Railroad Retirement Disability Benefits and Medicare

By: Jane Meggitt | Updated May 31, 2019

Railroads move goods and people all over the nation, and railroad workers are the unsung heroes of American commerce. Under the federal Railroad Retirement Act, railroad workers do not receive Social Security benefits but instead are covered under provisions of the act. The RRA also provides railroad annuities for eligible employees based on disability, age or length of service. While railroad workers don’t receive Social Security benefits, they are covered under Medicare.

The Railroad Retirement Act

The RRA is administered by the Railroad Retirement Board, an independent agency in the federal government’s executive branch created in 1997. The three-member board is appointed by the President and requires Senate consent. However, the RRB doesn’t administer railroad industry employees’ private pension plans.

Most railroad workers receive higher benefits under the RRA than they would if they were covered under Social Security. As of 2017, the average retired railroad employee received $3,415, while the average Social Security recipient received $1,370. These benefits are paid primarily via payroll taxes levied on both railroad employees and employers. Such taxes are higher than standard Social Security taxes.

Railroad Disability Basics

Many railroad jobs take a big toll on the body, and the RRB provides an occupational disability annuity for those whose disability is directly related to their job. As long as the employee has at least 10 years of service, this railroad disability annuity is payable at age 60. For disabled employees with at least 20 years of service, there is no age limit. However, the employee must hold a “current connection” with the industry for eligibility.

In most cases, disabled employees are considered currently connected as long as they worked for the railroad for at least 12 of the previous 30 consecutive months before the annuity date begins. A five-month waiting period ensues as of the month after the month in which the person became disabled. The applicant can file for benefits during this five-month period, and the RRB will accept disability applications up to three months prior to the date that the annuity starts, so the processing is generally complete by the time a worker retires.

Railroad Disability Documentation

When filing for a railroad disability annuity, the employee must provide medical evidence supporting their disability claim. Such evidence may include the names of their physicians, their medication and dosages, hospitalization dates, and they may need to undergo medical examinations by an RRB doctor. Any applicant receiving worker’s compensation or other forms of disability payments must include that information in the submission.

Applications for railroad disability are filed at an RRB field office. Applicants may call the Railroad Retirement Board phone number at the office closest to them to schedule an appointment. The RRB also maintains Customer Outreach Programs, or CORP, at various locations, and workers may also file for railroad disability at these offices. Filing is also available by mail or phone. One caveat: employees diagnosed with permanent kidney failure cannot file via the RRB, but must file at a Social Security Administration office.

When they arrive for their appointment, disabled railroad workers or their family members should bring all applicable medical records and medical evidence. In the case of severely disabled railroad workers, the RRB may make arrangements to send a representative to the employee’s home or hospital to help them with their application.

Total or Occupational Disability

Railroad disability annuities are based on either total or occupational disability. For the former, the annuity is based on the worker’s disability for all regular work, according to the RRB. The disabled employee must have at least 10 years of service for eligibility, although under certain conditions employees with between five and nine years of service after 1995 may qualify. Such employees must have a total disability if they meet Social Security’s standard for disability insured status, based on the number of either railroad retirement or Social Security earnings credits in 20 calendar quarters over 40 consecutive quarters, as per the RRB.

An occupational disability refers to the employee’s inability to perform his or her regular railroad job. They must currently work for the railroad for occupational disability eligibility, or at least have worked for the railroad for 12 of the previous 30 months. Employees may receive occupational disability if they reach age 60 and have put in at least 10 years of service. If an employee has a minimum of 20 years of service, they may qualify for occupational disability no matter their age.

Total disability is identified as the employee’s inability to perform any kind of work due to physical or mental impairments. Occupational disability pertains to the employee’s inability to perform their railroad job, even if they could hold down other types of gainful employment. For disability annuity purposes, the employee’s regular job is the one performed the most over the previous five years. It may also pertain to the job performed for hire in at least half of the consecutive months over the prior 15 years.

Occupational Disability and Work

If a person receives an occupational disability and decides to return to work in a nonrailroad field, special earnings rules apply. As of 2018, a person earning more than $920 monthly working, either as an employee or self-employed individual, they will forfeit their disability annuity for that month. However, if the disabled employee has reached full retirement age, there are no restrictions on how much they can earn without penalty. Keep in mind the restrictions are based on age, not years of service.

Railroad Retirement Benefits Vs. Social Security Disability

As with railroad retirement benefits, railroad disability annuity benefits pay far more than comparable Social Security disability benefits. In 2017, the average disabled railroad worker received $2,920 per month in disability annuity benefits, while the average SSD recipient received about $1,295.

SSD income is generally not taxed, because recipients usually don’t have sufficient income. Sometimes an SSD recipient does receive additional income from a spouse or some other kind of income, and that could trigger taxes on SSD income. Railroad disability payments are subject to the same taxes as Social Security, not SSD, although these disability payments are not taxable at the state level.

Medicare and Railroad Retirement

Medicare is the United States’ health insurance program for those over 65, and those with permanent kidney failure or amyotrophic lateral sclerosis, also known as Lou Gehrig’s disease, no matter the age. Medicare also covers certain disabilities for those under age 65. Railroad workers are eligible for Medicare, as their payroll taxes include Medicare hospital insurance tax. The RRB is in charge of enrolling retired railroad workers in the Medicare program.

Medicare Part A for Railroad Workers

Those under 65 may prove eligible for free Medicare hospital insurance, Part A, if they have been totally disabled and receiving monthly disability benefits for at least the prior 24 months. They must also have a disability insurance status under Social Security, which is true of railroad workers. Those under 65 may receive Medicare benefits as of the 25th month in which they receive disability benefits.

Medicare Part B for Railroad Workers

Anyone eligible for free Medicare Part A insurance may enroll in Medicare Part B, the medical plan if they pay the monthly premium. As of 2019, the standard premium for those newly enrolling in Medicare Part B is $135.50, but those already enrolled may pay somewhat less. That’s because the law doesn’t allow premiums for those currently enrolled to increase more than Social Security’s cost-of-living adjustments.

Those with an adjusted gross income exceeding $85,000 for single tax filers or $170,000 for married couples filing jointly can expect to pay higher rates, depending on how much their income exceeds these income limits.

How Medicare Differs for Railroad Workers

Enrollment in Medicare differs somewhat for railroad workers than for other occupations. Instead of Medicare enrollment processing by the Social Security Administration, the RRB handles this processing. When those receiving either railroad retirement benefits or railroad disability benefits become eligible for Medicare, the RRB automatically enrolls them in Medicare Parts A and B. Workers receive their Medicare card along with an explanation letter from the RRB.

The RRB also collects Medicare premiums. Those receiving railroad retirement or disability checks will have the Medicare Part B premiums deducted each month. All healthcare providers must send the “Railroad Medicare” Part B claims to the contractor chosen by the RRB. Patients should inform their providers that they have Railroad Medicare, as their Medicare cards do not look like standard Medicare cards.

Spouses and Railroad Retirement

The RRA provides annuities for eligible spouses, divorced spouses and survivors. The first two categories may receive annuities based on their spouse’s retirement date, age and years of service. Again, these annuities are more than a spouse would receive from their spouse’s equivalent Social Security. As per the RRB, in 2016 spouses of employees who retired at their full retirement age with a minimum 25 years of service received an average of $1,333 monthly, while the average Social Security benefit for a spouse was $719.

At what age can a spouse collect railroad retirement? Again, that depends on their spouses. Say a retired employee is aged 60 and retired with 30 years of service. The spouse is eligible for railroad retirement as of the first full month he or she is 60. If the same employee retired with railroad disability, the same criteria applies, unless the spouse’s annuity begins after 2001.

For those railroad employees retiring prior to attaining 30 years of service, the spouse may begin receiving an annuity the first full month in which he or she is 62. However, RRB full retirement age is rising for employees based on birth year, and will hit 67 eventually. That will also affect the age at which the spouse receives an annuity.

Other Spousal Eligibility Requirements

In order for a spouse to qualify for railroad retirement benefits, he or she must have been married to the railroad employee for at least one year. An exception is made if the spouse is the natural parent of a child with the employee.

Divorced spouses may qualify for railroad retirement benefits if they were married to the railroad employee for at least ten years, and both divorced spouses have been 62 for at least a month. Divorced spouses who remarry are not eligible for benefits. If the spouses are divorced at least two years, the divorced spouse may receive benefits even if the former spouse hasn’t retired, as long as both have reached the age of 62.

The annuity formula for a divorced spouse is calculated differently from a current spouse. The divorced spouse annuity cannot exceed what Social Security pays in a similar situation, so the divorced spouse cannot receive as much in an annuity as a current spouse. The RRB reports that the average 2016 divorced spouse annuity was $651. A divorced spouse’s annuity does not affect the annuity amount of the employee or the current spouse.

Spouses and Children

If a spouse cares for the unmarried child under age 18 of the employee, or a child who became disabled before age 22, they are eligible for the spousal annuity at any age, according to the RRB.

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About the Author

A graduate of New York University, Jane Meggitt's work has appeared in dozens of publications, including PocketSense, Financial Advisor, Sapling, nj.com and The Nest.

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