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Insurance Services Programs

Federal Employees' Group Life Insurance Program

FEGLI Handbook

Annuitants and Compensationers

ELIGIBILITY FOR LIFE INSURANCE

Basic Insurance - Annuitants

When you retire, you are eligible to continue Basic insurance - or have it reinstated - if you meet all of the following requirements:

  • you are entitled to retire on an immediate annuity (or under Section 8413 [Immediate Retirement under FERS] or 8414 [Early Retirement under FERS] of title 5, U.S. Code) under a retirement system for civilian employees;
  • you have been insured for the 5 years of service immediately before the date your annuity starts, or for the full period(s) of service during which you were eligible to be insured if less than 5 years (called the "all opportunity" requirement); and
  • you have not converted your life insurance coverage to an individual policy or if you have already converted the coverage, you cancel the converted policy.  To cancel the converted policy, contact the insurance company and ask to cancel the policy.  That company will send you a refund of any premiums you already paid for the converted policy.

Breaks in Service

Breaks in service are not counted when determining the five years of service requirement .

Example 1

Joan elected Basic insurance on February 11, 1990 and had a break in service from January 1, 1994 through January 1, 1996. Upon her return to service, she again elected Basic insurance. She retires on December 31, 1997. She is eligible to continue her insurance into retirement, since she has been continuously enrolled for the 5 years of service before retirement.

Example 2

Carlos waived Basic insurance coverage upon his employment. He left Federal service in 1983. He was rehired in 1993, and elected Basic and Option A coverage. When he retired in 1996, he was not eligible to continue either Basic or Option A coverage since he was not insured for the five years of service before his retirement. He did not meet the "all opportunity" requirement due to his prior employment in which he waived coverage.

Immediate Annuity

An immediate annuity is one that begins within 30 days of separation for retirement.

An annuity you receive under the Minimum Retirement Age (MRA)+10 provision of FERS also qualifies as an immediate annuity, even though you separated from service and postponed receipt of your annuity.

Reinstatement of Insurance

Effective January 11, 1990, your insurance will be reinstated when you retire under the FERS Minimum Retirement Age (MRA) + 10 provision (as long as you are otherwise eligible to continue your enrollment).

Basic insurance stops at the end of the day on which you separate. You get the 31-day extension of coverage and your employing office must give you a Notice of Conversion Privilege (SF 2819) for conversion purposes.

If you later apply for retirement and are eligible to continue Basic insurance, the Office of Personnel Management will send you a notice of eligibility and a Continuation of Life Insurance Coverage form (SF 2818). If you wish to have other than 75% Reduction for Basic insurance, you must return the completed SF 2818 within 60 days after OPM mails the form. Basic insurance will be reinstated effective the date your annuity starts or the date OPM receives your application for annuity, whichever is later.

Basic Insurance - Compensationers

When you separate from service or end 12 months of nonpay status, your life insurance coverage as an employee normally stops.  However, if you had a work injury and are receiving benefits from the Department of Labor under the Federal Employees' Compensation law (compensation), you may be able to continue your life insurance as a compensationer.  You may continue it if you meet all of the following requirements:

  • On the day you separate from service or on the day you end 12 months of nonpay status, you are still receiving compensation payments;
  • The Department of Labor has determined that you are unable to return to duty;
  • You have been insured for the 5 years of service immediately before the date compensation starts, or for the full period(s) of service during which you were eligible to be insured if less than 5 years; and
  • you have not converted your life insurance coverage to an individual policy or if you have already converted the coverage, you cancel the converted policy.  To cancel the converted policy, contact the insurance company and ask to cancel the policy retroactive to the effective date of your FEGLI coverage as a compensationer.  That company will send you a refund of any premiums you already paid for the converted policy.

Example

Jack is injured on the job and begins receiving compensation September 13, 2000.

If he met the above requirements as of September 12, 2000 (the day before compensation started), he can continue his life insurance at the end of the 12 months' leave without pay .

If he did not meet the above requirements as of September 12, 2000, insurance will terminate at the end of the 12 months' leave without pay or at separation, whichever comes first. He will have the 31-day extension of coverage and conversion privilege.

Optional Insurance

If you are eligible to continue or have reinstated Basic insurance, you are also eligible to continue or have reinstated Optional insurance if you meet the same coverage requirements for Optional insurance as those for Basic insurance.

For the purpose of continuing insurance as an annuitant or compensationer, you are not considered to have been eligible for Option C during any period when you had no eligible family member.

Who Makes the Determination?

For both annuitants and compensationers, OPM determines whether you are eligible to continue life insurance coverage.

No Waivers

There are no waivers of any of the requirements to carry life insurance into retirement or as a compensationer. There are no exceptions to the "no waiver" rule — it does not matter whether you retire on disability, accept a voluntary incentive payment, etc. The only way to continue coverage into retirement is to meet the five year/all opportunity rule. Yes, this is different from the health benefits program which does allow for waivers under certain circumstances.

Accidental Death and Dismemberment Coverage

Insurance coverage that you continue as an annuitant or compensationer does not include Accidental Death & Dismemberment coverage.

AMOUNT OF LIFE INSURANCE

Amount of Basic Insurance

The amount of Basic insurance that you can continue as an annuitant or compensationer is your Basic Insurance Amount on the date of your separation or completion of 12 months nonpay status, whichever is earlier.

Amount of Optional Insurance

The amount of Option A insurance you can continue as an annuitant or compensationer is $10,000.

The number of multiples of Option B and Option C insurance you can continue as an annuitant or compensationer is the number of multiples in force during the entire period of service required to continue Option B and Option C (or you can choose fewer multiples).

Example

Toshi carried 2 multiples of Option B and increased coverage to 5 multiples during the 1993 open enrollment period. He retired on September 30, 1996. He is allowed to continue 2 multiples as an annuitant, since that's the number he had during the entire 5-year period preceding his retirement (10/1/91-9/30/96). He didn't have the full 5 multiples long enough to meet the 5-year requirement. (He could choose to continue only 1 multiple, instead.)

POST- 65 REDUCTION IN THE AMOUNT OF COVERAGE - BASIC

Election of Basic Insurance

If you are eligible, and choose to continue your insurance as an annuitant or compensationer, you must complete a Continuation of Life Insurance Coverage form (SF 2818). On this form, you elect if you want to continue your Basic life insurance into retirement or compensation and elect the amount of Basic insurance you want after age 65 (or retirement, if later). The choices are 75% Reduction, 50% Reduction, or No Reduction.

Exception: You must elect No Reduction if you previously elected partial living benefits.

How the Reduction Works

75% Reduction

The amount of Basic life insurance in force reduces by 2% of the original amount each month until the original amount has been reduced by 75%; only 25% of the Basic Insurance Amount is payable as a death benefit once the full reduction is reached.

50% Reduction

The amount of Basic life insurance in force reduces by 1% of the original amount each month until the original amount has been reduced by 50%; 50% of the Basic Insurance Amount is payable as a death benefit once the full reduction is reached.

No Reduction

There is no reduction in the amount of life insurance after your 65th birthday; 100% of the Basic Insurance Amount is payable as a death benefit.

When the Reduction Starts

The reduction starts at the beginning of the 2nd month after your 65th birthday or the beginning of the 2nd month after your retirement, whichever is later.

Example

Henry retires on 9/30/96 with a Basic Insurance Amount of $60,000. He turns 65 on 3/15/97.

If he elects 75% Reduction, the amount of Basic insurance in force reduces by $1,200 each month ($60,000 x 2%), starting 5/1/97. On 6/1/00, the full 75% reduction will have been reached, and 25% of the Basic Insurance Amount ($15,000) will be paid to his beneficiaries upon his death.

If he elects 50% Reduction, the amount of Basic insurance in force reduces by $600 each month ($60,000 x 1%), until 6/1/01, when the full 50% reduction will have been reached. Upon his death, $30,000 will be paid to his beneficiaries.

Change of Election

If you choose 75% Reduction, you cannot later change that election.

You can cancel the 50% Reduction or No Reduction election at any time (unless you previously elected a partial living benefits or assigned your insurance). You then automatically get 75% Reduction. This is the only change in election that is permitted. You can't change from No Reduction to 50% Reduction (nor can you change from 75% Reduction to 50% Reduction or No Reduction).

If you do cancel your 50% Reduction or No Reduction election, the amount of Basic insurance in force is computed as if you had elected 75% Reduction at the time of retirement. Premiums will be reduced to the amount appropriate for 75% Reduction; however, you cannot receive a refund of the higher premiums that you paid before the original election was cancelled.

Contact OPM's Retirement Operations Center at P.O. Box 45, Boyers, PA 16017-0045 or 1-88USOPMRET (1-888-767-6738) if you wish to change your election.

You must elect No Reduction at the time of retirement if you previously elected partial living benefits. You cannot later cancel that election.

See "Assignment" for information on the effect of an assignment on elections and changes of elections.

Default Election

If you don't make an election regarding the post-65 reduction, you will have the 75% Reduction.

Judges

Judges retiring under 28 U.S.C. 371(a) and (b), 28 U.S.C. 372(a), 26 U.S.C. 7447 and 11 D.C. Code 776 are considered employees under the FEGLI law. Basic and Optional insurance continue without interruption or reduction upon retirement. For judges choosing to receive compensation instead of an annuity, Basic and Optional insurance reduce in the same manner as for other annuitants.

POST-65 REDUCTION IN THE AMOUNT OF COVERAGE - OPTIONAL

Option A

The amount of Option A automatically reduces when you reach age 65 (or retire, if later). There is no election to be made.

The amount of coverage reduces by 2% ($200) each month until the amount has been reduced by 75%. Only 25% of the original amount is payable ($2,500) as a death benefit once the full reduction has been reached.

Options B and C

Effective April 24, 1999, at the time of retirement or becoming insured as a compensationer, you will:

  • elect how many of your Option B and C multiples you wish to continue into retirement; and
  • choose whether to have all of those multiples reduce ("Full Reduction") or none of them reduce ("No Reduction") when you reach age 65 (or retire, if later).

Note:  Both your separation date and annuity starting date must be on or after April 24, 1999 to be eligible to make an Option C reduction election.

If you choose to continue fewer multiples than you are eligible to continue, you indicate this on the new Continuation of Life Insurance Coverage Form (SF 2818). You should not complete a Life Insurance Election form (SF 2817) to reduce the number of multiples at retirement. You will have a 31-day extension of coverage and the right to convert those multiples. Note: if you have assigned your insurance, you cannot elect to continue fewer multiples of Option B than you are eligible to continue.

You may choose Full Reduction for one type of insurance and No Reduction for the other type of insurance, or Full Reduction or No Reduction for both.

Default Election

If you do not make an election, you will automatically continue all multiples for which you are eligible and will get Full Reduction for all multiples.

At Age 65

Shortly before you reach age 65, you will get the opportunity to change your Full Reduction/No Reduction election. At that time you can also choose to have some multiples reduce and others not reduce.

Full Reduction

If you choose Full Reduction, each multiple of coverage reduces by 2% of the original amount each month until the amount has been reduced by 100%. The insurance stops at 12:00 noon on the day before the 50th reduction; after that no benefits are payable upon your death (for Option B) or your family member's death (for Option C).

The reduction starts at the beginning of the 2nd month after your 65th birthday or the beginning of the 2nd month after your retirement, if later. Withholdings stop the month after your 65th birthday (or retirement, if later) and Options B and/or C are free.

Example

Judy is retired and has Option A, 3 multiples of Option B worth $30,000 each, and two multiples of Option C. She has chosen to continue all of the multiples into retirement and has chosen Full Reduction of her Options B and C multiples. She turns 65 on March 15, 2000.

Option A reduces by $200 each month ($10,000 x 2%), starting May 1, 2000. On June 1, 2003, the maximum reduction will be reached, and 25% of the amount of Option A ($2,500) will be paid to her beneficiaries upon her death.

Each multiple of Option B reduces by $600 each month ($30,000 x 2%), starting May 1, 2000. At 12:00 noon on May 31, 2004, the full reduction will be reached, and Option B coverage will stop. No Option B benefits will be paid upon Judy's death.

Option C reduces by $200 each month for Judy's spouse ($10,000 x 2%) and $100 per month for each of her eligible children ($5,000 x 2%), starting May 1, 2000. At 12:00 noon on May 31, 2004, the full reduction will be reached, and Option C coverage will stop. No benefits will be paid to Judy if her spouse or eligible child(ren) dies after that date.

No Reduction

If you choose No Reduction, your Options B and/or C coverage will not reduce at all. After age 65 (or retirement, if later), you will continue to pay premiums appropriate to your age.

Example

When Jake retired, he chose to continue three multiples of Option B worth $45,000 each and three multiples of Option C into retirement. He chose No Reduction of his Option B coverage and Full Reduction of his Option C coverage after age 65. He turns 65 on July 4, 2001.

When he reaches age 65, his Option B coverage will not reduce and he will continue to pay the premiums for his age group; $135,000 in Option B benefits ($45,000 x 3) will be paid to his beneficiaries upon his death.

Starting on September 1, 2001, his Option C coverage will reduce by $300 per month for Jake's spouse ($15,000 x 2%) and $150 per month for Jake's eligible children ($7,500 x 2%). At 12:00 noon on September 30, 2005, the full reduction will be reached and Option C coverage will stop. No benefits will be paid to Jake if his spouse or eligible child dies after that date.

How to Make the Election

When you retire or become insured as a compensationer, you will make your election on the Continuation of Life Insurance Coverage form (SF 2818). This form has been revised to allow for your choice regarding continuation of Basic as well as Options B and C. The May 2001 version of the SF 2818 should be used. The new form makes the Option B and C Election Notice obsolete. Your employing office will include the completed SF 2818 with the retirement package when it is submitted to the Office of Personnel Management.

Can I Change My Election?

If you elect No Reduction, you can change to Full Reduction at any time (unless you have assigned your insurance). If you are over age 65, the amount of insurance in force will be computed as if you had elected Full Reduction originally. You will not get any refund of premiums.

If you elect Full Reduction, you can change to No Reduction at any time up until the 2nd month following your 65th birthday. You cannot change from Full Reduction to No Reduction once your annuity check has been issued that does not withhold premiums for the Full Reduction multiples.

As with your original election, up until age 65 these changes apply to all multiples.

Example

When Fred retired, he chose No Reduction of his three Option B multiples worth $25,000 each. He turned 65 on June 10, 2000. He can change from No Reduction to Full Reduction at any time. He elects on July 1, 2001 to change his election to Full Reduction of these multiples. His Option B insurance in force immediately reduces to $57,000 and will continue to reduce by 2% of the original $75,000 amount each month. He will no longer have Option B premiums withheld from his annuity. His Option B insurance will stop at 12:00 noon on August 31, 2004.

At the same time, Fred wanted to change his original choice of Full Reduction of his Option C coverage to No Reduction. He cannot make this change, since it is past the 2nd month following his 65th birthday.

What is the Difference between Cancelling a Multiple and Changing to Full Reduction?

If you cancel a multiple, it causes that coverage (and the premiums) to stop right away. If you become reemployed, you cannot get that coverage back unless you had a break in service of at least 180 days. If you die after cancelling a multiple, no benefits are paid for that multiple.

If you change to Full Reduction, your coverage goes away gradually (2% each month) instead of all at once. The reductions don't start (and premiums don't stop) until the 2nd month after you reach age 65. If you die after changing a multiple to Full Reduction, benefits are paid on whatever amount of that multiple is left at the time of your death.

What If I have Assigned my Insurance?

If you have assigned your insurance, you make the initial election regarding Option B reductions, just as you do for Basic. (Option C isn't subject to assignment.) After you have made the Option B election, you can change only from Full Reduction to No Reduction (before you reach age 65); you cannot change from No Reduction to Full Reduction.

Only your assignee can change from No Reduction to Full Reduction; your assignee cannot change from Full Reduction to No Reduction.

If You Retired Before April 24, 1999

If you: 

  • retired or became insured as a compensationer before April 24, 1999; and 
  • were age 65 or older in February 1999, 

you were given an opportunity during the April 24 - October 24, 1999, election period to:

  • choose Full Reduction or No Reduction of your Option B coverage; and 
  • freeze some or all of your Option B multiples at the amount in force on April 24, 1999.

If you made this election, you also began to have premiums withheld from your annuity appropriate to your age and the amount you chose to freeze.

If you were under age 65 in February 1999, you will receive a letter shortly before you turn 65 giving you the opportunity to choose Full Reduction or No Reduction of your Option B coverage. You can also choose to have some multiples reduce and some not reduce. If you have assigned your insurance, the letter will go to your assignee(s).

There was no election opportunity regarding Option C.

Judges

Judges retiring under 28 U.S.C. 371(a) and (b), 28 U.S.C. 372(a), 26 U.S.C. 7447, and 11 D.C. Code 776 are considered employees under the FEGLI law. Basic and Optional insurance continue without interruption or reduction upon retirement. For judges choosing to receive compensation instead of an annuity, Basic and Optional insurance reduce in the same manner as for other annuitants.

COST OF INSURANCE FOR ANNUITANTS AND COMPENSATIONERS

Who Makes Contributions and Withholdings?

For annuitants, the Office of Personnel Management pays the Government contribution, and the retirement system makes withholdings from your annuity.

For compensationers, OPM pays the Government contribution (the Postal Service pays it for Postal compensationers), and the Office of Workers' Compensation Programs (OWCP) makes withholdings from your compensation. Withholdings begin as soon as you start receiving compensation, even if you are within the first 12 months of nonpay status. Before separation or completion of 12 months in nonpay status, while you are still insured as an employee, your employing office pays the Government contribution for Basic insurance.

Exception: If you retired or started receiving compensation before January 1, 1990, and elected 75% Reduction, Basic insurance is free.

Withholdings for Basic Insurance

The premiums shown in the following charts may change in the future. You will receive notice before any premiums change.

Cost for Annuitants for each $1,000 of the Basic Insurance Amount in Effect at the Time of your Retirement

 

75% Reduction

50% Reduction

No Reduction

Until the Month after your 65th Birthday

$0.3250 monthly

$0.9250 monthly

$2.1550 monthly

Starting the Month after your 65th Birthday

Free

$0.60 monthly*

$1.83 monthly*

* This amount will be withheld from your annuity for life (unless you cancel or subsequently elect 75% Reduction).

Cost for Compensationers for each $1,000 of the Basic Insurance Amount in Effect at the Time You Continue Your Insurance as a Compensationer

 

75% Reduction

50% Reduction

No Reduction

Until the Month after your 65th Birthday

$0.30 every four weeks

$0.86 every four weeks

$1.98 every four weeks

Starting the Month after your 65th Birthday

Free

$0.56 every four weeks*

$1.68 every four weeks*

* This amount will be withheld from your compensation for life (unless you cancel or subsequently elect 75% Reduction).

Cost of Optional Insurance for Annuitants and Compensationers

The cost of optional insurance for an annuitant or compensationer is the same as that for an employee, adjusted to a monthly or weekly basis. The cost continues to increase based on your age, even after you retire.

For Option A and when you choose Full Reduction for Option B or Option C, withholdings stop the month after your 65th birthday, and the coverage is free.

Basis for Withholdings

Withholdings are based on the amount of insurance in force at the time of your retirement or continuation of insurance as a compensationer. The withholdings do not change when the amount of insurance in force begins to reduce.

Example

Linda chose 50% Reduction for her Basic insurance upon her retirement. Her Basic Insurance Amount is $66,000 and her 65th birthday is 02-21-03. She will pay $61.05 ($0.9250 x 66) monthly for this coverage through February 2003. Beginning March 2003, she will pay $39.60 ($0.60 x 66) monthly. (It will be shown in her April annuity payment, which is for the month of March.) Starting on April 1, 2003, her coverage will reduce by 1% of the Basic Insurance Amount per month ($660) and will continue to reduce by $660 per month until the coverage amount equals $33,000. She will continue to pay premiums monthly for the rest of her life.

Insufficient Annuity

If your annuity is insufficient to pay your life insurance premiums, you may pay your premiums directly to OPM to continue your coverage.

Chapter Continued on Next Page

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