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Disability insurance for federal employees

Federal employees get disability retirement benefits through the Federal Employees Retirement System (FERS), but policies may not offer all of the coverage you need.

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By

Andrew HurstSenior Editor & Licensed Auto Insurance ExpertAndrew Hurst is a senior editor and a licensed auto insurance expert at Policygenius. His work has also been featured in The New York Times, The Wall Street Journal, Forbes, USA Today, NPR, Mic, Insurance Business Magazine, ValuePenguin, and Property Casualty 360.

Edited by

Anna SwartzAnna SwartzSenior Managing EditorAnna Swartz is a senior managing editor who specializes in home, auto, renters, and disability insurance at Policygenius. Previously, she was a senior staff writer at Mic and a writer at The Dodo. Her work has also appeared in Salon, HuffPost, MSN, AOL, and Heeb.

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If you’re a federal employee, you may qualify for disability benefits from the Federal Employees Retirement System (FERS). You can also get private disability insurance. Both benefits can help you if you can’t work because of a disability, but they provide slightly different benefits.

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How do federal employees qualify for disability benefits?

You can use disability insurance to replace your income if you’re injured or sick and can’t work. After 18 months of federal service, you may qualify for disability benefits from FERS. To qualify:

  • Your disability has to be expected to last at least a year

  • Your agency must have tried to accommodate you in a similar position.

You can receive disability benefits as long as your condition prevents you from working, or until you reach retirement age. But you'll need to undergo periodic medical exams to maintain your coverage, and you're responsible for paying for these exams.

When do FERS disability benefits end?

Your disability benefits will stop if you’re under 60 and you recover from your disability, if you earn at least 80% of the salary you had before collecting disability benefits, or if you’re reemployed in a federal job that’s like your old one.

Benefits can start up again if you experience another disability or when you no longer make 80% of your pre-disability salary.

How much can you receive from FERS?

Your benefits depend on when your disability forced you to stop working and your years of service working in the federal government.

If you become disabled before you turn 62, here’s how your benefits change:

Duration

Description

For the first 12 months of your disability

60% of your salary minus your Social Security benefit

After the first 12 months of your disability

40% of your salary minus 40% of your Social Security benefit

Source: Eligibility rules from FERS’s disability computation tables

If you become disabled when you’re 62 or older and have at least 20 years of service, your benefit is equal to 1.1% of your salary for every year that you worked. It drops to 1% of your salary if you’re at least 62 and have less than 20 years of service.

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Is private disability insurance worth it for federal employees?

Even though private disability insurance costs can be expensive, it can be worth having private disability insurance to close your FERS plan’s gaps.

Disability benefits from FERS won’t necessarily fit your coverage needs. If your benefits replace only 40% of your income, you may have a gap between those disability benefits and the take-home pay you got before your disability.

This gap can become even wider since you’ll pay taxes on your FERS benefits, which isn’t the case for disability insurance you buy with after-tax dollars.

How much private disability insurance should you get?

If you’re considering a supplemental disability plan to complement your FERS benefits but you’re not sure how much federal coverage you’ll qualify for, talk to a benefits administrator or insurance agent before purchasing a plan.

You want your disability insurance benefits to replace your after-tax income. You should have enough private disability insurance to cover the difference between your net pay and your FERS benefits.

But one challenge of having a private disability insurance policy alongside a FERS plan is knowing how much coverage to get. Insurance companies won’t let you collect more in benefits than your earned income, but you want to make sure you have the right amount of coverage.

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Author

Andrew Hurst is a senior editor and a licensed auto insurance expert at Policygenius. His work has also been featured in The New York Times, The Wall Street Journal, Forbes, USA Today, NPR, Mic, Insurance Business Magazine, ValuePenguin, and Property Casualty 360.

Editor

Anna Swartz is a senior managing editor who specializes in home, auto, renters, and disability insurance at Policygenius. Previously, she was a senior staff writer at Mic and a writer at The Dodo. Her work has also appeared in Salon, HuffPost, MSN, AOL, and Heeb.

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