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Indiana Public Retirement System (INPRS) > My Fund > Police and Firefighters > Police and Firefighters Member Handbook: Disability Benefit Provisions Police and Firefighters Member Handbook: Disability Benefit Provisions

Since Jan. 1, 1990, there has been both an “old” and “new” disability plan in the 1977 Fund. Those members initially hired before Jan. 1, 1990, are included in the old plan (Pre-1990 Plan) unless they elected to be covered by the new disability plan adopted in 1990. Those hired after Dec. 31, 1989, and those hired on or before that date who elected coverage under the new plan (the 1990 Plan) are covered under the new disability plan.

Base Salary

Throughout this section of the handbook, you will see references to the term “base salary.” All benefits within the 1977 Fund are calculated according to this amount. The base salary is defined by state law as the salary of a first-class police officer or firefighter plus all longevity increases (if provided by the employer) for service of 20 years or less as certified to the 1977 Fund by each department. Upon retirement, benefits are based on the base salary effective for your department in the year your service ends. This first-class salary varies from employer to employer and is certified annually to the 1977 Fund.

Pre-1990 Disability Plan (For those members hired prior to Jan. 1, 1990)

If you are in the Pre-1990 Disability Plan, the following process governs your application for disability benefits:

  1. Your local board will conduct a hearing to determine whether you have a covered impairment and whether that covered impairment was incurred in the line of duty. A covered impairment is an impairment that permanently or temporarily makes you unable to perform your duties, considering reasonable accommodations under the Americans with Disabilities Act (ADA). Considering reasonable accommodations, the local board will also determine whether there exists suitable and available work within the department. See the Application and Appeal sections of this handbook for more details on how to apply for disability benefits.
  2. The 1977 Fund and the INPRS Medical Authority will review the local board’s finding. If the local board and the 1977 Fund determine that you have a covered impairment, you are entitled to receive a disability benefit equal to the benefit you would have received if you had retired at age 52.

Steps to Apply for Pre-1990 Disability Plan Benefits:

  1. Submit an application to request a hearing.
  2. Local department pension board conducts determination hearing.
  3. The 1977 Fund and the INPRS Medical Authority review local board findings to determine whether a covered impairment exists.
  4. If eligible, you receive disability benefits equal to your full normal retirement benefit at age 52.

The time spent receiving disability benefits is considered active service until you have 20 years of service. During this period, you may be subject to an annual medical review. If you are found to be no longer disabled, and suitable and available work is offered to you by your department, your disability benefit will cease regardless of whether you accept the offer of employment. Recovered members who return to 1977 Fund-covered service, will not be treated as new applicants, and will not be subject to the 1977 Fund membership application process required for new 1977 Fund members.

If you were to return to 1977 Fund-covered service after recovering from a covered impairment and you become disabled within two years of your return to active duty for the same condition or conditions (without an intervening circumstance) that caused the covered impairment for which you were previously paid disability benefits, you are eligible to receive benefits equal to the amount of the disability benefit you were receiving when you returned to work, plus any cost of living adjustments that 1977 Fund retired members received during your period of re-employment.

Tax Consequences

Pre-1990 Disability Statute – Line-of-Duty Injuries on or after July 1, 2000

If a member of the Pre-1990 Disability Plan suffers a duty-related injury, a duty-related disease or a disability presumed incurred in the line of duty under IC 5-10-13 or IC 5-10-15 on or after July 1, 2000, part of the disability benefits may be non-taxable. The part of the benefit that is taxable if your benefit is determined to be in the line-of-duty is the part of the benefit that is based on service over 20 years. The local board must make a determination on whether the disability was incurred in the line-of-duty. This determination must be reviewed and approved by the 1977 Fund and the INPRS Medical Authority.

Pre-1990 Disability Statute – Injuries that are not in the Line-of-Duty

Disability benefits in the 1990 Plan that are not related to an injury suffered while on duty are fully taxable until age 52, when the disability benefit converts to a retirement benefit. At that point, members begin to recover any tax basis from the monthly retirement benefits.

1990 Disability Plan (For those members hired after Dec. 31, 1989 or those electing coverage under the 1990 Plan)

If you are a part of the 1990 Plan and are found to have a covered impairment, the 1990 Plan will pay monthly disability benefits based on the class of your impairment, degree of impairment, and first-class salary for your department in the year in which the local board makes the disability determination. If you are in the 1990 Plan, in order for you to qualify for disability benefits under the 1990 Plan, your local board will conduct a hearing to determine whether you have a covered impairment.

Steps to Apply for 1990 Disability Plan Benefits

  1. Submit an application to the local board.
  2. Local pension board conducts hearing to determine whether there is a covered impairment.
  3. Local board then determines the class of your impairment. Considering reasonable accommodations required by the Americans with Disabilities Act (ADA), the local board will also determine whether there exists suitable and available work within the department.
  4. The 1977 Fund and the INPRS Medical Authority review local board findings to determine eligibility and class and degree of disability.
  5. If eligible, you will receive disability benefits based on your class of impairment. Your class of impairment determines your base monthly benefit and the degree of your impairment determines your additional monthly benefit.

A covered impairment is an impairment that permanently or temporarily makes you unable to perform your duties and the appointing authority certifies that there is no suitable and available work in your department for which you are or may be capable of becoming qualified, considering reasonable accommodations to the extent required by the Americans with Disabilities Act (ADA). Certain covered impairments are excluded from consideration if the impairment was a pre-existing “Class 3 excludable condition” at the time you were hired. You are not eligible for Class 3 benefits for impairments that relate to the excludable condition.

If the local board determines that you have a covered impairment, the board will also determine the “class” of your impairment, both of which, are reviewed by the INPRS Medical Authority. The class of impairment determines your base monthly benefit. The degree of impairment determined by the INPRS Medical Authority determines your additional monthly benefit.

Base Monthly Disability Benefit

The following describes the three different classes of impairments and the amount of base benefit for each class:

Class 1 Impairment

A Class 1 impairment is the direct result of one or more of the following:

  1. A personal injury that occurs while you are on duty;
  2. A personal injury that occurs while you are off duty but while responding to an offense or a reported offense in the case of a police officer or an emergency or a reported emergency for which you are trained, in the case of a firefighter; or
  3. An occupational disease (defined in IC 22-3-7-10 as a disease arising out of and in the course of the employment).
  4. A health condition caused by an exposure risk disease that results in a presumption of disability or death incurred in the line of duty under IC 5-10-13.

You will receive a monthly base benefit equal to 45 percent of the base salary, plus an additional amount based on your degree of impairment as determined by the INPRS Medical Authority.

Class 2 Impairment

A Class 2 impairment is defined as a duty-related disease, which means a disease arising out of your employment. This disease can be determined if it is apparent to the rational mind, upon consideration of all the circumstances, that:

  1. There is a connection between the conditions under which your duties are performed and the disease;
  2. The disease can be seen to have followed as a natural incident of your duties as a result of the exposure occasioned by the nature of your duties; or
  3. The disease can be traced to your employment as the proximate cause.
  4. A health condition caused by an exposure related heart or lung disease; an exposure related cancer; or exposure related Parkinson's disease; that results in a presumption of disability incurred in the line of duty under IC 5-10-15.

You are entitled to receive 22 percent of the base salary plus 0.5 percent of that salary for each year of service, up to a maximum of 30 years of service. In addition, you will be paid an amount based on your degree of impairment, as determined by the INPRS Medical Authority.

Benefit periods are limited for certain Class 2 disability benefits. Benefits for a Class 2 impairment are payable for a period equal to your years of service, if your total disability benefit is less than thirty percent (30%) of base salary and you have fewer than four (4) years of service.

Class 3 Impairment

A Class 3 impairment is a covered impairment that is not a Class 1 or Class 2 impairment. Benefit periods are limited for certain Class 3 disability benefits. Benefits for a Class 3 impairment are payable for a period equal to your years of service, if your total disability benefit is less than thirty percent (30%) of base salary and you have fewer than four (4) years of service.

You will receive a monthly benefit equal to the product of your years of service, not to exceed 30 years, multiplied by 1 percent of the base salary. In addition, you will be paid an amount based on your degree of impairment, as determined by the INPRS Medical Authority.

Additional Monthly Benefit (Class 1, 2, and 3)

A member's disabiliy benefit is equal to the member's base monthly benefit, which is based on the member's class of impairment, plus an additional monthly benefit amount, which is determined by the INPRS Medical Authority based on the member's degree of impairment using a linear interpolation calulation.

A member of the 1977 Fund who was hired after Dec. 31, 1989, (or elected coverage under IC 36-8-8-12.4) who receives a disability benefit based on a Class 1 impairment is entitled to receive the disability benefit for the remainder of the disabled member's life. At age 52, a member receiving a disability benefit based on a Class 1 or Class 2 impairment may be entitled to a monthly supplemental benefit.

1990 Disability Plan Benefit Chart

Type of Impairment Benefit Period Occurrence Benefit Formula
Class 1 Life Injured on duty; or injured off-duty while responding to an offense (police officer) or an emergency (firefighter) 45 percent x base salary + additional monthly benefit based on degree of impairment
Class 2 Period equaling total years of service or until age 52 Proven duty-related disease 22 percent x base salary + 0.5 percent x years of service up to 30 + additional monthly benefit based on degree of impairment
Class 3 Period equaling total years of service or until age 52 All other not Class 1 or 2 1 percent x base salary x years of service up to 30 + additional monthly benefit based on degree of impairment

Excludable Medical Conditions under a Class 3 Disability

If a member is hired with a pre-existing excludable medical condition, the member will not be eligible for a Class 3 disability benefit when the impairment is related in any manner to the excludable condition. This condition would also prevent the member from receiving any Class 3 disability benefit for a period of four years after the date of hire or rehire, unless the Class 3 impairment is attributed to an accidental injury.

Tax Consequences

1990 Disability Statute

Class 1 Benefits -- Class 1 disability benefits are not subject to federal income taxes.

Class 2 Benefits -- The taxable part of the class 2 disability benefit is the part of the benefit that is based on service. The non-taxable part of a class 2 impairment benefit is that part of the benefit that is based on the 22 percent of base salary and the additional benefit of 10 percent - 45 percent, that is based on degree of impairment. If a member is receiving a class 2 disability benefit at age 52, the disability benefit converts to a retirement benefit. At that point, members begin to recover their tax basis from the monthly retirement benefits.

Class 3 Benefits -- Class 3 disability benefits are fully taxable until the disability benefit converts to a retirement benefit at age 52. At that point, members begin to recover their tax basis from the monthly retirement benefits.

Supplemental Benefit -- If a member is receiving a Class 1 or Class 2 disability benefit at age 52 and the member is eligible for a supplemental benefit, that benefit is taxable.

Tax Withholding

You may elect the amount of federal and state tax you want withheld from your disability benefits. These forms are available from INPRS.

These tax rules are complex, so if you need additional information, you should obtain IRS Publication 575; or, if you need further assistance, you should contact your local IRS office or tax consultant.

Deferred Retirement Option Plan – DROP

If a member retires because of a disability less than 12 months after the date the member enters the DROP, the benefits for the member are calculated under the provisions of the applicable fund as if the member never entered the DROP. If the member retires because of a disability at least 12 months after the date the member enters the DROP, the benefits for the member are calculated as if the DROP retirement date is the date the member retires because of a disability.

The Local Board Process

  1. Applicant requests hearing to determine whether or not he or she has a covered impairment.
  2. Applicant provides medical records to the hiring authority and the local board.
  3. The hiring authority determines whether or not there is suitable and available work, considering reasonable accommodations required by the Americans with Disabilities Act (ADA).
  4. A hearing is held by the local board regarding whether or not the applicant has a covered impairment within the definitions set forth in the statutes. A transcript of the local board’s hearing shall be provided to the 1977 Fund.
  5. A determination of class of impairment (Class 1, 2, or 3) is made by the local board for members hired after Dec. 31, 1989 (or elected coverage under IC 36-8-8-12.4). For Pre-1990 Plan members, the local board determines whether the disability is duty-related.
  6. If the local board has determined a Class 3 impairment and the fund member had a Class 3 excludable condition, the local board determines if the impairment resulted from an accidental injury.
  7. The local board submits the determinations and a copy of all the medical documentation used in making that determination to the 1977 Fund.

Completing the Application

A completed 1977 Fund application for disability benefits, signed by you and the Chief of your department includes the following:

  • the local board’s determinations of impairment and the minutes of the hearing of the local board, with an authorized signature;
  • the local board determination of class of impairment for 1977 Fund members hired after Dec. 31, 1989, or who elected to convert to disability provisions of the 1990 Plan;
  • an employer service certification form signed by the Clerk-Treasurer, Controller or Trustee; 
  • a copy of member’s birth certificate (if not already submitted); and 
  • for Pre-1990 Plan members, a copy of the local board duty-related disability determination.

1977 Fund Administrative Process

  1. The application is reviewed for completeness. The 1977 Fund contacts the local board to request any additional information required for the application.
  2. The application file is reviewed by the INPRS Medical Authority.
  3. The INPRS Medical Authority sends a medical evaluation to INPRS, which may include a request for additional medical records.
  4. When the medical authority has completed its determination, the 1977 Fund issues an initial determination letter regarding eligibility for disability. The initial determination letter is sent to the local board, the disability benefit applicant and the employer unit.
  5. The initial determination issued by INPRS may be appealed by the member, the local board or the employer under the Indiana Administrative Orders and Procedures Act pursuant to IC 4-21.5.
  6. If the disability is approved, the 1977 Fund contacts the local employer for final pay information. Disability benefit payments for 1977 Fund members (or for converted members, the local unit begins benefit payments) begin after the exhaustion of all wages and paid leave.

The Administrative Review Process

Appeals of the 1977 Fund initial determination will be heard by an Administrative Law Judge in compliance with the Indiana Administrative Orders and Procedures Act IC 4-21.5.

You must have standing as a party or a right to intervention to request administrative review. The steps of administrative review are http://www.in.gov/inprs/adminreview.htm.

The appeal process will allow for additional evidence to be presented by all parties. The Administrative Law Judge will submit findings to INPRS. INPRS will review the findings of the Administrative Law Judge and issue a final determination.

All parties will be advised of the final determination.

Every attempt has been made to verify that the information in this handbook is correct and up-to-date. Published content does not constitute legal advice. If a conflict arises between information contained in this publication and the law, the applicable law shall apply.

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