United States

Office of Personnel Management

Retirement and Insurance Service

Benefits Administration Letter

Number: 99-203	Date: February 9, 1999

Subject:	Federal Employees' Group Life Insurance: Public Law 105-311 - Increased Amount of Option C and Election of Unreduced Options B and C at Retirement

GENERAL INFORMATION

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Background	Pub. L. 105-311, Federal Employees Life Insurance Improvement Act, enacted October 30, 1998, made numerous changes to the Federal Employees' Group Life Insurance (FEGLI) Program.

Those changes include increasing the amount of Option C coverage available and allowing retiring employees and employees becoming insured as compensationers to elect unreduced Options B and C.

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Purpose	The purpose of this Benefits Administration Letter (BAL) is to provide detailed information relating to these two new provisions of the law.

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INCREASED AMOUNT OF OPTION C

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Current Amount of	Currently, Option C coverage is $5,000 for a spouse and

Option C	$2,500 for each eligible child.

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What Is the New Amount?	The new law allows Federal employees to elect up to 5 multiples of the current amounts. The maximum amount of Option C available therefore will be $25,000 for a spouse and $12,500 for each eligible child.

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When Does this Change	This change becomes effective April 24, 1999.

Go into Effect?

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Can Employees Elect a	No. The number of multiples an employee elects applies

Different Number of	to all eligible family members. For instance, an employee

Multiples for Different	cannot elect 4 multiples on a spouse and 2 on a child.

Family Members?

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Can Employees Elect the	Yes and no. It depends on the situation.

New Amounts Right Away?

New employees who enter on duty on or after April 24, 1999, and employees who are newly eligible for FEGLI coverage on or after April 24, 1999, can elect the increased amounts at the time they become eligible.

Current employees who have a life event on or after April 24, 1999, can elect or increase Option C within 60 days of the event.

Current employees who already have Option C and who have (or had) a life event between October 30, 1998, and April 23, 1999, can elect additional multiples of Option C within 60 days after April 24, 1999.

Current employees who do not fit into any of the above categories can elect additional multiples of Option C during the April 24-June 30, 1999, open enrollment period.

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How Many Multiples of	For marriage, an employee can elect a number equal to

Option C Can an Employee	the number of eligible family members acquired with the

Elect Due to a Life Event?	marriage.

For acquisition of children, an employee can elect a number equal to the number of eligible children acquired. Foster children "count" as eligible children for electing or increasing Option C coverage; however, they do not "count" for electing or increasing Option B coverage.

For divorce or death of a spouse, an employee can elect a number equal to the total number of his/her eligible children.

In no case can the total number of multiples exceed 5.

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What Is the Effective	For those who elect Option C coverage as new or newly

Date of Employees'	eligible employees on or after April 24, 1999, the

Elections of Increased	coverage becomes effective the first day the employee

Option C Coverage?	enters on duty in pay status on or after the day the employing office receives the SF 2817.

For those who elect or increase Option C coverage because of a life event that occurs on or after April 24, 1999, the coverage becomes effective the day the employing office receives the SF 2817 or the date of the event, whichever is later.

For those who increase Option C coverage because of a life event occurring between October 30, 1998, and April 23, 1999, the increased coverage becomes effective retroactive to the pay period that includes April 24, 1999.

For those who elect or increase Option C coverage during the upcoming open enrollment period, the coverage becomes effective the first pay period beginning on or after April 23, 2000, which follows a pay period during which the employee was in pay and duty status.

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Open Enrollment	We will issue a separate BAL with detailed information

Information	concerning the upcoming open enrollment period.

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Can Employees Carry	The increased amount of Option C coverage is subject to

the Increased Option C	the 5-year/first opportunity requirement the same as any

Coverage into	other FEGLI coverage.

Retirement?

For employees who elect the increased coverage due to a life event, that event constitutes their first opportunity. For employees who do not experience a life event, the April 24-June 30, 1999, open enrollment period is their first opportunity.

Employees who elect the increased coverage at their first opportunity and retire within 5 years of the effective date of their coverage will be able to continue the coverage into retirement.

NOTE: Employees who elect additional multiples of Option C during the upcoming open enrollment period, and who retire before the coverage becomes effective, will not be able to continue the increased coverage into retirement.

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ELECTION OF UNREDUCED OPTIONS B AND C AT RETIREMENT

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The Way It Is	Currently, when an employee retires and is eligible to

Currently	continue FEGLI coverage, he/she can choose the amount by which his/her Basic insurance will reduce after age 65: 75% Reduction, 50% Reduction, or No Reduction.

There is no such choice for Optional insurance. Options A, B, and C all reduce automatically. Option A reduces until only 25% of the amount is left, and Options B and C reduce until they are gone entirely. Optional insurance is free for annuitants after the age of 65.

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What Does the New	Pub. L. 105-311 allows retiring employees and employees

Law Do?	who are becoming insured as compensationers to elect unreduced Options B and C. Premiums will continue to be withheld from the annuity or compensation after age 65.

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When Does This	This provision of the new law becomes effective April 24,

Become Effective?	1999.

This will apply to employees separating for retirement (or compensationers completing 12 months in nonpay status) on or after April 24, 1999.

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What Are a Retiring	A retiring employee must choose either Full Reduction or

Employee's Choices	No Reduction. There are no partial reductions.

Regarding Reduction?

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What Happens If an	If a retiring employee chooses Full Reduction, his/her

Employee Chooses	coverage will reduce just as it does now, beginning at age

Full Reduction?	65 (or at retirement, if the person is over age 65 at the time of retirement). The reduction is 2% per month until there is no coverage left. The annuitant/compensationer pays no premiums after age 65.

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What Happens If an	If a retiring employee chooses No Reduction, his/her

Employee Chooses	coverage will not reduce at all. After age 65, he/she will

No Reduction?	continue to pay premiums appropriate to his/her age.

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When Must a Retiring	Employees must make their election at the time of

Employee Make the	retirement (or for compensationers, at the time of

Election?	separation or the completion of 12 months in nonpay status). The election is made on the SF 2818, which is being revised.

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What If the Employee	If a retiring employee or an employee becoming insured

Doesn't Make an	as a compensationer doesn't make an election on the SF

Election?	2818, he/she will automatically get Full Reduction.

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Does an Employee Have to	No. A retiring employee may elect Full Reduction for

Make the Same Election	one Option and No Reduction for the other.

for Both Options B and C?

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Can an Employee Choose	No. An employee with more than one multiple of Option

Full Reduction for Some	B must elect either Full Reduction or No Reduction for all

Multiples and No Reduction	the multiples. The same is true for Option C.

for Other Multiples?

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Can an Annuitant or	An annuitant or compensationer who elects No Reduction

Compensationer Change	can change to Full Reduction at any time. However, a

the Election?	person who elects Full Reduction cannot change to No Reduction more than 30 days after he/she receives the first regular annuity check.

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What about Employees	Employees who are already retired or insured as

Who Retire before	compensationers when this new provision goes into effect,

April 24, 1999?	and who have Option B, will be given a one-time opportunity to elect unreduced Option B coverage.

Those whose Option B has already started reducing can elect to have their coverage "frozen" at whatever amount is left as of April 24, 1999, and to have no further reductions.

Annuitants and compensationers who make this election will start paying the premiums appropriate to their age.

These annuitants and compensationers will not be able to elect unreduced Option C.

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Abby L. Block, Chief

Insurance Policy

and Information Division