VRS Disability Retirement Plan 2

If you are vested and have a non-work related disability, the amount of your disability retirement benefit is the minimum guaranteed benefit or VRS formula amount, whichever is higher. If you are not vested, you are eligible for the minimum guaranteed benefit only.

You must apply for Social Security Disability Insurance benefits or, if you are eligible, Social Security retirement benefits to be considered for non-work related disability retirement under VRS. For more information, call the Social Security Administration toll free at 1-800-772-1213, visit the Social Security Administration website or contact your local Social Security Administration office.

Minimum Guaranteed Benefit

• If you qualify for Social Security disability or full retirement benefits, the minimum guaranteed benefit is equal to 33⅓ percent of your average final compensation or the VRS formula amount, whichever is higher.
• If you do not qualify for Social Security benefits, the minimum guaranteed benefit is equal to 50 percent of your average final compensation or the VRS formula amount, whichever is higher.

VRS Formula Amount

• The formula amount for those under age 60 is 1.7 percent of average final compensation multiplied by (a) twice the amount of total service credit at disability retirement or (b) actual service plus the number of years remaining between age at disability retirement and age 60, whichever is less.
• The formula amount for those age 60 or older is 1.7 percent of average final compensation multiplied by total service credit at disability retirement.

A work-related disability is the result of an occupational illness or injury that occurs on the job and the cause is determined to be eligible for benefits under the Virginia Workers’ Compensation Act. To be considered for a work-related disability retirement benefit under VRS, you must:

• Apply for benefits under the Virginia Workers’ Compensation Act if you are a state employee. For more information, visit the Department of Human Resource Management website.If you are a teacher or political subdivision employee, check with your human resource office about workers’ compensation benefits your employer may offer.
• Apply for Social Security Disability Insurance benefits or, if you are eligible, Social Security retirement benefits. For more information, call the Social Security Administration toll free at 1-800-772-1213, visit the Social Security Administration website or contact your local Social Security Administration office.

Guaranteed Benefit

• If you qualify for Social Security disability or full retirement benefits, the work-related benefit is equal to 50 percent of your average final compensation. You will receive the guaranteed benefit or the VRS formula amount (see Non-Work Related Disability above), whichever is higher. The amount will be offset by Workers’ Compensation benefits.
• If you do not qualify for Social Security benefits, the guaranteed benefit is equal to 66⅔ percent of your average final compensation. You will receive the guaranteed benefit or the VRS formula amount (see Non-Work Related Disability above), whichever is higher. The amount will be offset by Workers’ Compensation benefits.

If your application for work-related disability retirement is approved, you will be eligible for a refund of your member contributions and interest in your member contribution account in addition to a monthly benefit. If you are not vested, you will be eligible only for contributions you have made, plus accrued interest. You will not be eligible for a refund of any contributions made by your employer or the interest on these contributions.

When you apply for disability retirement, you choose how you want to receive your benefit. The options are the Basic Benefit or Survivor Option. The payout option you elect is irrevocable. That means you cannot change it after you retire, with the exception of the Survivor Option under some conditions.

Basic Benefit

The Basic Benefit is based on your age, service credit and average final compensation at retirement. The amount of the benefit depends on whether you retire on non-work related or work-related disability (see sections above). The Basic Benefit does not provide a continuation of a benefit to a survivor. However, your named beneficiary may be eligible for a refund of any member contributions and interest in your member contribution account upon your death.

The effective date of disability retirement is the first day of the month in which you retire. Your human resource office can assist you with your application. For more information about applying for disability retirement, see Member Handbooks and Guides. You also can download Disability Retirement Forms. Read the directions on all forms carefully and provide all signatures and required documents.

Social Security

You must apply for Social Security Disability Insurance benefits or, if you are eligible, Social Security retirement benefits to be considered for VRS disability retirement. For more information, call the Social Security Administration toll free at 1-800-772-1213, visit the Social Security Administration website or contact your local Social Security Administration office.

Service Retirement Pending Approval of Disability Retirement

If you are applying for non-work related disability retirement and also qualify for an unreduced or reduced service retirement benefit,you may apply for service retirement and disability retirement at the same time. If your application for disability retirement is denied, you may begin receiving a service retirement benefit while you are appealing the denial of your disability retirement application.

If you are applying for work-related disability retirement, VRS cannot begin paying a service retirement benefit while your disability retirement application is pending. However, if you apply for service retirement, the retirement date you select will be honored if your work-related disability retirement application is denied.

Submit the Application for Service Retirement (VRS-5) 125kb with your disability retirement application. Select the Basic Benefit or Survivor Option on your service retirement application. If you wish to retire under another benefit payout option in the event your disability retirement application is denied, include a letter with your application reserving the right to elect a different benefit payout option.

Receiving Your Benefit

• Your disability retirement benefit is deposited to the bank account you designate on the Authorization for Direct Deposit of Monthly Benefit (VRS-57 22kb, which you submit with your disability retirement application.
• Cost-of-living adjustments (COLAs) go into effect on July 1 of the second calendar year after you retire and are effective each July 1 thereafter, when provided. If you elect the Survivor Option, your COLA will be based on your reduced benefit amount.
• Each January, you receive an IRS Form 1099-R at your mailing address. The form shows your benefit income and deductions for the previous calendar year.

Taxes

If you retire on non-work related disability or on work-related disability with the VRS formula amount, your benefit will be subject to federal income taxes and state income taxes if you live in a state that taxes income. If you retire on work-related disability with the guaranteed benefit, your benefit may be exempt from federal and state income taxes. For more information, contact the Internal Revenue Service toll free at 1-800-829-1040 or visit the Internal Revenue Service website.

Group Life Insurance

• If you are covered under the VRS Group Life Insurance Program, a portion of your basic group life insurance will continue into retirement at no cost to you. Your coverage will begin to reduce by 25 percent beginning the January 1 following one calendar year from your 65th birthday. For example, if you turn age 65 on October 12, 2011, your life insurance will begin to reduce on January 1, 2013. It will continue to reduce by 25 percent each January 1 until it reaches 25 percent of its original value.
• If you have optional group life insurance coverage, you can continue a portion of your coverage into retirement provided you as well as your spouse and dependent children, if you enrolled them in the program, are covered during the 60 months preceding your disability retirement date.

Health Insurance Credit

If you retire on disability, you are eligible for the health insurance credit. This is a tax-free benefit that assists with the cost of premiums you pay for single coverage under qualifying health insurance plans. For more information, see Health Insurance Credit.

Disability Reexamination

After you retire on disability, you will be required to provide updated medical information until your VRS normal retirement age. You also may be required to have annual follow-up examinations until you reach your normal retirement age. If you do not comply with these requirements, your disability retirement benefit may end.

You may be able to continue receiving your VRS disability retirement benefit if you work for an employer that does not participate in VRS or in a non-covered position with a VRS-participating employer. For more information, see Working After Retirement.Your disability retirement benefit will end if you return to any position that requires the same or similar duties as those you performed before you retired on disability.

If you are considering working after disability retirement, call VRS toll free at 1-888-VARETIR (1-888-827-3847) to determine whether the position would disqualify you from receiving disability retirement benefits. In addition, if you are receiving a Social Security disability or retirement benefit, call the Social Security Administration toll free at 1-800-772-1213, visit the Social Security Administration website or contact your local Social Security Administration office to determine the effect of earnings on your benefit.