FECA provides cash and other benefits to eligible federal employees who suffer temporary or permanent disabilities resulting from work-related injuries or diseases. DOL’s Division of Federal Employees’ Compensation in the Office of Workers’ Compensation Programs (OWCP) administers the FECA program and charges agencies for whom injured employees worked for benefits provided. These agencies subsequently reimburse DOL’s Employees’ Compensation Fund from their next annual appropriation. FECA benefits are adjusted annually for cost-of-living increaseshas large FECA program costs. At the time of their injuries, 43 percent of and are neither subject to age restrictions nor taxed. USPS FECA beneficiaries in 2010 were employed by USPS, as shown in table 1. One way to measure the adequacy of FECA benefits is to consider wage replacement rates, which are the proportion of pre-injury wages that are replaced by FECA. Wage replacement rates that do not account for missed career growth capture the degree to which a beneficiary is able to maintain his or her pre-injury standard of living whereas wage replacement rates that account for missed career growth capture the degree to which a beneficiary is able to maintain his or her foregone standard of living (i.e., standard of living absent an injury). Data limitations can preclude calculating wage replacement rates that account for missed career growth; however, doing so provides a more complete story of the comparison between an injured worker and his or her counter-factual of having never been injured. Wage replacement rates can be targeted by policymakers; however, there is no consensus on what wage replacement rate policies should target. FECA beneficiaries receive different benefits past retirement age than workers who retire under a federal retirement system. Specifically, under FERS, federal retirees have a benefit package comprised of three components: the FERS annuity, which is based on years of service and high-3 average pay; the TSP, which is similar to a 401(k); and Social Security benefits. FECA benefits do not change at retirement age and beneficiaries cannot receive a FERS annuity and FECA benefits simultaneously. In addition, FECA beneficiaries cannot contribute to their TSP accounts post-injury, but they can receive benefits from contributions made to their TSP accounts prior to being injured. In addition, Social Security benefits attributable to federal service are offset by FECA. If an individual has a disability and no current capacity to work, OWCP determines that he or she is a total-disability beneficiary and calculates long-term FECA benefits as a proportion of the beneficiary’s entire income at the time of injury. In 2010, 31,880 FECA beneficiaries received long-term total-disability cash benefits. Alternatively, if an individual recovers sufficiently to return to work in some capacity, OWCP determines that he or she is a partial-disability beneficiary and reduces his or her FECA benefits from the total-disability amount. For such partial-disability beneficiaries, OWCP calculates long- term benefits based on any loss of wage earning capacity (LWEC), as compared to their pre-injury wages. A beneficiary’s LWEC may be based on the difference between their pre-injury wages and their actual post-injury earnings if the beneficiary has found employment that OWCP determines to be commensurate with their rehabilitation. Alternatively, OWCP may construct a beneficiary’s LWEC based on the difference between pre-injury wages and OWCP’s estimate of what the FECA beneficiary could earn in an appropriate job placement (constructed earnings). In 2010, 10,594 FECA beneficiaries received long-term partial- disability cash benefits. In addition to our work on FECA benefit levels, we have also conducted work on program integrity and management. We have identified several weaknesses in these areas. Most recently, in April 2013, we found examples of improper payments and indicators of potential fraud in the FECA program, which could be attributed, in part, to oversight and data- access issues. For example, we found cases where, in comparison to state wage data reports, individuals underreported their employment wages to DOL. Underreporting earnings could result in overpayments of FECA benefits. DOL did not have access to wage data to corroborate the self-reported incomes. Because of this limitation, we included a matter for congressional consideration, stating that Congress should consider granting DOL additional authority to access wage data to help verify claimants’ reported income and help ensure the proper payment of benefits. Congress has not yet passed legislation to give DOL additional authority to access wage data. We also found that, although some FECA claimants may be eligible to receive both FECA and unemployment insurance benefits, DOL did not have a process to share the necessary data to help the states identify overlapping payments. We recommended that the Secretary of Labor assess the feasibility of developing a cost- effective mechanism to share FECA compensation information with states. DOL agreed with the recommendation and has taken steps to develop a cost-effective mechanism to share FECA compensation information with states, but has not completed its efforts. Specifically, in August 2014, a DOL official stated that the agency’s Office of Workers’ Compensation Programs and Office of Unemployment Insurance are working with DOL’s Office of the Solicitor to develop agreements that would allow DOL to provide information on FECA compensation to states for use in determining unemployment benefits. When completed, these actions should help states to identify whether claimants are inappropriately receiving overlapping UI and FECA payments. Our simulations of the effects of compensating non-USPS and USPS total-disability beneficiaries at the single rate of either 66-2/3 or 70 percent of wages at injury, regardless of the presence of dependents, reduced the median wage replacement rates. Median wage replacement rates overall, and within the subgroups we examined, were generally lower under the 66-2/3 percent compensation proposal. As we reported in 2012, compared to the current FECA program, both proposals reduced 2010 median wage replacement rates for total- disability non-USPS and USPS beneficiaries, as shown in figure 1. The decreases in the overall median wage replacement rates were due to the greater proportion of beneficiaries who had a dependent—73 percent of non-USPS beneficiaries and 71 percent of USPS beneficiaries. Beneficiaries with a dependent received lower compensation under both proposals whereas beneficiaries without a dependent saw their compensation increase or stay the same. As shown in the middle group of bars in figure 1, the results of our simulation indicate that median wage replacement rates for USPS beneficiaries were generally higher than those for non-USPS beneficiaries. In both cases, the wage replacement rates account for missed income growth, as they are simulated based on 2010 take-home pay. All else equal, FECA beneficiaries who would have experienced more income growth—from the time of injury through 2010—had lower wage replacement rates than did those beneficiaries who would have experienced less income growth absent their injury. In general, USPS beneficiaries missed less income growth due to their injury than did non- USPS beneficiaries. Consequentially, USPS beneficiaries had higher wage replacement rates than non-USPS beneficiaries. For example, 4 out of 5 USPS beneficiaries in our analysis would have had less than 10 percent income growth had they never been injured. In contrast, 2 out of 5 non-USPS beneficiaries would have had less than 10 percent income growth, absent an injury. Under our simulations, both proposals increased the difference in wage replacement rates between beneficiaries with and without a dependent, increasing the magnitude and reversing the direction of the difference in median wage replacement rates, as shown in figure 2. Had we been able to account for the actual number of dependents, beneficiaries with dependents would have had lower wage replacement rates and thus the difference between median wage replacement rates would have been smaller under FECA and larger under both proposals. For other beneficiary subgroups we examined for our 2012 reports, the proposals did not reduce wage replacement rates disproportionately to the reduction in the overall median. However, we found that under the current FECA program and both proposals, wage replacement rates for some beneficiaries, such as those who, due to injury earlier in their careers, missed out on substantial income growth, were substantially lower than the overall median. FECA was not designed to account for missed income growth and thus total-disability beneficiaries who missed substantial income growth had lower wage replacement rates— outweighing the cumulative effect of FECA’s annual cost of living adjustments—as shown in figure 3. According to the retirement simulations from our 2012 reports comparing current FECA benefits to FERS benefits, we found that the overall median FECA benefit package (FECA benefits and TSP annuity) for both USPS and non-USPS FECA beneficiaries was greater than the current median FERS retirement benefit package (FERS annuity, TSP annuity, and Social Security). Specifically, the median FECA benefit package for non- USPS beneficiaries was 32 percent greater than the current median FERS—and 37 percent greater for USPS FECA beneficiaries. This implies that in retirement, FECA beneficiaries generally had greater income from FECA and their TSP in comparison to the FERS benefits they would have received absent an injury. As we reported in 2012, although the overall median FECA benefit was substantially higher than the median FERS benefit for 2010 annuitants, the difference between the two varies based on years of service. Our simulation showed that median FECA benefit packages were consistently greater than median FERS benefit packages across varying years of service; however, the gap between the two benefits narrowed as years of service increased. This occurred in large part because FERS benefits increase substantially with additional years of service. For example, under our simulation non-USPS beneficiaries whose total federal career would have spanned less than 10 years had a median FECA benefit that was about 46 percent greater than the corresponding FERS benefit.