Coordination of Debt Repayments with Retirement or Workers’ Compensation

When you apply for disability retirement or workers’ compensation benefits, your annuity or compensation is generally payable from the day following your last day of pay. If you are eligible to continue health benefits coverage, the employee share is withheld from your annuity or compensation retroactive to the beginning date of the annuity or compensation payments.

If you have not made payments to your employing office for coverage during leave without pay status (either directly or through collection of the debt), your employing office recovers withholdings and contributions for the period in the same way as it adjusts errors in withholdings and contributions.

If you paid your employing office for coverage during leave without pay status and withholdings are being made from your annuity or compensation benefits for the same period, your employing office must refund these amounts to you to avoid double payments covering the same period. Your employing office makes the refund in the same way that it adjusts errors. In retirement cases, your employing office must refund the amount it received from you for periods after your last day in pay because these amounts are withheld from your annuity.

When your annuity doesn’t begin on the day following your last day of pay, your employing office will not refund payments you made for time in leave without pay status until it receives OPM’s notice that your disability retirement application was approved. This may happen when you don’t meet the requirements for an annuity on the day after your last day of pay (e.g., you are receiving a disability annuity under CSRS and you don’t complete 5 years of service until a later date). If your employing office isn’t able to determine if withholdings from your annuity will cover all periods of leave without pay status after the last day of pay, it may request that OPM verify the correct period to be covered by  the refund. Its request may be attached to your health benefits documents when they are sent to OPM with the final Individual Retirement Record (SF 2806 for CSRS or SF 3100 for FERS).

In workers’ compensation cases, your employing office may request that the Office of Workers’ Compensation Programs verify the dates that health benefits premiums have been withheld from your compensation benefits before it will refund any amounts you paid to it.

When you are a retiring employee and are indebted to your employing office for advanced pay to cover the employee share of your health benefits premium for a period that you weren’t entitled to annuity or compensation benefits, the debt may be recovered by offset from your annuity. See chapter 4 of the CSRS and FERS Handbook for Payroll and Personnel Offices.

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