Both the current Administration and the previous Administration have called for eliminating the augmented compensation rate because it is out of line with benefits under state workers‘ compensation systems. As the acting head of the DOL Office of Workers‘ Compensation Programs testified, ―Few state systems provide any augmentation for dependents, and none approaches the Federal level.‖84 He also told the committee that the 75 percent rate is so high that it can create a financial disincentive for an injured employee to successfully rehabilitate and return to work.85 Ron Watson, testifying on behalf of the NALC, argued that the FECA tax-free 75 percent rate does not often exceed pre-injury take-home pay and does not create a financial disincentive to forego the pay, together with substantial benefits, that the individual would receive if able to return to work.86
The Obama Administration recommended that all disabled FECA beneficiaries receive compensation at a rate of 70 percent of lost wages – a percentage that is between the current 75 percent rate for individuals who have dependents and the current 66 2/3 rate applicable to those without dependents. However, the Committee determined that the rate should be set at 66 2/3 of lost pre-disability wages for all beneficiaries. This provision, in section 303 of the bill, brings the program in line with a majority of the state programs, including the District of Columbia. Currently, 36 states and the District of Columbia have total disability benefit rates that are set at this level.87 This also brings the program in line with benefits offered under other federal workers‘ compensation programs, such as the Longshore and Harbor Workers‘ Compensation Act, which also sets benefits at two-thirds of the pre-disability wage.
Section 303 also contains provisions to phase in the new compensation rate for current beneficiaries, and to exempt those who are permanently and totally disabled.
―Schedule Compensation Payments.‖ An employee who suffers a permanent disability involving the loss of an appendage or bodily function is entitled to disability benefits for a number of weeks, as provided under schedules set by statute and regulation.88 The employee may receive the schedule compensation benefit in addition to FECA benefits for partial or total disability but may not receive both simultaneously. Section 304 of the bill would make a limited but important exception: if an individual was injured before enactment of this legislation and faces a reduction in the level of disability benefits under section 302 or 303 of the bill, the individual may receive ―schedule compensation payments‖ once the individual starts receiving the reduced benefits for partial or total disability.
Strengthened back-to-work program. In addition to removing certain financial disincentives to returning to work, S. 1789 adopts several provisions from the Obama Administration‘s proposal to strengthen existing programs that help injured workers get back to work: