To carry 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. Image: Teacher Photo/Shutterstock.com
By: Reg JonesIt’s time for a refresher course on the Federal Employees Group Life Insurance program. I say that because it’s a benefit program for federal employees and retirees that doesn’t get much attention.
So, let’s start at the beginning. FEGLI comes in four parts – Basic Insurance, Option A (Standard Optional Insurance), Option B (Additional Optional Insurance), and Option C (Family Optional Insurance). Over the next few weeks, I’ll describe the features of each. In this article, I’ll fill you in on Basic.
Basic Insurance – Employees
When you were hired, you were automatically covered by Basic insurance. And you got it without having to get a medical exam. While you could have declined that coverage, few employees do.
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 $50,500, your coverage would be $53,000 ($51,000 + $2,000). For that coverage, you’ll pay two-thirds of the bi-weekly premiums and the government will pay the rest.
Your share of the Basic insurance cost is 16 cents biweekly for every $1,000 of coverage or 34.67 cents per month. 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 percentage points per year until it reaches zero at age 45.
In addition, your Basic policy 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 in addition to the amount of your Basic coverage. Although AD&D coverage doesn’t decline while you are still employed, it ends when you retire.
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.
If you are eligible to continue that coverage, you can 1) decide to keep the full value of the coverage you had on the day you retired, 2) allow it to decline to half its value, or 3) let it decline to 25 percent. If you choose the 25 percent option, the good news is that you won’t have to pay any more premiums when you reach age 65. The downside is that your coverage will decrease by 2 percent each month until it hits one-quarter of its original value. That’s where it will remain until you die.
If you choose the 50 percent option, your coverage will be reduced by 1 percent per month until it reaches half its value. If you choose the no reduction option, your premiums will increase each year until the month after you reach age 65. It would continue at that rate thereafter.
As a retiree, you can’t increase the amount of your Basic coverage; however, you may reduce the amount if you elected either the 50 percent option or no reduction. For example, if you chose the maximum reduction, you’d no longer have to pay any premiums. Note: There is an exception to this rule, which involves the assignment of benefits. I’ll explain that in a future column.
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 up to date. The person you chose to receive that benefit 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 one at www.opm.gov/forms/pdf_fill/sf2823.pdf. After you’re done filling it out, make sure it gets into your official personnel folder (OPF).
Next week I’ll fill you in on the coverage and cost of Option A insurance.
Former head of retirement and insurance policy at the Office of Personnel Management, and longtime FEDweek contributor, Reg Jones is known throughout the federal workforce community as an authority on pay and benefits.
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