Policy/Memo 62r1

Number: Policy Memo 62r1
Date Issued: June 5, 1992
Date Revised: March 4, 1999
Policy File Ref: A1130
Subject: Retirement

ISSUE:

Clarify the definition of "service-connected disability retirement" in Section 73.2 (a)(3)(vii) of the President's Regulations.

Background:

A Tier 3 employee with 9.45 years of service was injured on the job to the extent that she received Social Security Disability benefits and an Article 14 ordinary disability retirement from the Retirement System (an Article 14 disability retirement can be obtained with only 5 year's service); an Article 15 disability pension is pending a determination from the Retirement System that the disability resulted from an on-the-job accident not due to the employee's own negligence. The individual has requested health insurance in retirement on the grounds that she has had a "service connected disability retirement" because her injury was incurred on the job and she received benefits through an uncontroverted Workers' Compensation case. She was advised by Division Client Services staff that only an accidental disability retirement would meet the definition of "service connected disability retirement." PEF has questioned this determination.

Policy:

Waive the service requirements for health insurance in retirement for individuals who have received a disability retirement as the result of a work-related injury or illness from a retirement system or plan as specified in the President's Regulations. For ordinary disability retirements, acceptable proof of a work-related disability will be a photocopy of the employee's or employer's copy of the Workers' Compensation Notice of Decision certifying compensability, and a letter from the employer stating that to the best of their knowledge the retirement stemmed from the work-related condition. In the case of an accidental disability retirement, a copy of the Notice of Determination from the Retirement System will suffice.

Discussion:

The position that only an accidental disability retirement waives the service requirement for health insurance worked satisfactorily for Tiers 1 and 2 of the Retirement System. The parameters for granting an accidental retirement were more liberal, and Tier 1 and 2 members did not need more than 5 years service even for regular retirement. Also, those hired before April 1975 only needed 5 years service for health insurance in retirement. Since ten years service was needed for an ordinary disability retirement, all people with such a retirement got health insurance. Given these guidelines, few people were denied health insurance in retirement even if they received only an ordinary disability retirement.

The arrival of Tiers 3 and 4, though, have changed the situation. A Tier 3 employee can receive an Article 14 ordinary disability retirement, or an Article 14 accidental disability retirement or an Article 15 disability retirement. A Tier 4 employee can only receive an Article 15 disability. Under Article 15, there is no such thing as an accidental or ordinary retirement; the benefit is the same regardless of how the person was injured. If a person can prove that the retirement was the result of an accident, the ten year service requirement is waived, but the retirement is not placed in a special category.

Thus, we see that the concept of ordinary and accidental retirement has changed with the introduction of Tiers 3 and 4. In addition, while ordinary disability retirements have always included work-related injuries, the circumstances which enabled us to use the neat categories of "accidental" and "ordinary" have changed. It is necessary, therefore, that we update the administrative methods of handling these cases.