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Board asks for review of catastrophic disability survivor benefit after DRS rulemaking pause
Summary
The board requested a comprehensive review of DRS'administrative practice for catastrophic disability survivor benefits, focusing on whether survivor reductions should be based on the larger catastrophic benefit or on the lower service retirement benefit; DRS paused rulemaking to allow board input.
The LEOFF Plan 2 Board on July 23 directed staff to prepare a comprehensive review of catastrophic disability survivor benefits after Department of Retirement Systems (DRS) paused rulemaking to seek board input.
Board staff explained the technical issue: catastrophic disability retirees often receive a higher benefit (commonly cited as a 70% minimum of final average salary), subject to offsets for workers'compensation and Social Security Disability. DRS identified that basing survivor reductions on the catastrophic benefit could produce situations in which survivors receive a larger ongoing benefit than the retiree did while alive, or where members who are killed in the line of duty are treated differently from those who first retired on catastrophic disability and later died from the same injury.
DRS changed administrative practice in 2014 to base survivor reductions on the service retirement benefit rather than on the larger catastrophic-disability calculation. DRS staff told the board it provides benefit estimates showing survivor options for those applying for duty disability and that one recent case involved a member who added a survivor benefit after retirement and did not receive a full illustrative estimate in advance.
Board members expressed concern that some members may assume a 100% survivor option will leave survivors receiving the same monthly check the retiree received while alive. Board discussion highlighted the complexity of offsets and administrability if survivor reductions were pegged to a fluctuating catastrophic-disability payment. After discussion, the board approved a motion to request a comprehensive report that would examine (1) the implications of basing survivor reductions on the catastrophic-disability benefit versus the service retirement benefit, (2) whether rulemaking or statutory change is required, and (3) potential administrative solutions and cost impacts. The motion passed by voice vote.
