Gov't Code Ann. § 814.207(e).) 

Workers' Compensation, Texas: 

Lifetime income benefits are available for blindness in both eyes, loss 
of both feet or hands, other major amputations, spinal injuries, 
traumatic brain injuries, or burns. (Tex. Lab. Code Ann. § 408.161.) 

[End of section] 

Appendix IX: GAO Contacts and Staff Acknowledgments: 

GAO Contacts: 

Cynthia A. Bascetta, Director (202) 512-7215: 

Cristina T. Chaplain, Acting Director (202) 512-7215: 

Staff Acknowledgments: 

In addition, Carol Dawn Petersen, Assistant Director; Margie K. 
Shields, Analyst-in-Charge; and Diahanna L. Post, Thomas A. Radwick, 
and Peter E. Rumble were major contributors to this report. Joseph A. 
Applebaum, Chief Actuary; Kenneth J. Bombara, Senior Economist; and 
Daniel A. Schwimer, Deputy Assistant General Counsel, provided 
technical advice and support. 

Related GAO Products: 

Military Personnel: DOD Needs to Improve the Transparency and Reassess 
the Reasonableness, Appropriateness, Affordability, and Sustainability 
of Its Military Compensation System. GAO-05-798. Washington, D.C.: July 
19, 2005. 

21st Century Challenges: Reexamining the Base of the Federal 
Government. GAO-05-325SP. Washington, D.C.: February 1, 2005. 

High-Risk Series: An Update. GAO-05-207. Washington, D.C.: January 1, 
2005. 

Military Personnel: Survivor Benefits for Servicemembers and Federal, 
State, and City Government Employees. GAO-04-814. Washington, D.C.: 
July 15, 2004. 

VA Benefits: Fundamental Changes to VA's Disability Criteria Need 
Careful Consideration. GAO-03-1172T. Washington, D.C.: September 23, 
2003. 

Military and Veterans' Benefits: Observations on the Concurrent Receipt 
of Military Retirement and VA Disability Compensation. GAO-03-575T. 
Washington, D.C.: March 27, 2003. 

Major Management Challenges and Program Risks: Department of Veterans 
Affairs. GAO-03-110. Washington, D.C.: January 1, 2003. 

High-Risk Series: An Update. GAO-03-119. Washington, D.C.: January 1, 
2003. 

DOD Disability: Overview of Compensation Program for Service Members 
Unfit for Duty. GAO-01-622. Washington, D.C.: April 27, 2001. 

VA Disability Compensation: Comparison of VA Benefits with Those of 
Workers' Compensation Programs. GAO/HEHS-97-5. Washington, D.C.: 
February 14, 1997. 

Workers' Compensation: Selected Comparisons of Federal and State Laws. 
GAO/GGD-96-76. Washington, D.C.: April 3, 1996. 

(130461): 

FOOTNOTES 

[1] Provisions in 42 U.S.C. §3796b(8) define "public safety officers" 
for Department of Justice's Public Safety Officers' Benefits Program to 
include law enforcement officers (such as police, corrections, 
probation, parole, and judicial officers), firefighters, and members of 
rescue squads and ambulance crews, among others. 

[2] Military personnel in combat are now surviving injuries that would 
have been fatal in past conflicts, but along with this survival has 
come an increased rate of disabilities. See GAO, VA Disability Benefits 
and Health Care: Providing Certain Services to the Serious Injured 
Poses Problems, GAO-05-444T (Washington, D.C.: Mar. 17, 2005). 

[3] In 2003, GAO designated federal disability programs as a high-risk 
area. See GAO, High Risk Series: An Update, GAO-05-207 (Washington, 
D.C.: Jan. 1, 2005), and GAO, 21st Century Challenges: Reexamining the 
Base of the Federal Government, GAO-05-325SP (Washington, D.C.: Feb. 1, 
2005). 

[4] Pub. L. No. 108-375 (2004). This law also mandated that DOD conduct 
a study comparing the disability benefits for servicemembers with the 
disability benefit plans for commercial and other private-sector 
employees. In addition, under the National Defense Authorization Act 
for Fiscal Year 2004, Congress established the Veterans' Disability 
Benefits Commission to study the appropriateness of benefits for 
servicemembers for service-connected disability and death. 

[5] These indicators included, for example, the state median monthly 
Social Security Disability Insurance (SSDI) benefit, salary levels for 
state PSOs, and the amount of cash survivor benefits available to PSOs. 

[6] As a result, our analysis excludes, for example, the potential 
benefits received from the Traumatic Servicemembers Group Life 
Insurance Program, enacted in May 2005. 

[7] Previously, we reported that while the specific rationales for 
offset provisions vary, they generally focus on restoring equity and 
fairness by treating beneficiaries of more than one program in a 
similar manner as beneficiaries who qualify for benefits under only one 
of the programs. See GAO, Military and Veterans' Benefits: Observations 
on the Concurrent Receipt of Military Retirement and VA Disability 
Compensation, GAO-03-575T (Washington, D.C.: Mar. 27, 2003). 

[8] When eligible for both VA compensation and DOD disability severance 
benefits (as opposed to retirement benefits), the compensation benefit 
is offset. 

[9] Combat-related disabilities are defined as disabilities incurred as 
a direct result of armed conflict, while engaged in hazardous service, 
while performing duty simulating war, or through an instrumentality of 
war. 

[10] According to DOD records, about 1,170 (about 1.3 percent) of those 
receiving disability retirement were receiving special compensation for 
combat-related disabilities at the end of fiscal year 2004, following 
the first year of the program's implementation. 

[11] FERS generally covers all federal employees hired after January 1, 
1984. Those hired before 1984 still may be covered by the Civil Service 
Retirement System; however, that system has been closed to new members 
since FERS was implemented in 1984. 

[12] Federal law enforcement officers and firefighters can take normal 
retirement at age 50. The minimum retirement age for other federal 
employees is between the ages of 55 and 57, depending on the employee's 
year of birth. For details on benefit calculations, see app. II, 
federal PSOs. 

[13] In Indiana, state statutes allow some public employers to opt out 
of the state's workers' compensation program, and we found that both 
the Indiana State Police and the Indianapolis Fire Department had opted 
to provide disability benefits only from their pension funds. 

[14] See app. VIII for the various definitions of permanent total 
disability used across programs. 

[15] California's workers' compensation program also defines total 
disability as a disability rated at 100 percent, but adjusts its 
disability ratings to account for diminished future earning capacity. 
California's rating guide states that permanent total disability is a 
level of disability at which an employee has sustained a total loss of 
earning capacity. 

[16] In addition, current law specifies that benefit levels are to be 
based on disability ratings that reflect the average loss of earning 
capacity for the particular injury. However, we have noted in prior 
reports that the labor market information used in determining these 
benefits has not been updated since 1945. See GAO, VA Benefits: 
Fundamental Changes to VA's Disability Criteria Need Careful 
Consideration, GAO-03-1172T (Washington, D.C.: Sept. 23, 2003). 

[17] VA provides disability compensation for pre-existing injuries 
aggravated during service with no length of service requirement. Also, 
DOD can provide disability retirement benefits for a pre-existing 
condition, but only after the servicemember has completed 8 years or 
more of active service. 

[18] For example, if a servicemember sustains deafness in one ear as a 
result of service-connected disability and deafness in the other ear 
from a non-line of duty injury, VA may combine both injuries to obtain 
a total level of compensable disability. 

[19] However, military officials noted that the effects of drug abuse 
can be compensable if the servicemember develops human immunodeficiency 
virus (HIV) or acquired immunodeficiency syndrome (AIDS) from such use. 

[20] If exposed to radiation, presumptive conditions can include 
certain cancers. Additional presumptions also are provided, depending 
on the years and location of service. 

[21] See app. I for more detailed descriptions of these states' 
provisions. 

[22] A cost-of-living adjustment (COLA) is not guaranteed, but Congress 
has historically passed annual COLAs based on a percentage equal to the 
Social Security increase. 

[23] Re-examinations are required when it is likely a disability will 
improve over time, or when there is evidence of an error or a material 
change in a disability. 

[24] For those who entered military service on or after September 8, 
1980, basic pay is the average of the highest 3 years of basic pay. For 
reserve component members, it is the average of the last 36 months of 
basic pay as though the member were on full-time active duty. Basic pay 
does not include subsistence and housing allowances that often comprise 
a significant portion of a servicemember's total pay. 

[25] During temporary disability retirement, the servicemember is 
treated the same as a regular retiree, and as such, no longer has 
access to certain benefits, such as subsistence and housing allowances. 

[26] In some programs, the clock on these temporary disability payments 
starts following the end of continuation of pay (such as the programs 
for federal PSOs and California Highway Patrol). In other programs, 
these payments are made simultaneous to continuation of pay, with the 
employer recouping the payments from employees to help defray some of 
the cost of providing the employee with continuation of pay while 
injured employees are not working (such as the programs for Florida and 
Montana Highway Patrol). In these programs, injured employees could 
only continue to receive temporary compensation payments for the amount 
of time left after the period of continuation of pay expires. 

[27] VA does not provide wage loss benefits per se; however, veterans 
with disability ratings of 60 percent or more who are unable to secure 
employment due to their service-connected disabilities may be eligible 
to receive additional compensation at the 100 percent disability rate 
(referred to as Individual Unemployability benefits). 

[28] If servicemembers are unfit for duty but they have fewer than 20 
years of service, and they have a disability rating of less than 30 
percent, they may be eligible to receive a lump-sum disability 
severance payment. See app. II, military personnel, for details. 

[29] In several locations, state and local PSOs can opt into a special 
retirement program, referred to as a Deferred Retirement Option Plan 
(DROP). DROP programs have been established across the country as a 
means of retaining experienced PSOs beyond when they would be eligible 
for normal retirement. These programs create an additional retirement 
account with a guaranteed rate of return that produces a new benefit in 
addition to the standard retirement benefit. However, when PSOs opt 
into a DROP program, they generally are no longer eligible to receive 
disability retirement benefits. 

[30] Once a servicemember is found to be unfit for duty, DOD assigns a 
disability rating using the VA's rating schedule to determine the 
degree (percent) of disability. 

[31] Unlike with temporary disability retirement payments; however, 
there is no minimum payment of 50 percent of basic pay. 

[32] Where provided, the alternative formulas for those with more years 
of service generally result in disability retirement benefits that are 
at least equal to, if not more than, the benefits available under 
normal retirement based on age and length of service. For federal PSOs, 
however, disability retirement benefits are less than normal voluntary 
retirement benefits, despite the use of the same formula. This is 
because under normal voluntary retirement, a special retirement 
supplement is provided until age 62 that approximates the Social 
Security benefit earned in federal service. This benefit is not 
provided for those taking disability retirement. As a result, officials 
told us that virtually no one eligible for both disability retirement 
and normal voluntary retirement chooses to take disability retirement 
benefits. 

[33] Across all programs, we were told that whether an individual is 
found unfit for duty depends on the specific duties of his or her 
position, and the extent to which the disability prevents successful 
performance of those duties. 

[34] For more detailed information across all hypothetical scenarios 
and programs reviewed, see app. IV, table 10. 

[35] For purposes of our analysis, we assume that the servicemembers' 
tours of duty are such that, although still fit for duty, they can 
choose to separate immediately upon the determination of a permanent 
disability, with one exception: We assume that the servicemember with 
only 1 year of service must complete 2 years of service before being 
able to choose to separate. 

[36] Florida PSOs are not eligible for disability retirement benefits 
unless they are unable to engage in any employment, not just their pre- 
injury occupation. 

[37] Across the programs we reviewed, permanent total disability 
generally means that an individual is unable to maintain gainful 
employment. See app. VIII for individual program definitions of what 
qualifies for permanent total disability. 

[38] In Indiana, both the Indiana State Police and the Indianapolis 
Fire Department have opted to provide disability benefits only from 
their pension funds following a period of special sick leave 
allocation. 

[39] In California, benefits are received for life for injuries rated 
70 percent or higher, but the calculation of benefits for injuries 
rated 70 to 99 percent is different than for injuries rated 100 
percent. 

[40] Federal PSOs must have at least 18 months of service to be 
eligible for disability retirement benefits. See app. II, federal PSOs, 
for more information. 

[41] In Indiana, State Police receive disability retirement payments of 
100 percent of monthly salary when they sustain a catastrophic injury 
and are unable to perform any gainful work; otherwise, they receive a 
disability retirement payment of 70 percent for the first 2 years and 
50 percent thereafter. In Texas, State Troopers receive disability 
retirement payments of 100 percent of monthly salary when they are 
incapable of substantial gainful activity due to an occupational 
disability that is considered a total disability under federal Social 
Security law; otherwise, they receive a regular disability retirement 
payment of 50 percent if they have less than 20 years of service, and a 
payment calculated at 2.8 percent of average monthly compensation for 
each year of service if they have 20 years or more of service. 

[42] Those with 20 years or more of service being compensated at the 
100 percent disability level due to individual unemployability were 
initially excluded from this provision; however, legislation enacted in 
2006 authorizes these veterans to qualify for full concurrent receipt 
with no offset as well, beginning in fiscal year 2010. 

[43] See app. VIII for comparable definitions of total disability in 
the other programs we examined. 

[44] The date of injury determines the benefit amount, which is 
adjusted annually based on the Consumer Price Index. 

[45] The Social Security Administration does not use the terms 
"permanent" or "total" in its definition of eligibility for SSDI 
benefits. (See app. III for details.) However, most individuals who 
would qualify for SSDI would be considered as having permanent total 
disabilities by most other programs we reviewed. 

[46] The maximum benefit in 2005 was $1,939 per month. Added benefits 
may also be payable to eligible family members. (See app. III, SSDI, 
for details.) 

[47] State and local government employees who are members of a public 
retirement system are not required to pay into Social Security. Across 
all 50 states, 72 percent of state and local government employees were 
covered by Social Security as of 2002. 

[48] In the first year of FERS disability retirement benefits for 
federal PSOs, FERS reduces the retirement payment by the full amount of 
any SSDI payment. In subsequent years, FERS reduces the disability 
retirement payment by 60 percent of the SSDI payment. 

[49] The increment for dependents is available only for disabilities 
rated 30 percent or higher. 

[50] The additional amount changes with the number and type of 
additional dependents. 

[51] Federal PSOs' disability retirement payments are calculated at 75 
percent of salary for those with dependents, and 66-2/3 percent of 
salary for those without dependents. Indiana State Police receive an 
additional $40 per month per dependent. 

[52] We were not able to include SSDI in this analysis of benefits 
received over a lifetime, due to the complexity of how SSDI benefits 
are calculated based on an individual's entire work history. Among the 
civilian PSOs we reviewed, additional SSDI benefits would not likely 
affect the outcome of our analysis. Few participate in Social Security, 
and if they should qualify for SSDI, their SSDI benefits would be 
offset. However, military personnel participate in Social Security, and 
if they should qualify for SSDI, their SSDI benefits are not offset. As 
a result, over a lifetime, military veterans could receive significant 
additional SSDI benefits over and above the disability compensation and 
retirement benefits discussed here. 

[53] As state and local statutes and program rules for the programs we 
reviewed do not specify whether attendant care benefits are covered and 
in what amount, we could not include attendant care benefits for the 
selected state and local PSOs. 

[54] This is the case for a hypothetical civilian PSO age 35, with a 
salary of $60,000 and 12 years of service, serving as a state police 
officer in California, Florida, or New Jersey. See app. IV, table 12, 
for more details. 

[55] Several of the civilian disability retirement programs we reviewed 
have no caps on payments, or have caps ranging from 80 to 100 percent 
of pre-injury salary. See table 6 in earlier section for details. 

[56] Social Security Administration, Social Security Disability 
Insurance Program: Worker Experience, Actuarial Study No. 118, June 
2005, SSA Pub. No. 11-11543. 

[57] Social Security Administration, Life Tables for the United States 
Social Security Area, Actuarial Study No. 120, Aug. 2005, SSA Pub. No. 
11-11536. 

[58] As of 2000, 85.4 percent of the active-duty force was male and 
14.6 percent was female. In 2001, it was estimated that about 89 
percent of law enforcement officers nationwide were male and about 11 
percent female. 

[59] By inflation, we mean the rate of aggregate price change as 
measured by an index, such as the Consumer Price Index. 

[60] GAO, Discount Rate Policy (GAO/OCE-17.1.1, May 1991), 18. 

[61] See B. A. Reaves, Law Enforcement Management and Administrative 
Statistics, 2000: Data for Individual State and Local Agencies with 100 
or More Officers. U.S. Department of Justice, Office of Justice 
Programs, Bureau of Justice Statistics. March 2004, NCH 203350, 246. 

[62] Combat-related injury is defined as personal injury or sickness 
that is incurred as a direct result of armed conflict, while engaged in 
extra-hazardous service, or under conditions simulating war; or that is 
caused by an instrumentality of war. 

[63] However, individuals who have limited income and are retired on 
permanent and total disability, and who have taxable disability income, 
may qualify for a tax credit entitled Credit for the Elderly or the 
Disabled. 

[64] Certain military personnel serving in a combat zone may qualify to 
have their pay excluded from gross income subject to federal taxes, 
including pay received while hospitalized as a result of wounds, 
disease, or injury incurred in the combat zone for up to 2 years after 
leaving the zone. 

[65] Hawthorne v. City of Beverly Hills, 245 P. 2.d, 352 (1952); Rev. 
Rul. 68-10, 1968-1 C.B. 50; and Priv. Ltr. 7920009 (Feb. 13, 1979). 

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