The federal workers' compensation system would get its biggest makeover in almost 40 years under postal reform legislation the Senate passed 62-37 Wednesday.
The bill would cut workers' comp benefits to half of pre-injury pay for most recipients. Under existing rules, recipients without a spouse or dependents typically collect two-thirds of their normal salaries, while others receive 75 percent, and those benefits are tax-free.
The bill is intended to reduce benefits so recipients will opt to take retirement benefits when they become eligible. Currently, workers' comp benefits sometimes exceed what most feds would receive through retirement plans, so some feds receive workers' comp benefits until their death.
Retirement-age workers' comp beneficiaries already in the program would be grandfathered in, as would totally disabled beneficiaries of any age, according to Sen. Susan Collins, R-Maine, the leading advocate for the changes.
Other recipients would not see any changes to their workers' comp benefits for three years.
The workers' comp program, run by the Labor Department, provides tax-free pay and medical benefits to employees injured on the job. Forty-three percent of recipients in 2010 were U.S. Postal Service employees, according to a February Government Accountability Office report. More than 2,000 Postal Service employees on workers' comp are beyond the age of 70, while six federal employees on the program are age 100 or older, Collins, said Tuesday during floor debate on the postal bill.
"These individuals are not coming back to work," Collins said in arguing successfully against an amendment by Sen. Daniel Akaka, D-Hawaii, that would essentially have left the status quo in place. "We are trying to focus this program, as it should be, on returning injured workers to work."
Federal labor unions staunchly oppose the proposed benefit cuts. "It is disappointing to see the Senate bill include language that is harmful to injured employees," National Treasury Employees Union President Colleen Kelley said in a statement after the vote.
The bill now goes to the House. If signed into law, the changes would save $1.2 billion over 10 years, Collins spokeswoman E.R. Anderson said Wednesday and would mark the first major reworking of the system since 1974.
In 2010, about 307,000 federal employees received workers' comp benefits at some point, according to the GAO report. Almost 32,000 were long-term, full-time beneficiaries. Of that group, about 10,900 were at full retirement age, but collected more than half of the $1.9 billion in cash payouts that year, GAO said.
