The “set-aside” rule most commonly becomes an issue in the following scenario.  Federal employees applying for  federal disability retirement through  OPM are required to apply for Social Security disability at the same time they apply to  OPM.

However, the Social Security Administration can take months or even years to issue a final ruling on entitlement to Social Security disability retirement.  When  OPM awards  federal disability retirement to a postal worker or federal employee, and that federal employee or postal worker later learns that social security disability has been awarded, there is a strong likelihood that  OPM is overpaying the  federal disability retirement annuity to the former federal employee or postal worker, and the “set-aside” rule comes into play.

The “set-aside” rule comes from an  OPM regulation that individuals who are aware that they are receiving overpayments are obligated by the principles of equity and good conscience to set aside the amount overpaid pending recoupment by  OPM.   In other words,  OPM is entitled to calculate certain offsets to your  federal disability retirement annuity based on the amount of social security disability benefits you are  receiving.   OPM requires you to notify it that you are receiving social security benefits within sixty days of receipt of those benefits.  The wise course of action is to “set-aside” the social security payments so that  OPM may recover those payments after its bureaucracy recalculates your federal disability retirement annuity.

Make no mistake –  OPM will find out that social security disability benefits are being paid.  It can take them months, or even years, to discover this overpayment, and they can recover the overpayment from you.  There are some provisions that allow you to challenge the amount of the overpayment, and some provisions that allow for waiver of the overpayment, but why go down that road?

If you receive social security disability benefits after receiving  federal disability retirement benefits from  OPM, promptly notify  OPM of this (I recommend sending it Certified Mail, Return Receipt Requested), and then segregate the social security disability payments.  Many attorneys, including this Firm, recommend placing these funds in a low risk, interest-bearing account that is separate from your actual checking and savings account, for hopefully obvious reasons, until the slow gears of the  OPM bureaucracy recalculates your  federal disability retirement annuity and the overpayment.

No post on this website is legal advice, is meant to be legal advice, and certainly does not serve as a substitute for legal advice. Information is power, and we are providing this information to give you, the federal employee, with some power. This information is not widely or easily accessible to Federal Employees.

The Attig Law Firm represents Federal employees under FERS or CSRS in their applications for federal disability retirement to OPM. If an application for  federal disability retirement is denied, the Firm represents Federal employees under both FERS and CSRS in their MSPB appeals of denials of  federal disability retirementapplications by OPM.

It is best to consult with a lawyer familiar with Merit Systems Protection Board (MSPB) and  federal disability retirement appeals to discuss the facts and law of your particular case. If you have questions about federal disability retirement under FERS or CSRS, or OPM’s denial of your applications for  federal disability retirement benefits under FERS or CSRS, contact an MSPB attorney or a Federal Disability Retirement Lawyer at the Attig Law Firm to schedule a telephone consultation.