There’s one benefit program for federal employees and retirees that doesn’t get much attention: Federal Employees’ Group Life Insurance. FEGLI comes in four parts – Basic, Option A (Standard Optional Insurance), Option B (Additional Optional Insurance), and Option C (Family Optional Insurance). This week I’ll focus on Basic Insurance.
Basic – Employees
As a rule, when you get your first federal civilian job, you are covered automatically by Basic insurance. And you’re covered without having to get a medical exam. While you can decline that coverage, very few employees do. Not only is it life insurance at group rates, the government pays a third of the total cost if you are a non-postal employee, and the entire cost if you are a postal employee.
Your Basic insurance amount is equal to your annual basic salary rounded up to the next higher $1,000 plus $2,000. For example, if your basic salary is $60,285, your coverage would be $63,000 ($61,000 + $2,000). For that coverage, you’ll pay two-thirds of the bi-weekly premiums and the government will pay the rest.
If you are under age 45, the amount of that coverage is increased at no additional cost to you. If you are age 35 or younger, the coverage is doubled. However, beginning at age 36 the multiplier used to determine your additional coverage declines by 10 percent per year until it reaches zero at age 45.
Your Basic policy also includes coverage for accidental death and dismemberment. AD&D pays the full amount of your Basic coverage if you die or lose two or more body parts – for example, a hand, foot, eye, etc. – and half that amount for the loss of one part. If you die, this payment is over and above the amount of your Basic coverage. Although AD&D coverage doesn’t decline while you are still employed, it stops when you retire.
If you turned down Basic coverage when you were hired, you have three opportunities to enroll: during an open season (which is rare), after providing medical proof of your insurability, or when you experience a qualifying life event, such a marriage or the birth of a child.
Basic Insurance – Retirees
To carry your FEGLI Basic coverage into retirement, you must either have been enrolled in it for the five consecutive years immediately before you retire or from your first opportunity to enroll in the program.
When you retire, you have a decision to make. You can decide to keep the full value of the coverage you had on the day you retired, allow it to decline to half its value, or let it decline to 25 percent. If you choose the 25 percent option, you won’t have to pay any more premiums when you reach age 65. However, that your coverage will decrease by 2 percent each month until it reaches 25 percent of the original face value.
If you choose the 50 percent option, your annuity will be reduced by only 1 percent per month until it reaches half its value. If you elect no reduction, then you’ll continue to pay the premiums as long as you live. While you can’t increase the amount of your Basic coverage, you can reduce it if you elected either the 50 percent option or no reduction.
P.S. If you are covered by Basic insurance when you die, the proceeds will be paid to the beneficiary you designated on a Standard Form 2823. So be sure to keep that designation current. The person you chose when you were first hired may not be the one you want to receive that money now. You can get a copy of that form from your personnel office or download a copy at www.opm.gov/forms. After you’re done filling it out, make sure it gets into your official personnel folder.