The $38.3 Billion Benefit With No Retirement Age

Every state runs its own workers' compensation system, and every one of them eventually stops paying: benefits taper, cap out, or end at retirement age.▸ The federal government's own program for its own employees does none of that. The Federal Employees' Compensation Act (FECA) pays wage-loss and medical benefits for as long as a disability lasts — which, per the Congressional Research Service, means "there is no maximum duration of benefits and no maximum age at which benefits must be terminated." There is also no dedicated trust fund behind it: Congress advances the money each year, and employing agencies reimburse it dollar-for-dollar the next year through a process called "chargeback."

In fiscal year 2025 the program opened 79,000 new claims; over the same chargeback year it paid out $3.13 billion — $2.146 billion in wage-loss compensation, $885 million in medical and rehabilitation care, and $102 million in death benefits to survivors of workers killed on the job — to more than 173,000 people.▸ Base compensation runs two-thirds of a worker's pre-disability wage, rising to 75% if they have dependents, and it is not taxed. Running the program itself is cheap: overhead is 4% of benefits paid, and because disputes are resolved administratively rather than in court, the government avoids litigation costs that can eat up to 46% of a payout in some state systems.

None of that shows up as a liability on any single year's ledger, because FECA has no funded reserve — it runs on cash, appropriated annually and charged back to agencies afterward.▸ But every future dollar the program is actuarially expected to pay out does show up on the government's books, and as of September 30, 2025 that number was $38.3 billion, according to notes to the U.S. government's FY2025 financial statements published by the Treasury's Bureau of the Fiscal Service. That figure sits apart from federal pensions and life insurance in the same filing — it is the price tag of an open-ended promise, not a trust fund balance.

The reason the liability keeps compounding is structural: FECA recipients can — and do — stay on the rolls well past when they'd otherwise retire.▸ Because benefits are tax-free and indexed for inflation, the CRS report notes that in some cases the monthly FECA check is worth more than the federal retirement annuity a worker gave up to keep receiving it.

The U.S. Postal Service carries a disproportionate share of that liability: in fiscal year 2022, Postal Service employees accounted for more than 41% of all new federal workers' comp cases and 42% of all benefit payments across the federal government, according to its own Inspector General.▸ USPS tracks its long-term cases as the "periodic rolls": employees whose disabilities are expected to last more than 90 days. Between FY2017 and FY2022 that roll shrank modestly, from 15,525 to 14,932, a decrease the OIG credits to case reviews, modified assignments, and attrition. What didn't change was the age range: at the end of FY2022, USPS employees on the permanent-disability rolls ran from 20 years old to 103. Because FECA recognizes no retirement age, a claim opened decades ago simply continues.

A no-expiration benefit still has to be adjudicated by someone, and that side of the machine is under real strain.▸ The Department of Labor has told the union representing letter carriers that well-run state programs, like Washington's, hold claims examiner caseloads to about 200 cases per examiner — "the industry gold standard." DOL's own comparison, relayed by the National Association of Letter Carriers, put its current FECA caseload at roughly four times that benchmark.

The consequences of that overload aren't abstract.▸ In April 2025, OWCP unilaterally cancelled every scheduled oral hearing nationwide — the only appeal route the statute itself guarantees, in place since 1966 — citing the loss of its contracted transcription service. Hearings resumed at the end of June, but for two months, injured workers awaiting a ruling on denied claims, reduced benefits, or terminated wage-loss payments had nowhere to appeal, "many without income and unable to work," per the union's own account of the disruption.

Dollar and headcount figures in this piece come from three separate vintages — a FY2025 program snapshot, a September 2025 Treasury balance sheet, and a FY2022 Postal Service audit — because FECA's constituent agencies publish on different schedules; each figure is labeled with its own date above.