Issue Briefs

Following is a summary of recently finalized rules making numerous changes in FEGLI life insurance benefits, many of them highly technical in nature but some of them affecting issues such as adding coverage voluntarily.

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(1) Public Law 106-398 amended 5 U.S.C. 8702 to allow Department of Defense (DoD) employees who are designated as “emergency essential” under 10 U.S.C. 1580 to elect Basic insurance within 60 days of being so designated. Section 1103 of Public Law 110-417, the Duncan Hunter National Defense Authorization Act for Fiscal Year 2009, which became effective on October 14, 2008, further amended chapter 87 of title 5, U.S. Code, to allow “emergency essential” DoD employees, as well as civilian employees deployed in support of a contingency operation, to elect Basic insurance, Option A (Standard) coverage and Option B (Additional) coverage up to a maximum of five (5) multiples. We are amending the regulations to include these election opportunities. These changes can be found in § 870.503(e) and (f) and § 870.506(f) and (g).

(2) Public Law 110-279, enacted July 17, 2008, provides for certain Federal employee benefits to be continued for certain employees of the Senate Restaurants after the operations of the Senate Restaurants are contracted to be performed by a private business concern. The law provides that a Senate Restaurants employee, who is an employee of the Architect of the Capitol on the date of enactment and who accepts employment by the private business concern as part of the transition, may elect to continue coverage under certain Federal employee benefits programs during continuous employment with the business concern. Former Senate Restaurants employees who have FEGLI coverage as of the date of transfer may continue their coverage, if they also elected to continue their retirement coverage under either chapter 83 or 84 of title 5, U.S. Code. These individuals will continue to be eligible for FEGLI during continuous employment with the private contractor unless the employees opt out of the FEGLI program. We are revising the FEGLI regulations to address coverage for these individuals. These changes can be found in § 870.601(a) and § 870.602(b).

(3) Section 1102 of Public Law 110-181, the National Defense Authorization Act for Fiscal Year 2008, enacted January 28, 2008, amended 5 U.S.C. 8706 to authorize the continuation of FEGLI coverage for up to 24 months for Federal employees called to active duty. FEGLI coverage is free for the first 12 months, but employees must pay the full cost (Government and employee share) of the premiums for the additional 12 months. We are amending the regulations to include this election opportunity. These changes can be found in § 870.601(d)(3)(iii).

(4) Public Law 110-177, the Court Security Improvement Act of 2007, enacted January 7, 2008, deems certain categories of judicial officers to be considered as judges of the United States under section 8701 of title 5, United States Code. The law requires magistrate judges retired under section 377 of title 28, United States Code, to be considered Federal judges under the FEGLI law. Public Law 111-8, the Omnibus Appropriations Act of 2009, enacted March 9, 2009, further amended the FEGLI law, by identifying additional judges who should continue to be treated as employees following retirement. This law requires bankruptcy judges and magistrate judges retired under section 377 of title 28, U.S. Code, and judges retired under section 373 of title 28, to be considered Federal judges under the FEGLI law. In addition, we identified additional judges who also should continue to be treated as employees following retirement (DC judges and Tax Court judges). We are changing the regulations to add these judges. These changes can be found in § 870.703(e)(1).

(5) Currently, with a change in family circumstances an employee must already have Basic insurance and may elect only Option B and Option C. The number of multiples of Option B that such an employee may elect with a change in family circumstances is limited. We are eliminating the limitations on the coverage an employee may elect, so that an employee making an election based on a change in family circumstances, may elect Basic insurance and any and all Optional insurance, including up to the maximum number of multiples available of Option B and Option C. These changes can be found in § 870.503(b)(3) and § 870.506(a).

(6) Newly eligible employees must be in pay and duty status before Optional insurance can become effective. The six-month belated election opportunity allows Optional insurance to become effective retroactive to the pay period following the one in which the employee became eligible, but it does not require the employee to be in pay and duty status at that time. We are changing the regulations to apply the same pay and duty status requirements for belated elections that are required for elections made on a timely basis. These changes can be found in § 870.503 and § 870.506.

(7) We are making a change to provide that no one but the insured individual has the right to convert coverage when insurance terminates, unless the insured individual has assigned his or her insurance, with the exception that an individual having power of attorney may convert on behalf of the insured. In addition, a family member may convert Option C coverage. These changes can be found in § 870.603(a)(1).

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(8) We are changing the time frame for making an initial election of Optional insurance from 31 days to 60 calendar days after the employee becomes eligible. We are also extending the time frame for electing coverage by providing satisfactory medical information from 31 days to 60 calendar days after OFEGLI’s (Office of Federal Employees’ Group Life Insurance) approval. These changes will make these election time frames consistent with other election opportunities for Federal benefits. These changes can be found in § 870.504 (a)(1) and § 870.506(c).

(9) When an employee who elected a partial living benefit dies, the post-election BIA (Basic Insurance Amount) is multiplied by the extra benefit age factor in effect at the time that OFEGLI received the living benefit application. We are changing this computation to use the age factor in effect nine months from the date OFEGLI received the living benefit application to be consistent with the age factor used to compute the amount of the living benefit. These changes can be found in § 870.203.

(10) Public Law 108-445, The Department of Veterans Affairs (VA) Health Care Personnel Enhancement Act of 2004, provided for the payment of market pay, in addition to base pay, for physicians and dentists employed by the VA. Accordingly, in addition to base pay, market pay must be used to determine the annual rate of pay described in § 870.204 for these individuals. 96, currently cited in § 870.204(a)(2)(x), relating to the treatment of bonuses for physicians and dentists employed by the VA, is no longer in effect. We are revising § 870.204 to include market pay in the determination of annual pay for these individuals.

(11) In situations of concurrent employment, the amount of Basic insurance and Option B insurance is based on the combined salaries. However, if an employee accepts a temporary position while in nonpay status from a covered position, the amount of insurance is based on whichever salary is higher. We are eliminating this exception, so that this situation will be treated the same as other instances of concurrent employment. These changes can be found in § 870.204(g).

(12) Currently, the earliest that coverage elected as a result of providing satisfactory medical information can become effective is the day after the date OFEGLI approves the employee’s request for coverage. We are changing the regulations to allow Basic insurance to become effective on the date of OFEGLI’s approval if the employee is in pay and duty status. We are also allowing Option A and Option B coverage to become effective on the date of OFEGLI’s approval if the employing office receives the employee’s election on or before that date and the employee is in pay and duty status. These changes can be found in § 870.503 and § 870.506.

(13) We are changing the regulations to treat reemployed compensationers the same as reemployed annuitants. When a compensationer returns to work under conditions that allow him or her to continue receiving compensation, Basic insurance (and Options A and C) held as a compensationer are suspended and the insured obtains coverage as an employee. If the reemployed compensationer dies in service, OFEGLI would pay Basic insurance benefits based on whichever amount is higher: The suspended compensationer coverage or the coverage through reemployment. As with reemployed annuitants, Option B would remain with the individual’s compensation, unless the employee elects to have it through reemployment. If a reemployed compensationer stops working and continues to receive compensation, he or she could continue the FEGLI acquired through reemployment if the individual meets the 5-year/all-opportunity requirement and has been reemployed for the length of time required for a reemployed annuitant to earn a supplemental annuity (1 year for full-time employment). These changes can be found in § 870.707.

(14) Public Law 106-522, 114 Stat. 2440, enacted November 22, 2000, changed the entitlement to Federal employee benefits for the District of Columbia (DC) Offender Supervision Trustee and employees of the Trustee. Previously these employees were treated as Federal employees for purposes of Federal employee retirement and insurance programs only if they transferred to the DC government within three days of separating from Federal service. Public Law 106-522 gave these employees retroactive entitlement to be treated as Federal employees on the date of their appointment or the date their sub-organizations transferred to the Trustee’s office, whichever is later. We are reflecting this change in the regulations. These changes can be found in § 870.302(a)(3).

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(15) Public Law 105-311, the Federal Employees Life Insurance Improvement Act, 112 Stat. 2950, enacted October 30, 1998, amended chapter 87 of title 5, U.S. Code, to allow retiring employees to elect either No Reduction or Full Reduction for their Option B and Option C coverage. This election was to be made at the time of retirement, the same as the election for Basic insurance. Implementing this provision required programming changes to the electronic records system for annuitants to allow for “mixed” elections, i.e., electing reductions for some coverage, but not for other coverage. While these system changes were being made, annuitants were required to elect either No Reduction or Full Reduction for Option B and Option C coverage at the time of retirement. Then, shortly before the annuitant’s 65th birthday, the insured was given a second opportunity to make another election, this time being allowed to choose No Reduction for some multiples and Full Reduction for others. We are eliminating the opportunity for a second election at age 65. There are several reasons for this change: (i) The law states the election must be made at the time of retirement; (ii) administering the second election opportunity at age 65 is an ongoing cost to the Program; (iii) the 2nd election may be confusing to some annuitants, since the election for the Basic insurance reduction is made at the time of retirement without a second opportunity at age 65; and (iv) the mailing itself is problematic with regard to individuals who are paying their premiums directly, as described in § 870.405, and individuals who have assigned their coverage. Individuals who have retired since this statutory provision became effective (April 24, 1999) and who have not yet turned 65 will be given the opportunity to make their “final” election. These changes can be found in § 870.705(d).

(16) We are eliminating the requirement for designated beneficiaries of assignees to notify the appropriate employing office of any change in address, since we do not require any other designated beneficiaries to make such a notification. The requirement will still apply to assignees themselves. These changes can be found in § 870.910.

(17) The current regulations regarding reconsiderations require the insured individual to provide his or her Social Security Number when filing a request for reconsideration. We are eliminating this requirement. Annuitants and compensationers may be identified by their retirement or compensation claim numbers. Agencies are able to identify employees by their names, addresses, and dates of birth. These changes can be found in § 870.105.

(18) Beginning April 24, 1999 and continuing until April 24, 2002, eligible employees could elect portability for Option B coverage that would otherwise terminate. The 3-year portability demonstration project has expired and employees are no longer able to elect portability. We are removing subpart L and all references to portability from the regulations, including the definitions of “Portability Office” and “ported coverage” from § 870.101.

(19) The current regulations specify that only the insured individual may elect a living benefit and no one can elect a living benefit on his or her behalf. We are changing the regulations to allow another person with a power of attorney to apply for a living benefit on the insured individual’s behalf. These changes can be found in § 870.1103