Workers’ Compensation for State & Local Government Employees

Understanding the coordination of state and local government employee benefits with workers’ compensation in North Carolina

The single largest employer in North Carolina (by a long shot) is not Amazon, Walmart or another private company that you might guest, but actually the state government. Over 81,016 people work for the state of North Carolina, across many different branches of government—from education, transportation, public safety and healthcare, to law enforcement, firefighting and corrections.

And that just begins to scratch the surface. When you factor in local government employees, the number is much larger.

In North Carolina alone, over half a million residents—549,747 officially—are employed in a full-time equivalent job by state and local government agencies.

In March 2014, payroll costs for state and local government employees totaled over $2 billion, according to Governing.com. Many of these costs help support special programs offered to local and state government employees. While these programs can offer better benefits to government employees, there is often confusion over how they impact workers’ compensation and disability in the event of a work-related accident, injury or occupational illness.

In this article, we’ll provide an overview of state and local government employee benefits available under the North Carolina Retirement System, and how those benefits interact with the N.C. Workers’ Compensation Act.

NOTE: Every state employee can access his or her personal account and all forms referenced in this Chapter through the ORBIT system located at www.MyNCRetirement.com. Information regarding a specific beneficiary may be obtained by calling the Retirement System at 1-877-627-3287.

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Types of alternative coverage

Are you eligible for alternate coverage?

In order to answer this question, we’ll need to explore the various alternate coverage plans available for government employees in North Carolina at the state and local levels. These plans include:

• TSERS disability income and retirement plans (for teachers and other state employees)
• LGERS disability and retirement plans (for county, city, town and other local government employees)
• Salary continuation
• Police separation allowance
• Firefighter and rescue squad benefits
• State Employee Health Care Plan (SEHP)

Teachers’ & State Employees’ Retirement System (TSERS)

Many state employees are covered by the Teachers’ and State Employees’ Retirement System of North Carolina (TSERS), which is a defined benefit plan administered by the N.C. Department of State Treasurer, and is governed by Chapter 135 of the N.C. General Statutes.

TSERS benefits include participation in the state retirement benefit plan, short term disability plan, extended short term disability plan, long term disability plan, and health care plan. Members pay 6% of their pre-tax compensation to participate in the system.

To qualify for TSERS participation as a state government employee, you must be:

• A permanent full-time teacher or employee of a state-supported Board of Education or community college, or a permanent employee of the state or its agencies, and
• Work at least 30 hours per week for 9 months per year.

TSERS also covers specific law enforcement officers who meet the following qualifications:

• A permanent, full-time, paid employee of the state (or any of its agencies, departments, bureaus or educational institutions),
• An individual who is actively serving in a position with assigned duties of prevention and detection of crime or the general enforcement of criminal laws, and
• Someone who possesses the power of arrest by virtue of an oath administered by the authority of the state.

Examples of employees in the TSERS systems are public teachers, principals, school librarians, bus drivers, school custodians, state parole officers, ALE agents, SBI agents, and state highway patrol officers.

Local Government Employees’ Retirement System (LGERS)

LGERS is a defined benefit plan administered by the N.C. Department of State Treasurer that includes both retirement and disability benefits. It is governed by N.C. Gen. Stat. §§ 128-21 through 128-38.1.

Membership in LGERS is open to full-time employees of any county, city, town or other local government who have agreed to participate in LGERS. Members pay 6% of their pre-tax compensation to participate in the system.

Examples of LGERS members include city police officers, Sheriff’s deputies, city managers, sanitation workers, county librarians, and parks & recreation officers.

Salary continuation

The state of North Carolina provides salary continuation for state law enforcement officers and other specific state employees who are disabled in the course of their official duties. Those eligible for salary continuation will receive their full salary for up to 2 years from the date of injury (under N.C. Gen. Stat. §§ 143-166.13, 143-166.14).

However, this statute was amended in 2014 to allow salary continuation only when the injury was proximately caused by the “heightened risk and special hazards directly related to the violent nature” of the injured employee’s official duties. Also, the statute says that the salary continuation will end once a job is offered that complies with the treating physician’s restrictions.

Examples of state law enforcement officers eligible for salary continuation include State Highway Patrol officers, state correctional officers, state probation and parole officers, SBI agents, and ALE agents. Local law enforcement and correctional officers are not eligible for salary continuation.

(See N.C. Gen. Stat. § 143-166.13 for a complete listing of state employees eligible for salary continuation.)

Teachers and other full-time employees of the state’s educational institutions injured in an episode of violence may receive their full salary for up to 1 year from the date of the accident. However, substitute teachers and part-time teachers and aides are not eligible for salary continuation.

The application for salary continuation must be filed within 1 year from the date of the episode of violence. Again, salary continuation for an episode of violence only applies to full-time employees of educational institutions supported by or under the control of the state.

Police separation allowance

Both state and local sworn law enforcement officers who possess the power of arrest and who are permanent, full-time, paid employees with at least 5 years of continuous service as a law enforcement officer preceding retirement, may be eligible for monthly separation allowance from their retirement date to age 62—or until they return to any employment within the state government.

Note that this membership service may not be purchased. (N.C. Gen. Stat. § 143-166.41)

State Employee Health Plan (SEHP)

The North Carolina Teachers’ and State Employee’s Comprehensive Major Medical Plan (SEHP) extends health care benefits for teachers, state employees, retirees and their dependents. The SEHP also covers beneficiaries and their dependents who qualify for state workers’ compensation benefits, short-term disability benefits, extended short-term disability benefits, and long-term disability benefits.

The SEHP is self-insured by the state and is exempt from ERISA (the Employee Retirement Income Security Act) because it is a government-sponsored plan. Local government employees are not eligible for the SEHP unless their agency elects to participate in the system. The SEHP is administered by Blue Cross/Blue Shield.

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Types of service

Both TSERS and LGERS reference “contributing membership service” and “creditable service” as precursors to certain benefits. Here’s what these terms mean:

Contributing membership service

“Contributing membership service” means service as an employee rendered while a member of the retirement system. This is service time that accrues when you, the employee, pay 6% of the gross monthly wages to the State Retirement System in the form of a payroll deduction.

Contributing membership service is needed to vest in the SEHP and the retirement system. Contributing membership service is also earned while on vacation leave, continuous sick leave or salary continuation.

Contributing membership service is NOT earned while on workers’ compensation leave, short-term disability, extended short-term disability, or long-term disability.

Non-contributing service

This is service time for which a member receives retirement credit, but for which 6% was not withheld from their paycheck. This time does not count toward vesting but does count toward retirement credits. Examples include time spent on short-term disability, extended short-term disability, and long-term disability; as well as time purchased while on workers’ compensation.

Non-contributing service may be purchased, whereas membership service cannot.

However, the General Assembly introduced HB 188 in February 2019 to eliminate the purchase of retirement credits. The bill did not pass the House, so as of now a member can still purchase retirement credits. But, you should be aware that the General Assembly may revisit this issue in a future session.

Creditable service

This is the sum of both contributing and non-contributing membership service credit. You can vest in the retirement system after 5 years of membership service. It is not possible to purchase membership service in order to vest in the system, although currently it is possible to purchase non-contributing service after vesting.

A combination of both types of service is known as creditable service, or “retirement credits.”

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How to apply for TSERS disability income plans

Short-term disability (STD)

TSERS participants are eligible to receive short-term disability benefits if they meet the following 3 eligibility requirements:

1. At least 1 year of contributing membership service in the Retirement System earned within 36 months preceding the disability,
2. Be found mentally or physically disabled for the further performance of their usual occupation by the State Medical Board, and
3. Have a continuous disability incurred during the time of active employment.

The short-term disability plan pays approximately 50% of pre-injury wages. This payment is made by your government employer instead of the State Retirement System, with no contribution from you.

Your doctor must certify disability on Forms 7A and 703.

The state’s use of the word “disabled” may cause confusion. In the workers’ compensation system, the term “disability” means the inability to earn pre-injury wages. However, for STD/LTD purposes, the term “date of disability” is used to mean either the day after the last day you actually worked or the date the physician certified that you were unable to work—whichever is later.

For example, if the last day you worked was September 1, 2020, then your date of disability would be September 2, 2020.

There is a 60-day waiting period that starts the day after the last day worked. After the waiting period, you may receive short-term disability for up to 365 days.

There used to be no time limit to file the short-term disability application. However, as of July 1, 2018, the state requires that the STD application be made within 365 days of the date of disability. For injuries occurring prior to 2018, it may still be possible to apply for short-term disability. However, the best practice is to apply for short-term disability as soon as your doctor takes you out of work.

As the injured employee, you should submit the forms to your employer, who then fills out its portion and sends the form to the state. However, it is best practice to keep a copy of all forms. You may submit the completed forms directly to the State Treasurer’s office at the address on the bottom of the forms, but doing so may delay processing while the state waits to receive your employer’s portion.

Don’t forget that you may use sick time, vacation time, workers’ compensation, or salary continuation during the 60-day waiting period.

Our recommendation is to apply for short-term disability as soon as the doctor takes you out of work. The time limit to apply for short-term disability is 365 days from the date of disability. You must apply for STD before being eligible for long-term disability. You must qualify for LTD in order to keep your health insurance through the SEHP, so it’s imperative that you apply for short-term disability within that first 365 days of being out of work or risk losing health insurance.

Have you accrued enough retirement credits?

As an employee, you will earn creditable service if they receive at least $1 in short-term disability payments. This credit will be applied toward retirement, but not toward vesting.

A member may apply for STD/extended STD even if the member is already eligible for unreduced state retirement. However, a member may not receive short-term disability and state retirement at the same time because you must be on the state payroll to receive short-term disability.

However, a member may receive both STD/extended STD and federal Social Security retirement. There are no offsets against short-term disability for federal social security retirement.

Coordination with workers’ compensation

Short-term disability benefits are offset dollar-for-dollar by temporary total disability (TTD). This offset does not apply to permanent partial disability (PPD) benefits. Therefore, once you reach maximum medical improvement (MMI), it may be better to take the PPD rating and continue to receive short-term disability benefits rather than ongoing TTD to eliminate the offset. The short-term disability offset will end once a clincher is approved, but it is still a good idea to add Social Security proration language to the clincher.

State employees who receive only workers’ compensation benefits will not earn any creditable service. Therefore, it is always a good idea for TSERS participants to apply for short-term disability benefits concurrently with workers’ compensation benefits in order to continue to earn retirement credits. (This is especially true now that the state requires the short-term disability application to be made within 1 year of going out of work.)

Although short-term disability benefits are offset by TTD, the state is entitled to a credit under N.C. Gen. Stat. § 97-42 for short-term disability benefits paid in a denied workers’ compensation claim that is later found compensable. This is because the state short-term disability system is fully funded by the employer with no contributions from the employee. However, the attorneys’ fees should be based on the entire award of TTD before the credit is applied.

State employees who are receiving TTD should always apply for concurrent short-term disability.

Extended short-term disability

Extended short-term disability benefits are available for 1 additional year following the expiration of the short-term disability period. This period must be exhausted before applying for extended short-term disability.

If you are a member, you should apply 90 days before the conclusion of short-term disability. These benefits are available with permission of the Medical Board, which considers the likelihood of you returning to work within the 1-year extension.

Extended short-term disability is also offset by TTD. It is paid by the State Treasurer’s office and not the employer.

There is no Social Security disability offset against short-term or extended short-term disability.

Long-term disability

After short-term disability and/or extended STD ends, TSERS participants are eligible for long-term disability (LTD) benefits for as long as they remain disabled and until they are eligible for unreduced retirement benefits.

In other words, LTD stops once full retirement starts.

LTD pays up to 65% of pre-injury monthly wages. Unlike short-term disability where the employer pays the benefits, LTD benefits are paid by the State Retirement Division.

Eligibility for long-term disability and how to apply

Eligibility for LTD is conditioned on the termination of state employment. The 4 eligibility requirements are:

1. At least 5 years of contributing membership service in the state retirement system earned within 96 calendar months (8 years) prior to the date of disability
2. Apply to receive LTD within 180 days after the end of short-term disability, salary continuation payments, or monthly workers’ compensation payments (whichever occurs later)
3. Certified mentally or physically incapacitated for further performance of duty by the State Medical Board, where the disability has been continuous, is likely to be permanent, and is incurred at the time of active employment
4. Terminate employment as a state employee

Because LTD requires leaving state employment, you should consider your true return to work options before electing long-term disability.

As with the STD/LTD application, the use of the word “disabled” on the form should not be confused with the workers’ compensation definition of disability. You must be deemed permanently disabled by your doctor while still an active employee and before the retirement date.

LTD offset by workers’ compensation

As with short-term disability benefits, there is a dollar-for-dollar offset against LTD benefits for weekly workers’ compensation benefits. However, the state disability plan does not currently apply the LTD offset to benefits paid pursuant to a clincher. Nevertheless, it is always a good idea to include Social Security disability proration language in the clincher.

The state should not be entitled to a credit under N.C.G.S. § 97-42 for LTD benefits paid in a denied workers’ compensation case that was later deemed compensable because the LTD plan is jointly funded by you (the employee) and your employer with the 6% payroll deduction.

LTD offset by Social Security disability

The state LTD plan was amended effective July 31, 2007, to require anyone who is expected to stay on LTD for more than 36 months to apply for Social Security disability. If you had less than 5 years of contributing membership service as of July 31, 2007, then the LTD plan will stop paying benefits entirely unless you are receiving Social Security disability.

To illustrate:

• If SSDI benefits are awarded within the first 3 years of LTD, then LTD will reduce its payments by the amount of SSDI.
• If SSDI is not awarded within the first 3 years, then LTD ends at the 3-year mark. However, if SSDI is later awarded, then LTD will pay retroactively to the date LTD ended, subject to an offset against the SSDI back pay.
• If SSDI is denied, then LTD will stop altogether after 3 years.

If you had 5 or more years of contributing membership service as of July 31, 2007, then LTD will continue to pay regardless of whether you qualified for SSDI. However, after the 36-month period, LTD will take an offset for what Social Security would have paid that person in disability benefits.

In other words:

Even if you don’t apply for SSDI (or if you apply and lose), LTD will continue to pay. But LTD will subtract the amount of SSDI that would have been received had SSDI been awarded.

If you are approved for SSDI and is awarded back pay, then LTD will ask for reimbursement of benefits from the back pay. SSDI attorneys’ fees are not subject to LTD reimbursement. Typically, a payment arrangement can be worked out with the Retirement Systems Division.

We advise clients who are receiving LTD to apply for SSDI as soon as he or she is approved for LTD. For most people, LTD is limited to 36 months of benefits unless the person is approved for SSDI. And, if the person is no longer eligible for LTD, then he or she cannot participate in the SEHP. So, unless you are approved for SSDI within 36 months, you could lose both your monthly LTD check and health insurance.

LTD offset by Social Security early retirement

For employees aged 62-65, LTD will be reduced by any Social Security early retirement that the employee may be entitled to receive, whether he or she elects to receive the early retirement benefits or not.

In other words:

The LTD benefit will be offset by both workers’ compensation and any reduced Social Security retirement if you are age 62 or older, whether or not you apply for early Social Security retirement.

Are you a member of the Faulkenberry class?

Employees who had 5 years of membership service in the TSERS system prior to January 1, 1988, and who are deemed permanently disabled from their own occupation, may elect “disability retirement,” instead of STD/LTD.

There are no offsets for Social Security retirement, Social Security disability, or workers’ compensation. There is no requirement to apply for SSDI, and these benefits last until unreduced retirement.

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How to apply for a TSERS retirement plan

Service retirement vs. early retirement benefits and eligibility

A government employee becomes a member of TSERS on the hire date and becomes vested upon the completion of 5 years of contributing membership service. Most members (except for law enforcement officers) may retire with unreduced service retirement at:

• Age 65 and completion of 5 years of membership service,
• Age 60 and completion of 25 years of creditable service, or
• Any age upon completion of 30 years of creditable service.

Most employees are eligible for reduced early retirement benefits at

• Age 50 and completion of 20 years of creditable service, or
• Age 60 (age 55 for firefighters and rescue squad workers) and 5 years of membership service.

Vesting credits vs. retirement credits

You cannot purchase contributing membership service in order to reach the 5-year vesting requirement. However, you continue to accrue creditable service that counts towards service retirement while receiving STD/LTD, extended short-term disability, and salary continuation benefits.

Prior to 2019, employees could purchase creditable service that counted towards retirement while receiving TTD. However, the General Assembly introduced HB 188 in February 2019 to disallow the purchase of creditable service.

You or your attorney can request a service audit by writing to:

NC Department of State Treasurer, Retirement Systems Division
325 N. Salisbury St.
Raleigh, NC 27603-1385

Coordination with workers’ compensation and Social Security

There is no workers’ compensation offset against state retirement benefits. However, once you become eligible for unreduced retirement benefits, then you can no longer receive benefits under the state’s LTD plan. The LTD automatically converts to unreduced service retirement.

If you are receiving TTD, then you may want to elect to receive early retirement instead of STD/LTD because there is no workers’ compensation offset against retirement. However, once you choose to go off STD/LTD and take early retirement, this election cannot be undone.

To recap, you CAN receive:

• Workers’ compensation and STD/LTD at the same time (subject to an offset)
• Workers’ compensation and state/federal retirement at the same time (not subject to an offset)
• Workers’ compensation, STD/LTD and federal Social Security disability at the same time (subject to an offset)
• STD and federal early/full retirement at the same time (not subject to an offset), or
• LTD and early Social Security retirement at the same time (subject to an offset).

However, you CANNOT receive STD/LTD and state retirement at the same time, nor can they receive LTD and full Social Security retirement at the same time.

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How to apply for an LGERS disability retirement plan

The LGERS disability retirement plan provides monthly payments to members who become permanently and totally disabled from the performance of their usual job. This payment lasts until the member qualifies for unreduced retirement benefits.

LGERS does not provide coverage under the SEHP, unless the retiree worked for a local unit that chose to participate in the SEHP.

LGERS disability retirement eligibility

Eligibility for LGERS disability retirement is conditioned on the termination of state employment. The eligibility requirements you must meet are as follows:

• At least 5 years of creditable service (in a job that requires at least 1,000 hours of work in a calendar year), or
  • One year of creditable service if an LGERS fireman or rescue squad worker becomes disabled as a result of a line-of-duty injury, or
  • Any creditable service of a law enforcement officer who becomes disabled as a result a line-of-duty injury.
• Apply at least 1 day but not more than 120 days prior to the disability retirement date,
• Certified mentally or physically incapacitated for further performance of duty by the state Medical Board, where the disability has been continuous, is likely to be permanent, and is incurred at the time of active employment,
• Resign as a state employee, and
• Not yet eligible to receive unreduced LGERS service retirement benefit.

Workers’ compensation and sick leave cannot be used to obtain creditable service necessary to become eligible for LGERs disability retirement. The member must be actively contributing to the system at the time of disability. Even though the LGERS handbook references “creditable service,” in practice, “contributing membership service” is necessary to vest.

Don’t confuse LGERS disability retirement with TSERS STD/LTD. There is no STD/LTD in the LGERS system. The only state disability plan available under LGERS is disability retirement. However, the local agency may offer participation in a private STD/LTD plan.

Also, don’t assume that you have state health insurance because you’re an LGERS employee. Your local agency may have its own health insurance plan instead of participating in the SEHP.

LGERS offset with workers’ compensation

A member can receive both workers’ compensation and disability retirement at the same time. There is no workers’ compensation offset against LGERS disability retirement benefits.

Retirement credits accrue while on LGERS disability retirement. However, retirement credits do not accrue while on workers’ compensation. If you are receiving TTD but not LGERS disability retirement, then you can purchase retirement credits for the time you received TTD.

The LGERS disability retirement plan is funded partially by the employer and partially by you, the employee. Therefore, the state is not entitled to a credit under N.C. Gen. Stat. § 97-42 against disability retirement benefits paid in a denied case that is later found compensable because.

If you are permanently disabled from returning to your own job, then you should apply for LGERS disability retirement in addition to workers’ compensation.

LGERS offset with Social Security disability

There is no Social Security disability offset against LGERS disability retirement benefits.

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How to apply for an LGERS retirement plan

Service retirement vs. early retirement

You become a member of LGERS on your hire date and become vested upon the completion of 5 years of creditable service. Most LGERS members (except for law enforcement officers) may retire with unreduced service retirement at:

• Age 65 and completion of 5 years of creditable service,
• Age 60 and completion of 25 years of creditable service, or
• Any age upon completion of 30 years of creditable service.

An employee is eligible for reduced early retirement benefits at:

• Age 50 and completion of 20 years of creditable service, or
• Age 60 (age 55 for firefighters and rescue squad workers) and 5 years of creditable service.

Workers’ compensation and sick leave cannot be used to obtain creditable service necessary to become eligible for LGERS retirement. The member must be actively contributing to the system at the time of disability. Even though the LGERS handbook references “creditable service,” in practice, “contributing membership service” is necessary to vest.

Vesting credits vs. retirement credits

As a local government employee, you continue to accrue creditable service that counts towards service retirement while receiving LGERS disability retirement. However, creditable service towards the police separation allowance does not accrue while on LGERS disability retirement. LGERS disability retirement ends when you are eligible for unreduced service retirement benefits. At that time, disability retirement converts to unreduced service retirement.

Since there is no offset against LGERS for SSDI or Social Security retirement, you can receive both LGERS benefits and Social Security disability or retirement benefits at the same time.

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Coordinating salary continuation with workers’ compensation

Government employees are not eligible to receive both salary continuation and workers’ compensation wage loss benefits at the same time. The number of weeks you’ll receive salary continuation will be deducted from the 500-week TTD cap.

But, if you remain disabled at the end of the salary continuation period, then you will be eligible for TTD and will be treated just like any other workers’ compensation claimant.

The state of North Carolina may only terminate salary continuation if:

• The salary continuation period ends,
• The employee returns to work, resigns, retires or dies, or
• The state offers the employee an assignment of a job that complies with the treating physician’s restrictions, or by order of the Secretary or head of department of that employee’s agency.

Also, although the statute indicates that salary continuation may only end at the time of return to work, an offer of suitable employment, resignation, retirement or death, in practice, the state will cease to pay salary continuation when it separates someone from employment prior to when the 2 years expires.

In other words, salary continuation ends once employment ends.

If the salary continuation period ends or if the benefits are terminated by the Secretary or department head, then the state must immediately start TTD if you are also eligible for workers’ compensation.  Once TTD is started, then a Form 24 (Application To Terminate Or Suspend Payment of Compensation) is necessary to terminate those benefits.

Unlike TTD, salary continuation just includes base pay at the time of the injury, and does not include overtime, shift differential pay, or additional earnings that you may have received prior to the injury.

You are entitled to receive medical benefits (under N.C. Gen. Stat. § 97-25) and permanent partial disability benefits (under N.C. Gen. Stat. § 97-31) while receiving salary continuation. You may also earn contributing membership service credit while on salary continuation.

Salary continuation should be given to you without any need for further action. But, if it does not start automatically, then you should request the salary continuation directly from your company’s human resources (HR) department. If the benefits are denied, then file a Form 33 (Request That Claim Be Assigned For Hearing).

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Police separation allowance

If a TSERS or LGERS law enforcement officer is eligible for unreduced retirement benefits (meaning 55 years old and 5 years of contributing membership service, or 30 years of creditable service) and chooses to retire before age 62, then he or she is eligible for monthly separation allowance payable until age 62 (or until he or she returns to any employment in state or government) if the officer had at least 5 years of continuous service as a law enforcement officer prior to retirement.

However, after retirement, the officer may work for a local government employer in a public safety capacity and that will not cause the separation allowance to stop.

Separation allowance is paid with funds by the governing body of the local employer, not the state. Therefore, the governing body of the local employer, not the state, will determine if the employee is eligible for separation allowance.

Membership credits may not be purchased in order to achieve the number of years necessary for separation allowance. And, creditable service earned while on LGERS disability retirement does not count for separation allowance.

In other words, a law enforcement officer must work (or exhaust paid leave) until age 55 or have 30 years of service in order to receive the separation allowance. In addition, the 5 years immediately preceding retirement must be as a law enforcement officer.

Law enforcement officers are also automatically enrolled in the Supplemental Retirement Income Plan, which is the NC 401(k) Plan. This is in addition to the state retirement plan.

The local employer contributes 5% of the law enforcement officer’s salary to the 401(k) plan. The officer may elect to make additional contributions. These contributions may be rolled over to the state retirement plan upon the officer’s retirement and will be added to the officer’s monthly retirement benefit. Alternatively, the officer may transfer this 401(k) contribution to a private IRA upon retirement.

It’s worth noting that law enforcement 401(k) benefits are not available to probation/parole officers.

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Firefighters’ and Rescue Squad Benefits

Firefighters and rescue squad workers have additional pension and disability benefits available to them.

Pension plan

Eligible firefighters (as defined in N.C. Gen. Stat. § 58-86-25) and rescue squad workers (as defined in N.C. Gen. Stat. § 58-86-30) may enroll in the Firefighters’ and Rescue Squad Pension Fund, which is administered by the N.C. State Treasurer.

The cost is currently $10 per month and members must pay into the system for 20 years (for a total of $2,400) in order to receive a monthly benefit at retirement.

A firefighter or rescue squad member may apply for the monthly pension after:

• Having 20 years of creditable service as a firefighter or rescue squad worker, and
• Reaching age 55.

A member can terminate membership in the fund at any time and request a refund of payments previously made.

Disability plan

A firefighter or rescue squad worker is eligible for pension fund disability retirement after 10 years of creditable service, if the member is certified totally and permanently disabled by the pension fund’s Medical Board, and can no longer perform the duties of a firefighter or rescue squad worker.

The member must still make a $10 per month contribution to the pension fund in order to receive a monthly pension at age 55. However, that $10 contribution is waived if the firefighter or rescue squad worker experiences a line-of-duty disability.

Death in the line of duty

If a member of the pension fund dies in the line of duty, then his or her beneficiary will receive a lifetime monthly survivorship benefit (currently $170 per month) starting from when the member would have attained age 55 and continuing for the remainder of the beneficiary’s life.

If a member died in the line of duty prior to July 1, 2018, the monthly lifetime survivorship benefit goes to the spouse. If there is no spouse, then a lump sum equal to the member’s remaining contributions will be paid to the member’s heirs.

Coordination with workers’ compensation

Only paid firefighters and rescue squad workers are eligible for payments from the pension and disability fund. However, both paid and volunteer firefighters/rescue squad workers are eligible for workers’ compensation benefits in North Carolina. The average weekly wage (AAW) for a paid firefighter/rescue squad worker is calculated the same way as anyone else who is injured at work.

The AWW for a volunteer firefighter/rescue worker is calculated by looking at the employment in which the volunteer was earning wages at the time of the injury. However, the minimum compensation rate for a volunteer firefighter/rescue squad worker is 2/3 of the maximum compensation for the year in which the injury occurred.

For example, if a volunteer firefighter earned $600 per week in his regular job and was injured in 2017 (when the maximum compensation rate was $978), then instead of his compensation being two-thirds of $600 ($400), instead it would be two-thirds of $978 ($652.03).

Do you qualify for a State Employee Health Care Plan (SEHP)?

Retired state employees are eligible to participate in the SEHP if they have 5 years of contributing membership service in the TSERS retirement system.

Employees hired before October 1, 2006

For employees hired before October 1, 2006, the TSERS employee handbook indicates that you should pay no premium. However, the state has made a practice of charging these vested employees a portion of their premiums for the standard 80/20 plan.

The trial court has ruled that vested retirees had a contractual right as part of their work agreement to receive the standard 80/20 coverage without paying a premium, which is in accordance with the current TSERS employee handbook.

However, in a 3-0 decision, the Court of Appeals reversed the trial court’s decision and indicated that the SEHP is not a vested benefit and is subject to change by the General Assembly.

Employees hired on or after October 1, 2006

For employees hired on or after October 1, 2006, the employee must pay:

• 100% of the health insurance premiums if the employee has at least 5 years but less than 10 years of service
• 50% of the premium if the employee has at least 10 years but less than 20 years of service
• 0% of the premium if the employee has 20 or more years of service.

You must pay the full cost of dependent coverage no matter how many years of creditable service.

Retired local employees are not eligible to participate in the SEHP unless the retiree worked for a local governmental unit that opted to participate in the State Plan. The retiree should contact his or her human resources department to determine whether the local government agency participated in the SEHP.

Coordinating SEHP with other disability plans

TSERS disability income plans

SEHP coverage is available at no cost for employees who qualify for short-term disability, extended STD, LTD, salary continuation and workers’ compensation, and who have at least 5 years of contributing membership service in the TSERS system. Contributing membership credits transferred from LGERS to TSERS prior to the date of the disability do not count toward SEHP health insurance vesting.

If you have less than 5 years of contributing membership service, you may still receive SEHP coverage but must pay the entire premium. In all cases, you must pay the full amount of dependent coverage.

The SEHP is also available to the Faulkenberry class of beneficiaries who elect TSERS disability retirement instead of STD/LTD.

LGERS disability retirement plan

Qualification for LGERS disability retirement does not in and of itself make you eligible to participate in the SEHP. You must have worked for a local governmental unit that opted to participate in the SEHP.

Coordinating SEHP with medicare

Medicare is a primary payor to SEHP if you are retired or on STD/LTD. At age 65, a retired state employee should enroll in Medicare Parts A, B and D. The SEHP could then be used as a Medicare supplement.

Medicare is a secondary payor to SEHP if you still work for the state, or if you receive workers’ compensation benefits through the state.

Coordinating SEHP with workers’ compensation

In our experience, the SEHP will pay for benefits to an injured employee after the employee settles the claim. The State Plan specifically excludes charges:

“…for services rendered in connection with any occupational injury or disease arising out of and in the course of employment with an employer if i) the employer furnishes pays for or provides reimbursement for such charges, or ii) the employer makes a settlement payment for such charges, or iii) the person incurring such charges waives or fails to assert his or her rights respecting such charges.” (N.C. Gen. Stat. § 135-40.7(4).)

However, in practice, the SEHP will pay for treatment related to the injury once the workers’ compensation case is closed.

Although the SEHP has a “super lien” on personal injury settlements, there is no indication that the SEHP will claim reimbursement from the injured state employee for medical expenses paid in a denied workers’ compensation claim.  This is because the state is self-insured for both workers’ compensation and health insurance. But the SEHP may seek reimbursement if the injured worker is a dependent of a state employee and receives a workers’ settlement from a different workers’ compensation carrier.

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Injured on the job? Consult an experienced Charlotte workers’ compensation attorney

As you can see, obtaining workers’ compensation as a state or local government employee in North Carolina can quickly get complicated when determining how to coordinate benefits with other employer programs such as TSERS, LGERS, salary continuation, police separation allowance, firefighter and rescue squad benefits, SEPH and others.

In order to make sure that you’re receiving the maximum compensation you are entitled to, it’s important to consult with an experienced work injury attorney near you who is deeply knowledgeable in these types of cases.

If you were hurt on the job in North Carolina as a government employee, don’t hesitate to contact our Charlotte work injury lawyers to discuss your rights today.

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