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Loss of Wage Earning Capacity

This is disability income for Federal employees, which includes Peace Corps Volunteers.

If you cannot work because of your Peace Corps-related service you should file for disability (loss of wage earning capacity) with the US Department of Labor. Contact the Peace Corps Post Service Unit to get this process started.

Regardless of whether you were paid in pesos or Thai Bhats, your disability income will be in US dollars, calculated according to a pre-determined Government pay scale and the income will be the same regardless of where you served.

Here's how this works. If you are unable to work at all, you will receive 66 2/3% of a GS 7-step 1 level. In 2014 that's about $34,300 gross income before you take 66% of that amount, roughly. If you are married, you will receive 75% of a GS7-step 1 level. This income is not taxable. If you are unable to work for a long period, over time the government will add in some cost of living income adjustments.

The GS-7 Step 1 "wage" is based on the value at the time you file your claim and are unable to work. Your income is paid on a 28 day cycle. That means that you will get 13 monthly checks per year. 

For the 2014 table go here.

Be aware that it takes a long time for this to be processed. It can take 9 months and you should contact Peace Corps to help you. However, when it finally gets processed, you will be retroactively reimbursed.

Also be aware that the above is how it works if you are 100% unable to work. If you work part-time or work on a consulting or per project basis it gets very tricky. The formula really only works if you have predictable, steady employment part-time. And you won't get much, if any disability if you can work at all. 

To simplify: If you work part-time you will only be eligible to receive from the USDOL the difference between the 66 2/3% of 75% of the GS 7-step 1 minus the amount you earn. In total you can never get more than the sum even if you work 4 hours/week if your income totals the GS 7-step 1 amount.

Here's an example. Say you can do very part-time work 5 hrs/week at $50.00/hour totaling $12,000.00/ year. You then take the appropriate figure from the table here and take 66 2/3 or 75% of it, such as $25,000/year (if you are single) and subtract the $12,000 you earn on your own - the earned $12,000 from $25,000. You should be eligible to receive the remaining $13,000 annually divided into monthly increments paid out every 28 days. Now, if you earn an erratic amount unpredictably, the government really gets confused. It can be very challenging for them and for you to figure out what you are entitled to. The formula is next to impossible to calculate and it wreaks havoc with the USDOL system and your potential income.