U.S. Office of Personnel Management - Ensuring the Federal Government has an effective civilian workforce

Option B - Additional insurance was first available to active Federal employees in April 1981. This coverage was not available to anyone who retired before April 1981. The amount of coverage is determined by multiplying your final annual basic pay rate by the number of Option B multiples that were in effect for the five years of service immediately before your retirement or the entire periods of service during which these multiples were available to you, if less than five years. It is possible to have as many as 5 multiples. (Before multiplying, the basic pay is rounded to the next higher thousand if it is not an even thousand.)

For example, if the number of multiples in effect for the five years of service before your retirement was 3 and your final basic salary rate was $27,500, the amount of your Option B insurance at retirement is $84,000 (3 x $28,000).

If you separated for retirement on or after April 24, 1999, and were eligible to continue Option B insurance in retirement, your agency asked you to elect how many of your Option B multiples would continue in retirement and whether — at age 65 — multiples will continue at their full value or will gradually reduce to zero.

We will give all annuitants who are eligible to make an election regarding the reduction of Option B a second opportunity to make this election. Those who are 65 or older at retirement will hear from us when we are processing their retirement applications. We will contact annuitants who retired before age 65 shortly before their 65th birthday. At that time, the annuitant may elect either Full Reduction or No Reduction for each separate multiple of Option B. For example, a person with five multiples may elect No Reduction on two multiples, while the three remaining multiples reduce fully.

If you elect Full Reduction or if you separated for retirement before April 24, 1999, effective the first day of the second month after you reach age 65 or the first day of the second month after you retire, whichever is later, your Option B full-reduction multiples will reduce by 2% of the face value per month for 50 months, at which time this coverage will end. We will withhold premiums for this coverage from your annuity through the month in which you reach age 65.

If you elect to continue some or all of your Option B multiples with No Reduction, when you are 65 or at retirement, whichever is later, we will adjust the withholding for your Option B coverage to reflect the number of multiples you decided to retain at no reduction. Any other multiples will start to reduce as described above.

You can cancel or reduce the number of multiples at any time, unless you have assigned your insurance. The cost of Option B insurance depends on your age, the amount of insurance in effect when you retired, and the reduction you elect, as shown in the following table:

When you go from one age group to the next, your premiums will increase at the beginning of the month after your birthday. The increased premium will be reflected in the next payment. For example, if you are 60 in May and the full amount of your Option B insurance was $84,000 at retirement, your monthly premium for this benefit would increase from $50.99 (84 x $.607) to $109.20 (84 x $1.30) effective June 1. This increased premium would be reflected in your payment dated July 1, which covers your annuity and insurance premiums for the month of June.

If you elect to have some or all Option B multiples reduce, we will stop withholding the monthly premium for the multiples that are to reduce the first of the month after you are 65. For example, if you reach age 65 in May, premiums for Option B - Additional insurance multiples that reduce will stop June 1. This will be shown in your payment dated July 1, covering your annuity and insurance premiums for the month of June.