If you are a federal employee injured on the job, here is the short answer: you pay nothing. Your medical care and wage-loss benefits for an accepted claim are paid by the federal government through the Employees’ Compensation Fund, which is administered by the Office of Workers’ Compensation Programs (OWCP). There are no premiums, no deductibles, and nothing comes out of your paycheck.
What surprises most people is who ultimately foots the bill: your own employing agency. OWCP pays your benefits from the Fund and then bills your agency to pay it back each year. This guide breaks down exactly who pays for what, including the first 45 days after an injury, so you know what to expect, and our federal injury center in Palm Beach Gardens can walk you through it.
Quick Takeaways
- As the injured federal worker, you pay nothing: no premiums, no deductibles, no payroll deduction.
- OWCP pays your benefits out of the federal Employees’ Compensation Fund.
- Your own agency ultimately covers the cost by reimbursing the Fund each year (the chargeback system).
- For a traumatic injury, your agency pays your full salary for the first 45 days (Continuation of Pay).
- After that, OWCP pays wage-loss compensation at 66.67% of pay, or 75% if you have dependents.
Who actually pays for your OWCP benefits?
Your benefits are paid by the federal Employees’ Compensation Fund, administered by OWCP under FECA. You, the injured worker, pay nothing. Your employing agency is ultimately responsible: OWCP pays your benefits from the Fund, then bills the agency to reimburse it each year.
| What it covers | Who actually pays | What you pay |
|---|---|---|
| Medical care for an accepted injury | Employees’ Compensation Fund, paid out by OWCP | $0 |
| First 45 days of lost time (traumatic injury) | Your employing agency, as Continuation of Pay | $0 (you keep 100% of pay) |
| Wage loss after COP, or for occupational disease | OWCP, from the Compensation Fund | $0 (you receive 66.67% or 75% of pay) |
| Physical therapy and rehabilitation | OWCP, from the Compensation Fund | $0 for authorized care |
| The bill, ultimately | Your employing agency reimburses the Fund (chargeback) | Nothing comes from your pocket or paycheck |
In other words, there are two layers. Day to day, OWCP pays your doctors and your wage-loss compensation directly from the Compensation Fund. Behind the scenes, OWCP tallies what it spent on your agency’s employees and sends the agency an annual bill, which the agency must reimburse to the Fund. Congress set it up this way on purpose, so that agencies carry the cost of workplace injuries and have a reason to keep workers safe.
Do you pay anything as the injured worker?
No. FECA is not health insurance you pay into, and nothing is deducted from your pay for it. For an accepted condition, your authorized medical care is covered in full, and your wage-loss benefits are paid to you. You never see a premium or a deductible.
One useful distinction at tax time: wage-loss compensation paid by OWCP is not taxed, while Continuation of Pay (the first 45 days, paid by your agency) is treated like regular wages and is subject to the usual taxes and deductions.
How is FECA funded?
FECA benefits are paid from the Employees’ Compensation Fund, a federal fund managed by the Department of Labor. The Fund is replenished through ‘chargeback’: each year OWCP tells every agency what it spent on that agency’s injured employees, and the agency reimburses the Fund from its budget.
Each August, OWCP reports to every federal agency what was spent on its employees during the prior chargeback year, and the agency reimburses the Compensation Fund the following fiscal year. Because the cost lands on the employing agency, the system is designed to encourage agencies to prevent injuries in the first place.
What does the money cover?
FECA covers the medical and wage-related costs of a work injury or illness: all authorized medical care for the accepted condition, wage-loss compensation, schedule awards for permanent impairment, and vocational rehabilitation, including physical therapy, to help you recover and return to work.
- Medical care: 100% of authorized treatment for the accepted condition, including physical therapy.
- Wage loss: 66.67% of your pay with no dependents, or 75% with one or more dependents.
- Schedule awards: compensation for permanent loss or loss of use of certain body parts.
- Vocational rehabilitation: support to help you return to suitable work.
Continuation of Pay: who pays the first 45 days?
For a traumatic injury, your employing agency, not OWCP, keeps paying your full salary for up to 45 calendar days. This is called Continuation of Pay (COP). If your disability lasts beyond 45 days, you then claim wage-loss compensation from OWCP, paid from the Fund.
COP applies to traumatic injuries (a single event), claimed on Form CA-1, and is paid at 100% of your regular pay. Occupational diseases (which develop over time, claimed on Form CA-2) do not qualify for COP, so wage-loss compensation from OWCP begins after a short waiting period instead. For how these forms fit together, see our guide to the CA-17 and the main OWCP forms.
What is the timeline for OWCP?
It starts the moment you report the injury. Your agency gives you the claim forms (CA-1 for a traumatic injury, CA-2 for an occupational disease) and submits them to OWCP. OWCP reviews the claim and supporting medical evidence, and once it is accepted, your benefits begin. Complete, accurate paperwork is the single biggest factor in how fast that happens.
Report the injury as soon as possible, get the right form filed, and make sure your medical documentation clearly connects your condition to your job. Missing details or unanswered questions are the most common cause of delay, which is exactly where an experienced federal injury provider can help.
Get help in Palm Beach Gardens
A workplace injury is stressful enough without fighting the paperwork. Knowing that your care is fully covered, and who is responsible for paying it, is the first step to using the system with confidence.
Our federal injury center in Palm Beach Gardens specializes in helping injured federal workers navigate OWCP and get the physical therapy their claim covers, handling the paperwork many clinics will not. You focus on recovering; we help with the rest.
Injured on the job as a federal employee?
We help you navigate OWCP, handle the paperwork, and get the treatment your claim covers, at no cost to you for accepted care.
Frequently asked questions
Does federal workers’ compensation come out of my paycheck?
No. FECA is not something you pay into. There are no premiums or deductibles, and nothing is deducted from your pay for it. Benefits are paid from the federal Employees’ Compensation Fund.
Who pays my medical bills under OWCP?
OWCP pays them from the Employees’ Compensation Fund. For an accepted condition, your authorized medical care is covered in full, with no cost to you. Your employing agency later reimburses the Fund through the chargeback process.
How much does OWCP pay for lost wages?
Wage-loss compensation is 66.67% of your regular pay if you have no dependents, or 75% if you have one or more dependents. For a traumatic injury, your agency first pays 100% of your pay for up to 45 days as Continuation of Pay.
Is OWCP compensation taxed?
Wage-loss compensation paid by OWCP is not subject to federal income tax. Continuation of Pay, however, is treated as regular wages and is taxed and subject to normal payroll deductions.
This article is general information about the OWCP / FECA program, not legal, tax, or medical advice. For decisions about your specific claim, consult a qualified provider or your OWCP claims contact.