| Railroad Retirement Board and Disability Benefits
The Railroad Retirement Board (RRB) is an independent agency in the executive branch of the Federal Government. The RRB’s primary function is to administer comprehensive retirement, survivor, unemployment and sickness benefits for the nation’s railroad workers and their families, under the Railroad Retirement and Railroad Unemployment Insurance Acts.
The RRB was created as a retirement benefit program for the nation’s railroad workers. The railroad industry had pioneered private industrial pension plans.
The Tier 1 portion of a RRB Annuity is calculated based on the employee earnings from the railroad and Social Security earnings. Social Security’s formula for a retirement annuity is used in calculating this portion of the benefit, which is the highest 35 years of earnings of the employee. If the employee does not have 30 years of railroad service and is not disabled, the annuity cannot begin any earlier than age 62 and would be subject to a reduced pension due to the applicable age reduction. If the employee has less than 30 years of service, the full retirement age is anywhere from age 65-67, depending upon the year the employee was born.
The Tier 2 portion of a RRB Annuity is calculated using an average of the highest 60 months of railroad Tier 2 earnings. This monthly average is then multiplied by the number of years of railroad service. That figure is then multiplied by .007% and this is the Tier 2 amount of the employee’s annuity. Active military service may be creditable as railroad service months but these months will not be included on the RRB BA-6 form.
The spouse of a railroad employee may be entitled to RRB Spousal Benefits. A spouse is entitled to 50% of the employee’s Tier 1 benefit portion and 45% of the employee’s Tier 2 benefit portion. If the employee did not have 30 years of railroad service, the benefit would be subject to an age reduction if the spouse is not at full retirement age. The Tier 1 benefit amount is also reduced if the spouse receives Social Security benefits or a Public Service Pension.
It is often not advantageous for the employee or their spouse to file for their own Social Security benefits because of the offset on the Tier 1 portion of the Railroad Retirement benefit. This is especially true if a reduced Social Security benefit has to be taken because this reduced benefit amount may be completely offset from the Tier 1 benefit. Sometimes it is advantageous to wait until you are older to file for Social Security benefits because Delayed Retirement Credits can be obtained which could lead, at some point in the future, to a monthly benefit that is more than the spouse’s Tier 1 Benefit portion.
An employee must have a Current Connection in order to receive a RRB Occupational Disability Annuity. A Current Connection is also required in order for the RRB to pay Survivor Benefits in the event of the death of the employee. Generally, a Current Connection is maintained if the employee worked for the railroad 12 consecutive months out of the last 30 months prior to retirement. Most self-employment will not break an employee’s Current Connection. Also, some Federal jobs, such as working for the DOT or RRB, will not break a Current Connection.
The Railroad Medicare program covers railroad workers just like workers covered under social security. The Medicare program provides health insurance to persons ages 65 and older, as well as persons under age 65 who have been entitled to monthly benefits based on total disability for at least 24 months or who suffer from chronic kidney disease requiring hemodialysis or transplant. In addition to basic hospital insurance (Part A) financed by payroll taxes, there is an elective supplementary medical insurance (Part B) that covers many other medical services, such as doctor visits, durable medical equipment, and outpatient services that hospital insurance does not cover.
Eligible railroad retirement annuitants and social security beneficiaries whose benefits are payable by the RRB are automatically enrolled under both plans, but the annuitant or beneficiary can decline Medicare Part B. Eligible nonretired persons must apply in order to obtain Medicare coverage.
The RRB’s headquarters is located at 844 North Rush Street, Chicago, Illinois 60611-2092. The agency’s website is at www.rrb.gov.
There is a terrific website for railroaders that provides answers to all of your questions about insurance, retirement and benefits. The website is called “Your Track to Health”.Click To View | Your Track to Health