Detailed Information on the
Federal Employees Group Life Insurance Assessment

Conducting an independent program evaluation of sufficient scope and quality; OPM will use the information to demonstrate that the program is effective and is achieving results.

Establishing ambitous targets for the long-term goals and demonstrate adequate progress in achieving these performance goals.

Holding program managers and partners accountable for cost, schedule, and performance results, and demonstrate that the program and its partners are achieving its annual goals.

Measure: Paid claims timeliness

Explanation:Number of calendar days between completed file and date of payment. (99% of fully documented claims must be adjudicated within 10 business days of receipt) (HRPS)

Measure: Paid claims accuracy

Explanation:Payments paid accurately as a % of Number Paid (99% of claims must be paid accurately) (HRPS)

Measure: Improper payment rate

Explanation:(HRPS)

Measure: Enrollee satisfaction with life insurance benefits (FEGLI)

Explanation:Data source: Federal Human Capital Survey (SHRP)

Measure: % of benefits officers trained per year

Explanation:(HCLMSA)

Measure: Increase enrollee knowledge

Explanation:(data source TBD)

Measure: % of new hires who say FEGLI benefits are competitive, a fair value, and important in their decision to accept a job with the Federal Government.

Explanation:Data source: Federal Benefits Survey (the 2004 Federal Benefits Survey data collection immediately followed the rare FEGLI Open Season campaign opportunity to purchase additional insurance. We do not expect another such opportunity in the immediate future and therefore do not expect to maintain the current performance level). (SHRP)

Measure: % of employees who say FEGLI benefits are competitive, a fair value, and important in their decision to remain in the Federal Government.

Explanation:Data source: Federal Benefits Survey (the 2004 Federal Benefits Survey data collection immediately followed the rare FEGLI Open Season campaign opportunity to purchase additional insurance. We do not expect another such opportunity in the immediate future and therefore do not expect to maintain the current performance level). (SHRP)

Measure: Benchmarking results demonstrate that FEGLI benefits are comperable/competitive

Explanation:Data Source: Benchmarking Study (under development)

Is the program purpose clear?

Explanation: The Federal Employees' Group Life Insurance (FEGLI) Program is an employer-sponsored life insurance program under which benefit payments are made following the death or dismemberment of employees and retired employees. The program purpose is to 1) offer Federal employees the opportunity to purchase group term life insurance which provides financial protection to beneficiaries in the event of enrollee death or dismemberment and 2) to be part of a compensation package that enables the government to remain competitive with other employers for highly qualified workers.

Evidence: The Federal Employees' Group Life Insurance Act of 1954 (P. L. 83-598 of August 17, 1954), P.L. 96-427, and P.L. 105-311.

Does the program address a specific and existing problem, interest or need?

Explanation: Life insurance protection is almost a universal employee benefit in the United States. Approximately 98% of all employers and 100% of all large employers offer some life insurance benefits to its employees. The importance of life insurance benefits among Federal employees and annuitants can be demonstrated, in part, by the participation rate of Basic coverage of 87% among all eligible employees for 2003. The Program has been legislatively changed over the years (additional options added in 1980, living benefits added in 1994, etc.) to meet enrollees evolving needs. Common reasons why employees want employer-sponsored life insurance include reduction of underwriting restrictions or additional costs typically used to offset adverse selection that can be reduced by group purchases and other possible insurance features through group plans that are impracticable on an individual policy basis.

Evidence: According to a 2002 survey by the Society of Human Resource Management, 100% of companies with 500 or more employees and 98% of all employers offer life insurance benefits. Legislative changes that show program evolution over time to meet changing needs can be found on the OPM Web site at www.opm.gov/insure/life/handbook/legislation.asp.

Is the program designed so that it is not redundant or duplicative of any other Federal, state, local or private effort?

Explanation: FEGLI is the only employer-sponsored group life insurance program for Federal civilian employees. However, Federal employees are not limited to benefits provided through FEGLI; individual policies are widespread and can be readily purchased through private vendors. Additional survivor and death benefits are made available to federal employees through Social Security, Federal employee retirement systems, and special payments authorized by the Federal Employees Compensation Act (FECA) which are tied to service related deaths. Despite the widespread availability of survivor benefits there are limitations to other forms of coverage available to Federal employees that can be mitigated through an employer-sponsored group policy. For example, the cost and availability of privately purchased life insurance can vary according to the individual's health, age, occupation or other personal characteristics while FEGLI coverage is available to all eligible employees, at the same rate. FECA survivor benefits are limited to accidents or deaths occurring at the workplace, while there are no such limitations on FEGLI benefits. Benefits paid through the Government's retirement system can vary by years of service or contributions made by the enrollee, while FEGLI enrollees have the option of purchasing additional coverage to meet their individual needs. FEGLI serves a useful purpose with features not generally available through individual policies or other Federal life insurance sources.

Evidence: Life insurance is readily available in the private market at prices that may be generally competitive with FEGLI premiums, depending on the individual's age and health status. FEGLI coverage is available to all eligible employees without regard to health if elected when first eligible, following a life event, or during an open season. While a somewhat wider range of insurance products may be available in the private sector, (e.g., whole life coverage), there is one feature of FEGLI that sets it apart from coverage offered by private sector employers: the ability to continue the full amount of insurance into retirement. Most private sector employers limit retirement coverage to a nominal amount (from $5,000 to $10,000). With FEGLI an employee who retires on an immediate annuity and who meets the 5-year/all-opportunity requirement may continue the full amount of his/her coverage. The employee may make an election as to whether to have the insurance reduce at age 65 or to retain the full value after age 65.

Is the program design free of major flaws that would limit the program's effectiveness or efficiency?

Explanation: There is no indication that the FEGLI program has major design flaws that would impede it from effectively and efficiently meeting the program purpose. FEGLI is reveiwed periodically by OPM's Inspector General. By design, a group term life insurance plan is less expensive for the employer compared to other types of insurance plans which have a savings feature (e.g. universal, whole life insurance) because it's pure insurance, keeping administrative costs low because administration is simple. The FEGLI enabling legislation authorizes the insurance coverage to be provided and administered by a single carrier further making the administration of the program simple. OPM is responsible for overall program administration with day-to-day responsibilities shared by Federal agencies. In addition, program participants can also purchase additional coverage options, beyond basic coverage, to meet their individual needs.

Evidence: The OIG's Audit report of the FEGLI program (No. 4A-RI-00-02-024) of January 27, 2003 identified 2 areas where internal controls needed to be improved. OPM has addressed one of the items and is working to address the other. These items are discussed in more detail in question 3.7.

Is the program effectively targeted, so that resources will reach intended beneficiaries and/or otherwise address the program's purpose directly?

Explanation: In keeping with the two program purposes, FEGLI is primarily targeted to Federal employees. However, the program has been modified throughout the years to include the participation of additional classes of individuals that are not directly linked towards achieving the program's purpose (e.g. certain D.C. government employees, among others). Nevertheless, participation of these additional groups are very few in number and there is no indication that they pose an adverse impact on the program or impede the ability to achieve the program's purpose. More importantly, the program design facilitates OPM's ability to ensure that all program participants make the proper contributions to the program through payroll or annuity deductions. The design also supports accurate benefit payments to the proper beneficiaries. Based on payment data representing a significant share of benefit dollars paid (67%).

Evidence: FEGLI benefits are effectively targeted and reach the intended beneficiaries: Based on payment data representing a significant share of benefit dollars paid, OPM estimates the rate of FEGLI improper payments to be - 0.22% of total benefits paid to the beneficiaries of deceased annuitants in FY 2004. Although the paid claims matches do not examine all benefit payments, they cover the largest group of these payments (67% of total payments made); OPM believes that, based on this data, FEGLI is not susceptible to a high risk of improper payments. OPM will conduct a review covering all FEGLI benefit payments during FY 2005 and will explore new methods of estimating improper payments.

Does the program have a limited number of specific long-term performance measures that focus on outcomes and meaningfully reflect the purpose of the program?

Explanation: OPM has established long-term measures that assess the life insurance program's purposes of providing life insurance and enabling the government to remain competitive with other employers for highly qualified workers.

Evidence: See measures tab (indicators 1, 2, 3 and 5).

Does the program have ambitious targets and timeframes for its long-term measures?

Explanation: Since the 2004 Federal Benefits Survey data collection for indicators 7 and 8 immediately followed the rare FEGLI Open Season campaign associated with FEGLI's 50th anniversary, we do not expect to maintain the current performance level for these 2 indicators because we do not expect another open season opportunity in the immediate future. Preliminary results from the survey have given us a baseline for developing long-term measures. The 2004 survey shows that 61% of current employees and 67% of new hires rate life insurance as important, a good value, and competitive. In the absence of another open season, we expect the results from future surveys to show slightly slower numbers.

Evidence: See measures tab for targets and timeframes.

Does the program have a limited number of specific annual performance measures that can demonstrate progress toward achieving the program's long-term goals?

Explanation: OPM has established annual measures to demonstrate progress toward achieving FEGLI's long-term goals of providing employees life insurance for financial protection and that is part of a compensation package that enables the government to remain competitive with other employers for highly qualified workers.

Evidence: See measures tab (indicators 4, 6, 7 and 8).

Does the program have baselines and ambitious targets for its annual measures?

Explanation: OPM has the following baselines and targets for its annual measures of OFEGLI (the Office of Federal Employees' Group Life Insurance, a unit of MetLife that pays claims under the FEGLI Program): 99% of claims must be paid accurately, and 99% of fully documented claims must be adjudicated within 10 business days of receipt. OPM currently measures the accuracy of claims paid following the death of an annuitant, which represent 89% of FEGLI claims; we are developing a system for measuring the accuracy of claims paid following the death of an employee, which represent 10% of FEGLI claims. (The remaining 1% represents claims for deaths during the 31-day extension following termination of coverage.)

Evidence: See measures tab for targets and timeframes.

Do all partners (including grantees, sub-grantees, contractors, cost-sharing partners, and other government partners) commit to and work toward the annual and/or long-term goals of the program?

Explanation: OPM's main partner, MetLife, is held accountable through contractual requirements to meet performance standards that OPM sets (see requirements listed in 2.4). Federal agencies, which handle such aspects of the Program as enrollment processing, enrollment decisions and appeals, certifying coverage at death, and premium withholding, follow the law and regulations and the guidance OPM issues in the FEGLI Handbook and Benefits Administration Letters (BALs). OPM has provided training to agencies in the proper administration of the Program and provides ongoing counseling and guidance through the FEGLI Internet mailbox. OPM uses a listserv system to alert agencies of new information and procedures and also puts notices of changes on the FEGLI website. MetLife contacts agencies to conduct pre-payment verification of claims before making payment to beneficiaries of insured individuals with $200,000 or more of FEGLI coverage to assure accurate payments. Following the Oklahoma City bombing in 1995, OPM put into place expedited claims procedures for claims payment to beneficiaries of bombing victims who were killed and to bombing victims who suffered a dismemberment. This was a coordinated effort among OPM's contracting office, OFEGLI, affected agencies, and OPM's retirement office. These procedures were used again following 9/11. We have since issued a BAL informing agencies that these expedited procedures are automatically in place for any insured individual killed in an attack when we are at orange alert (or higher); we also issued a memo to OFEGLI notifying them that the procedures will go into effect automatically in this situation.

Evidence: MetLife contract. The OFEGLI receives a negotiated service charge amount yearly that is based on performance results. Regulations (LIFAR). The contractor service charge is determined per Section 2115.905 of the Life Insurance Federal Acquisition Regulation (LIFAR). OPM has determined the service charge under LIFAR since 1997. There are six Profit factor areas that each has its own weight. There is a factor for Contractor Performance--the better the performance, the larger the weight for that section. There are also factors for Contract Cost Risk, Federal Socioeconomic Programs, Capital Investments, Cost Control and Independent Development.

Are independent evaluations of sufficient scope and quality conducted on a regular basis or as needed to support program improvements and evaluate effectiveness and relevance to the problem, interest, or need?

Explanation: In FY05 OPM will issue a Request for Information (RFI) to the academic community to solicit information on how to best design independent evaluations to assess the performance of OPM's benefits programs, including FEGLI, against the program purposes. OPM then will contract with a third party to conduct such evaluations.OPM's accounting firm, KPMG, conducts an annual audit of the life insurance trust fund, including the financial statements and controls in the FEGLI program. Since 1996 KPMG has issued an unqualified audit opinion on the FEGLI financial statements. MetLife's accounting firm, Deloitte and Touche, conducts an annual audit of MetLife's FEGLI operations, in accordance with Generally Accepted Government Auditing Standards. D&T continues to report an unqualified audit opinion on MetLife's FEGLI operations. In addition, OPM's Office of the Inspector General performs periodic audits of various aspects of the FEGLI Program. The most recent IG audit was conducted in 2001 and focused on OPM's administration of the FEGLI Program. The final report was issued 1/27/03. OPM implemented the new Federal Benefits Survey in Q1 FY 2005 and preliminary results are reported for the appropriate indicators in the measures tab. Final results are expected in Q2 FY 2005.

Evidence: OPM will submit a program evaluation plan for the benefits programs, including FEGLI, in FY 2005 Q1.

Are Budget requests explicitly tied to accomplishment of the annual and long-term performance goals, and are the resource needs presented in a complete and transparent manner in the program's budget?

Explanation: Opm needs to further imporve it's budget submission to better link resources to the accomplishment of the program's long term and annual measures.

Evidence: See Measures tab and FY 2005 CBJ.

Has the program taken meaningful steps to correct its strategic planning deficiencies?

Explanation: OPM has revised its performance measurement strategy, including new performance indicators that better address the FEGLI's purposes. To collect data for these long term measures, OPM implemented the Federal Benefits Survey of new and existing employees, with preliminary results reported for indicators in the measures tab. Final results are expected in Q2 of FY 2005. Also, OPM is contracting for a benchmarking study to assess how OPM's benefits programs, including FEGLI, compare with those benefits offered by private sector employers. OPM will issue an RFI to the academic community to solicit information on how to best design independent evaluations to assess the performance of each of OPM's benefits programs, including FEGLI, against the program purposes. OPM then will contract with a third party to conduct such evaluations.

Evidence: See Measures tab, Federal Benefits Survey, and Benchmarking SOW.

Does the agency regularly collect timely and credible performance information, including information from key program partners, and use it to manage the program and improve performance?

Explanation: OPM collects performance data from several sources to manage the program. OPM collects financial and performance data from the FEGLI contractor and uses it to set the contractor's service charge (profit) and track performance. Data used for performance measurement (i.e., claims timeliness and accuracy) is collected each fiscal quarter and shared with program managers on an on-going basis through OPM's on-line information system, called the HyperShow. Also, OPM meets periodically with agency benefits officers to provide information and to learn of issues that could affect administration of the Program. This data relates to both the program's competitiveness and service delivery. In addition, OPM maintains agreed-upon procedures (AUPs) with agencies relating to submission to OPM if withholdings/ contributions for benefits. OPM's independent auditor audits agencies' AUPs as part of its audit of OPM's financial records. Also, the FEGLI contractor regularly surveys Program beneficiaries to gauge how satisfied they are with services (i.e., FEGLI customers who rate overall satisfaction with LI claims and call handling) and reports these results to OPM each quarter. Additionally, Federal employees are surveyed via OPM's Federal Benefits Survey to support performance measures relating to the program's value toward both competitiveness and service delivery.

Evidence: OPM's Hypershow. OPM receives a claims paid report weekly from OFEGLI providing the number of claims paid and the benefit amount. Agency-OPM Agree-Upon Procedures (AUPs) relating to the submission to OPM of withholdings/contributions for benefits. OPM Federal Benefits Survey. OPM Federal Human Capital Survey.

Are Federal managers and program partners (including grantees, sub-grantees, contractors, cost-sharing partners, and other government partners) held accountable for cost, schedule and performance results?

Explanation: OPM and OPM managers have a purchaser/oversight role, including overall program responsibility and accountability for performance. OPM sets the amount of the premium withholdings from salary and annuities and negotiates with our contractor, MetLife, for the amount of the premium payments to OFEGLI. OPM negotiated a formula with MetLife for the annual administrative expense ceiling; OPM must approve any expenses that fall outside the ceiling. OPM also negotiates with MetLife for the amount of the service charge. The service charge is computed using a formula in the Life Insurance Federal Acquisition Regulation, which takes into account OFEGLI's performance results.

Evidence: Quarterly Financial and Performance Reports. FEGLI contractor. Performance standards in MetLife contract, which are used to calculate the service charge. The service charge is determined per Section 2115.905 of the Life Insurance Federal Acquisition Regulation (LIFAR) and has been used since 1997.

Are funds (Federal and partners') obligated in a timely manner and spent for the intended purpose?

Explanation: OPM has procedures in place to ensure that FEGLI funds are obligated in a timely manner and spent for the intended purpose at every major transaction point. First, since employees are automatically enrolled in the FEGLI program (unless coverage is waived), agency payroll providers automatically deduct from pay employee and agency contributions for premium payments, and deposit the funds directly into the life insurance fund administered by OPM . Similar procedures exist for annuitants through annuity deductions. As the administrator of the life insurance fund, OPM maintains a transaction driven financial system that permits both budgetary and proprietary accounts to be recorded in a timely manner. The FEGLI contractor (MetLife) draws on a letter of credit account (LOC) from the life insurance fund to pay for claims and administrative expenses. Since OPM incurs an expense and a budgetary obligation when MetLife draws funds from the LOC, this method ensures MetLife's claims and premiums receivables are equal to OPM's expenses and the LOC balance at the end of the fiscal year. OPM's Inspector General conducts periodic audits to verify that funds are spent for the intended purpose. The IG has not identified any recent problems with respect to the obligation of funds. OPM also conducts monthly assessments of claims payment data to ensure the accuracy of the benefit payments made by MetLife (FEGLI Paid Claims Match). While a comprehensive assessment of the claim accuracy data has not been conducted, preliminary data demonstrates that the program is not susceptible to a high risk of erroneous payments.

Evidence: In FY 2003, MetLife paid approximately $2 billion in claims in an average of 5.2 calendar days. Periodic OPM IG audits and annual independent financial audits serve to verify that funds are spent for the intended purpose --1985 OIG Audit No. L-85-001 --1988 OIG Audit No. II-00-89-01 Scope: 1984-1988 Annual Accounting Statements examined OFEGLI's claims processing procedures reviewed to determine compliance with the provisions of the contract and regulations in part 870. --1996 OIG Audit No.II-00-96-015 Scope: Administrative expenses for 1991-1995 Benefit payments and interest paid 1994-1995 Evaluation of MetLife's compliance with the laws and regulations governing the FEGLI Program. --1998 OIG Audit No. 2F-00-98-100 Scope: OFEGLI's compliance with overpayment procedures, debt collection, bad debt expense, and related allowances for bad debt procedures. --2001 OIG Audit No. 4A-RI-00-02-024 Scope: Economy and efficiency audit that included tests of internal controls over contract administration and quality assurance reviews.

Does the program have procedures (e.g. competitive sourcing/cost comparisons, IT improvements, appropriate incentives) to measure and achieve efficiencies and cost effectiveness in program execution?

Explanation: FEGLI claims administration is outsourced to a single contractor, MetLife, which receives a reimbursement for associated program administrative costs and a payment of a service charge (profit), negotiated annually by OPM. In 2004, FEGLI program administrative costs were 0.51% of premium income. Additional costs of administrating the program are incurred by OPM and amounted to 0.04% of premiums, or $915,708, in 2004. The life insurance contract contains a performance clause that establishes an expectation that the contract will remain with MetLife except for nonperformance. Since FEGLI premiums (to cover anticipated claims) are set each year by OPM, re-competing the contract would not lower the premium rates. OPM's actuaries set the premiums based on the actual claims experience and death rates of the Federal group. Further, the contract also has an annual negotiated service charge based on performance criteria and attendant results. These performance criteria include a claims timeliness efficiency measure.

Evidence: ' MetLife contract performance criteria cited in section 2.5 evidence used to measure MetLife's efficiency and effectiveness. ' See "measures" for baselines and targets for FEGLI Paid Claims Timeliness efficiency measure and targets which beats the industry standard in terms of claims processing efficiency.

Does the program collaborate and coordinate effectively with related programs?

Explanation: FEGLI is a stand-alone program. There is no other life insurance program for civilian employees and retirees of the Federal Government. The FEGLI Program does collaborate with the retirement programs to assure that benefits for both programs are paid in a timely manner. When a Federal employee dies, the death must be reported to the employing agency. When an annuitant dies, the death must be reported to the Retirement Operations Center. In addition to starting the FEGLI claims process, this starts the process for any survivor annuity (or lump sum payment, if there is no survivor annuity) and continuation of FEHB coverage, if applicable. OFEGLI and retirement services have a collaborative relationship and work towards their mutual goal of customer service. The claims timeliness attests to this strong relationship and to OFEGLI's relationship with the individual agencies, including OWCP.

Evidence: FEGLI Handbook Claims chapter (www.opm.gov/insure/life/handbook/claims2.asp); website link with guidance on reporting a death (www.opm.gov/insure/life/death_1.asp).

Does the program use strong financial management practices?

Explanation: MetLife is audited annually by Deloitte and Touche, in accordance with Generally Accepted Auditing Standards (GAAS) and Generally Accepted Government Auditing Standards (GAGAS), and the results are provided to OPM. OPM contracts with an independent financial accounting firm, KPMG, to audit the life insurance trust funds, including the financial statements and the controls in the FEGLI program. Actuarial valuations of the program are also subject to an annual independent audit. Agreed-upon principals: OFEGLI's independent auditor will subscribe to procedures to ensure that OPM can incorporate the audit figures into OPM's consolidated report.

Evidence: Deloitte and Touche continues to report an unqualified audit opinion on FEGLI-related MetLife financial activities. Since 1996, KPMG has issued an unqualified audit opinion on the FEGLI financial statements. The auditors have continually reported no material internal control weaknesses.

Has the program taken meaningful steps to address its management deficiencies?

Explanation: ' The FEGLI Program has processes in place to track production data on a weekly basis and mitigate failure by bringing needed corrective action(s) to managers' attention. ' Additionally, the agency receives a list each year from our Inspector General of the top management challenges facing OPM. No FEGLI Program issues were identified as one of OPM's management challenges. OPM's Inspector General recommended that OPM develop a manual that clearly states the goals, objectives, policies and procedures to govern its FEGLI annuity claims paid match, and which shows precisely what organization is responsible for what task, and the order and timeframe in which the tasks are to be completed. We agreed to the recommendation to document these procedures, and have complied. We developed a FEGLI claims paid match manual, and incorporated it into the Quality Assurance Group playbook of reviews procedures and documentation. The OIG also recommended that OPM renegotiate the contract with OFEGLI. Now that the FEGLI 50th anniversary celebration and open season are completed, OPM will focus on the contract renegotiation. ' On the financial side, MetLife's financial report on the FEGLI Program is audited annually by Deloitte and Touche, in accordance with Generally Accepted Auditing Standards (GAAS) and Generally Accepted Government Auditing Standards (GAGAS). KPMG, OPM's auditor, then uses this information to audit OPM's financial statements. The 2003 Audit of FEGLI by Delotte required a statement by the auditor to management on reportable conditions. The Required Communication to Management did not contain any irregularities or reportable conditions. Reportable conditions are significant deficiencies in the design or operation of the internal control system that could adversely affect the Program's ability to record, process, summarize and report financial data consistent with the assertions of management in the financial statements. ' No outstanding management deficiencies with OIG, KPMG, or GAO. ' Benchmarking study will further elaborate on the subject of the competitive benefits package.

Evidence: OPM has processes in place to track production data and mitigate failure by bringing needed correction actions to management attention. OPM conducts a paid claims match each month, receiving information from MetLife, comparing payments against source and identification data, to determine whether claims have been paid accurately. In addition to resolving individual payment or records errors, OPM brings any recurring problems to MetLife or the FEGLI Program management for review. On the financial side, Deloitte and Touche continues to report an unqualified audit opinion on FEGLI-related MetLife financial activities, and KPMG continues to issue unqualified opinions on OPM's financial statements. See "Required Communication to Management' statement by Delotte to MetLife, 2003 financial statement audit.

Has the program demonstrated adequate progress in achieving its long-term performance goals?

Explanation: OPM has recently conducted a benefits survey to determine the baseline for its long-term performance goals. (See question 2.2.) Additionally, OPM is contracting for a benchmarking study to assess how OPM's benefits programs, including FEGLI, compare with those benefits offered by private sector employers. OPM also will issue an RFI during FY 2005 to the academic community to solicit information on how to best design independent evaluations to assess the performance of each of OPM's benefits programs, including FEGLI, against the program purposes. OPM then will contract with a third party to conduct such evaluations.

Evidence: See: The Measures tab, Benefits Survey

Does the program (including program partners) achieve its annual performance goals?

Explanation: The FEGLI Program and its partner, MetLife, achieve the annual performance goals. As shown in the FY2004 PAR, OFEGLI paid claims within 6.4 days of receipt of full documentation, and 99.8% of claims were paid accurately. (The goals were 10 days and 99.5% respectively.)

Evidence: See FY2004 PAR. Metlife performance standards reports.

Does the program demonstrate improved efficiencies or cost effectiveness in achieving program goals each year?

Explanation: The FEGLI program demonstrates high levels of efficiency and cost effectiveness. Currently, the program has a target of processing fully documented claims within 10 calendar days of receipt. Actual experience for FY04 was that, on average, claims were processed within 6.4 calendar days. In addition, the FEGLI program has an expense level of 0.40% of premium (as calculated by dividing the net administrative expenses by premium as reported in the FY03 financial statements). According to MetLife, their four largest insurance customers have expense levels of 1.30%, 1.35%, 3.7% and 4.8% of premium. The last two of these are somewhat higher because of certain additional services included that are not part of the first two programs or the FEGLI program. When these services and the expenses associated with them are removed for comparison purposes, the expense levels for these customers would decrease to be more in line with the first two. The expense level for FEGLI is far below that of MetLife's other large group life insurance programs. MetLife also reports that FEGLI is one of only three companies in their book of business that has an expense ratio below 2%.

Evidence: The performance indicators for the FEGLI in OPM's annual PARs and CBJ/PB's provide data regarding claims processing times, etc. that demonstrate the Program's improved or continuing efficiency and effectiveness in achieving program goals each year. In terms of cost effectiveness, FEGLI administrative costs are very low only $8.4 million on $2 billion claims paid (less than 4/10 of one percent).

Does the performance of this program compare favorably to other programs, including government, private, etc., with similar purpose and goals?

Explanation: The FEGLI Program has exceeded its target of 10 days or less for paid claims timeliness for the past 4 years. In the private sector, it is becoming more common for employers to terminate or reduce life insurance coverage when an employee retires. Under the FEGLI Program, employees retiring on an immediate annuity who have had coverage for the 5 years of service immediately preceding retirement may continue the FEGLI coverage. For most types of coverage the retiring employee may choose whether or not to have the coverage reduce at age 65. OPM is undertaking a benchmarking study to further compare the FEGLI Program with life insurance offerings in the private sector.

Evidence: See attached study design and timeline outlining OPM's approach to evaluating the long-term impact and effectiveness of OPM's benefits programs, including FEGLI, and benchmarking FEGLI to the private sector.

Do independent evaluations of sufficient scope and quality indicate that the program is effective and achieving results?

Explanation: OPM will issue an RFI to the academic community to solicit information on how to best design independent evaluations to assess the performance of each of OPM's benefits programs, including FEGLI, against the program purposes. OPM then will contract with a third party to conduct such evaluations.

Evidence: Independent evaluation plan