How to Medically Retire from the Federal Government

To medically retire from the federal government, you file a disability retirement application with the Office of Personnel Management (OPM) showing that a medical condition prevents you from performing your job, that your agency cannot accommodate or reassign you, and that the condition will last at least a year. If OPM approves the claim, you begin drawing a monthly annuity and can keep your federal health and life insurance, subject to periodic medical reviews and an earnings cap until age 60.

The process is document-driven. Most denials trace back to a weak physician’s statement or a missed deadline, not to the underlying medical condition, so the value is in doing the paperwork right the first time.

Who Qualifies for Federal Disability Retirement

Eligibility runs on two tracks depending on which retirement system covers you. Under the Federal Employees Retirement System (FERS), you need at least 18 months of creditable civilian service.¹ Under the older Civil Service Retirement System (CSRS), you need at least five years.²

Service alone is not enough. You also have to show:

A medical condition that prevents useful and efficient service in your current position.
That your agency cannot reasonably accommodate the condition or reassign you to a vacant position at the same grade or pay level within your commuting area.
That the condition is expected to last at least 12 months.

The agency’s certification of its accommodation and reassignment efforts is a formal part of the application, not a background check.³

The One-Year Filing Deadline

Filing while you are still on the rolls is the cleanest path because your agency handles much of the paperwork. If you have already separated, OPM or your former agency must receive your application within one year of your separation date. Miss that window and you lose the right to apply.³

The only exception is mental incompetence at the time of separation or within a year after. In that situation, OPM can accept a filing within one year of the date competency is restored or a guardian is appointed, whichever comes first.³

If the deadline is closing in and your package is not complete, file anyway. An incomplete application counts as timely. OPM will not process it until you finish it, but a partial timely filing is far better than a perfect late one.

Forms You Have to File

Two form sets go together. The first is the standard retirement application: SF 3107 for FERS or SF 2801 for CSRS.⁴⁵ The second is SF 3112, the disability-specific documentation package. Your HR office can supply both, and both are on the OPM website.

SF 3112 has five parts, each filled out by a different person:

SF 3112A, the applicant’s statement, where you describe your condition and identify the specific duties you can no longer perform.
SF 3112B, the supervisor’s statement, documenting performance or attendance problems tied to your condition and what the agency tried.
SF 3112C, the physician’s statement, covering diagnosis, treatment, prognosis, functional limitations, and the link between the medical findings and your job duties.
SF 3112D, the agency’s formal certification of its accommodation and reassignment efforts.
SF 3112E, a completeness checklist.

Why the Physician’s Statement Matters More Than Anything Else

Weak SF 3112C statements are the most common reason OPM requests more information or denies a claim outright. A short note saying the patient cannot work is not enough. Your physician needs to tie the medical findings to the specific duties in your position description, explain why treatment cannot restore your ability to perform those duties, and address how long the condition is expected to last.

If your physician has never written one of these before, give them your position description and the SF 3112C instructions ahead of the appointment. Attach supporting records: test results, imaging, specialist evaluations. Everything that shows the connection between the diagnosis and the work you can no longer do belongs in the package.

Where to Send the Application

If you are still employed or separated fewer than 31 days ago, submit the package to your agency’s HR office. HR checks it, adds the agency documentation, and forwards it to OPM.⁶

If you separated 31 or more days ago, send it directly to OPM. Routing through a former agency at that point risks slowing the package down enough to threaten the one-year deadline.³ When you file directly, every required form and record is your responsibility. Keep copies of everything.

How Long OPM Takes and When Payments Start

OPM reviews the medical evidence, the agency certification, and your service history. If anything is missing or unclear, expect a request for more documentation. Respond promptly. Ignoring a request leads to denial.

Review typically runs several months. Straightforward cases move faster; complicated medical situations or thin submissions stretch out considerably. There is no way to hurry OPM, but a well-documented package is the single biggest factor in avoiding delays.

After approval, you go on interim payments while OPM finishes calculating your exact annuity. About 75 percent of retirees start receiving interim pay within 30 days of OPM getting a completed application; the remaining 25 percent, generally those with court-ordered benefits or service credit questions, usually start within 60 days. Interim pay is roughly 80 percent of your estimated final annuity, and OPM issues any back pay owed once the final calculation is complete.⁷ The annuity’s effective date is typically the day after your last day of pay.³

How Much You Will Receive

FERS

During the first 12 months of disability retirement, you receive 60 percent of your high-3 average salary, meaning the average of your highest three consecutive years of basic pay. After the first year, that drops to 40 percent of your high-3. If you also draw Social Security Disability Insurance (SSDI), OPM reduces your FERS annuity by 100 percent of the SSDI benefit during the first year and by 60 percent afterward.⁶

If your earned annuity based on actual service comes out higher than the 60/40 formula, you receive the earned annuity instead. For shorter careers, the 60/40 formula usually wins.

At age 62, OPM recomputes your annuity as if you had kept working the whole time you were on disability. Your total service includes the disability years, your high-3 is adjusted by every cost-of-living increase paid during that period, and the recomputation uses the standard FERS formula: 1 percent of the adjusted high-3 per year of service, or 1.1 percent if the combined service is 20 years or more.⁸

CSRS

CSRS disability retirees get a guaranteed minimum: the lesser of 40 percent of the high-3 average salary, or the annuity you would have earned had your service been extended to your 60th birthday. If your earned annuity based on actual service is higher than both, you receive the earned annuity instead.⁹

Keeping Your Health and Life Insurance

You can carry Federal Employees Health Benefits (FEHB) into disability retirement, but only if you were continuously enrolled for the five years of service immediately before your retirement date, or since your earliest opportunity to enroll if that was less than five years.¹⁰ The same five-year rule applies to Federal Employees Group Life Insurance (FEGLI), and OPM does not waive it for disability retirees.¹¹ If coverage lapsed at any point during that window, you may not be able to continue it. Check with HR well before you file.

What Happens After You’re Approved

Federal disability retirement is not automatically permanent. OPM can end it two ways: medical recovery and restored earning capacity.

Medical Reexaminations

OPM directs a medical examination one year after your disability retirement date and annually after that until you turn 60, unless your disability is found to be permanent. You have to submit to these. Refuse, and OPM stops paying until you comply.¹²

If OPM finds you have recovered, payments do not stop immediately. You have one year from the date of the recovery finding before the annuity terminates.¹²

The 80 Percent Earnings Limit

Under age 60, if your wages or self-employment income in any calendar year reach 80 percent or more of the current salary for the position you retired from, OPM treats your earning capacity as restored. Your annuity then terminates on June 30 of the following year. This applies even if your medical condition has not changed. The income alone triggers it.¹³

Every year, OPM sends a form asking you to report the prior year’s income. Fail to return it and payments can stop. Once you turn 60, the earnings limit no longer applies and you no longer have to report.⁶

Taxes on the Annuity

Part of each payment is a tax-free recovery of the retirement contributions you made during your career; the rest is taxable. For annuities that started after November 18, 1996, the IRS Simplified Method determines the split, and IRS Publication 721 walks through the calculation.¹⁴

If OPM Denies Your Application

A denial letter lays out OPM’s reasons, and you have two levels of review.

First is reconsideration by OPM. Your request must reach OPM within 30 calendar days of the date on the initial denial letter. Use it to fill the gaps OPM identified: additional physician statements, new medical evidence, a direct response to the stated reasons. Resubmitting the same package rarely changes the outcome.¹⁵

If OPM denies you again on reconsideration, you can appeal to the Merit Systems Protection Board (MSPB) within 30 days. An MSPB appeal is a formal legal proceeding with testimony, evidence rules, and an administrative judge.¹⁶ Many applicants bring in an attorney at this stage, and the preparation required is a significant step up from reconsideration.

1
Office of the Law Revision Counsel. 5 USC 8451 – Disability Retirement
2
Office of Personnel Management. Information About Disability Retirement (CSRS)
3
U.S. Office of Personnel Management. CSRS and FERS Handbook Chapter 60 – Disability Retirement
4
Office of Personnel Management. SF 3107 – Application for Immediate Retirement
5
Office of Personnel Management. SF 2801 – Application for Immediate Retirement
6
Office of Personnel Management. Information About Disability Retirement (FERS)
7
U.S. Office of Personnel Management. When Will I Receive My First Retirement Payment
8
U.S. Office of Personnel Management. Computation
9
U.S. Office of Personnel Management. Computation
10
U.S. Office of Personnel Management. Continuing Insurances Into Retirement
11
U.S. Office of Personnel Management. Insurance FAQs – Retirement and FEGLI
12
eCFR. 5 CFR 844.401 – Recovery From Disability
13
eCFR. 5 CFR 844.402 – Restoration of Earning Capacity
14
Internal Revenue Service. Publication 721 – Tax Guide to U.S. Civil Service Retirement Benefits
15
Office of Personnel Management. CSRS and FERS Handbook Chapter 3 – Reconsideration and Appeal
16
U.S. Merit Systems Protection Board. How to File an Appeal