NEW REGULATIONS CAN PROVIDE CASH PAYMENT TO
TERMINALLY-ILL FEDERAL EMPLOYEES UNDER FEGLI

Washington, D.C. -- Terminally-ill federal employees and former employees who have Federal Employees Group Life Insurance (FEGLI) now have more options in obtaining cash before death. The benefit is included in a proposal by the U.S. Office of Personnel Management to allow federal employees and former employees to irrevocably assign ownership of their life insurance coverage to another individual, corporation, or trustee.

The new assignment benefit allows terminally ill individuals and their families who incur extreme, uncovered medical- or personal-care expenses to assign their life insurance to a viatical settlement firm. This can be a life-line for families who often diminish life savings paying for medical care.

In February, OPM announced that federal employees would be able to take advantage of the "Living Benefits Act" which was signed by President Clinton a year ago and became effective July 25, 1995. The law authorizes the payment of the "basic" benefit to terminally-ill federal employees and retirees--those with a life expectancy of nine months or less who are participating in the FEGLI program.

"The new interim rule give federal employees one more choice when they are faced with astronomical medical bills," said OPM Director Jim King.

The interim regulation, which will be published in the Federal Register on Wednesday, October 4, implements Public Law 103-336. In addition to allowing terminally-ill employees to obtain cash from viatical settlement firms, the interim regulation also allows employees to use assignments:

• to comply with a court order for divorce that requires an employee to name a former spouse as the beneficiary of his or her FEGLI proceeds;

• for inheritance tax purposes. An absolute assignment of an insured person's interest in a group life insurance policy, madeat least three years before his or her death, generally removesthe insurance proceeds from the insured person's estate; and
• to pay off debts. Agencies cannot refuse to accept an assignment made to satisfy indebtedness.

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Web page created 2 December 1997