OPM administers FEGLI, MetLife provides the life insurance, and the OFEGLI adjudicates the claims. Image: ArDanMe/Shutterstock.com
By: Reg JonesOver the last two weeks, I’ve provided a refresher course on Basic Insurance and Option A coverage available under the Federal Employees’ Group Life Insurance (FEGLI) program. Now I want to fill you in on Option B (Additional Optional Insurance).
As I pointed out before, the government pays one-third of the cost of your Basic Insurance premiums; however, if you enroll in any of the life insurance options, you are responsible for paying 100 percent of the premiums. Even so, you are getting a good deal because the government has negotiated lower premiums than you’d get from most private insurance companies.
If you are covered by Basic Insurance, you can choose to be covered by Option B, which allows you to elect additional amounts of coverage that are equal to one, two, three, four or five times your rate of basic pay, rounded to the next higher $1,000.
In contrast to the flat $10,000 coverage under Option A that I described last week—a figure that hasn’t changed since 1968—Option B can make a substantial financial difference to your survivors.
Your bi-weekly premiums will vary by age and range from two cents per $1,000 of coverage through age 35 up to $2.88 per $1,000 at age 80 or above.
When you retire, you can either elect a full reduction in your Option B multiples or no reduction. If you chose the full reduction, you would no longer have to pay any premiums and your coverage would decline by 2 percent per month for 50 months until it reaches zero. That reduction would start either in the second month after your 65th birthday or when you retire, whichever is later.
If you decide to keep the full value of your Option B coverage, the monthly premiums you pay will depend on how old you are when you retire. For example, at age 60 through 64, your monthly premium for each $1,000 of coverage would be $0.867. That cost would continue to rise in five-year intervals until it plateaus at age 80 and above at $6.240 per $1,000 of coverage.
Whether you are an employee or a retiree who elects no reduction, both your full coverage and the payment of premiums will continue until you cancel the coverage. That’s something you are free to do unless you have assigned that benefit to someone else. I’ll write about that wrinkle in a future article.
Next week I’ll fill you in on the costs and benefits of Option C coverage.
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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