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Checkout the special spreadsheet that assists you calculate the total FEGLI cost over your career along with the article Low Cost Term Life Alternative to FEGLI Option B.
What is FEGLI?
The Federal Government established the Federal Employees’ Group Life Insurance (FEGLI) Program on August 29, 1954. It is the largest group life insurance program in the world, covering over four million Federal employees and retirees, as well as many of their family members.
FEGLI provides group term life insurance. As such, it does not build up any cash value or paid-up value. It consists of Basic life insurance coverage and three options. In most cases, if you are a new Federal employee, you are automatically covered by Basic life insurance and your payroll office deducts premiums from your paycheck unless you waive the coverage. In addition to Basic, there are three forms of Optional insurance that you can elect. You must have Basic insurance in order to elect any of the options. Unlike Basic, enrollment in Optional insurance is not automatic — you must take action to elect the options.
The cost of Basic insurance is shared between you and the Government. You pay 2/3 of the total cost and the Government pays 1/3. Your age does not affect the cost of Basic insurance. You pay the full cost of Optional insurance, and the cost depends on your age. Read our recommendations on how to maximize the value of FEGLI as the cost becomes increasingly expensive at the age of 50.
The Office of Federal Employees’ Group Life Insurance (OFEGLI), which is a private entity that has a contract with the Federal Government, processes and pays claims under the FEGLI Program.
Who is Eligible?
Most Federal civilian employees are eligible to enroll in the Federal Employees Group Life Insurance (FEGLI) program. This includes part-time service employees. However, there are some exclusions by law and regulation.
Some employees who are excluded are employees serving on temporary appointments limited to one year or less; employees on intermittent appointments; employees whose annual pay is $12 or less; and those paid on a contract, fee, or piecework basis.
We recommend you review the FEGLI Handbook to see the full listing of the eligibility requirements for FEGLI as well as a listing of the exclusions.
What are my FEGLI Options?
FEGLI consists of Basic insurance, Options A, B and C.
The Basic Insurance Amount (BIA) is based on your actual current pay. To determine your BIA:
1. Take your annual rate of basic pay, and
2. Round up to the next higher thousand (if it’s not already an even thousand dollar amount), and
3. Add $2,000
Option A: Option A coverage is $10,000.
Option B: Option B coverage comes in 1, 2, 3, 4, or 5 multiples of your annual pay (after your pay has been rounded to the next higher thousand). It does not include the extra $2,000 added for your BIA.
Option C: Option C provides coverage for your spouse and eligible dependent children. When you elect Option C, all of your eligible family members are automatically covered. You may elect either 1, 2, 3, 4 or 5 multiples of coverage. Each multiple is equal to $5,000 for your spouse and $2,500 for each eligible dependent child.
For example, if you elect 3 multiples and your spouse dies, you would receive $15,000 (3 times $5,000). If one of your eligible dependent children dies, you would receive $7,500 (3 times $2,500). The number of multiples you elect applies to all of your eligible family members. You cannot elect a number of multiples for your spouse that is different from the number of multiples for your eligible dependent children. A child’s eligibility for Option C benefits ends once he/she reaches age 22, unless he/she is Incapable of Self-Support because of a mental or physical disability that existed before the child reached age 22.
To see how different combinations of FEGLI options can change the cost and coverage for you and your family, check out OPM’s FEGLI Calculator.
When Do I Enroll?
There are no regularly scheduled FEGLI Open Seasons to elect or increase your coverage. Open Seasons are held only when specifically scheduled by the Office of Personnel Management (OPM). FEGLI Open Seasons are held quite infrequently, and you should not count on one occurring any time soon. You will receive plenty of notice if and when there is another Open Season.
You are automatically covered under Basic Insurance (if your appointment conveys eligibility). You must specifically elect the types of Optional insurance you wish to carry within 60 days of becoming eligible i.e. date of hire, conversion to permanent appointment.
When you first become eligible for FEGLI coverage, you must specifically waive Basic insurance if you do not want it. If you do not want any Optional insurance, you do not have to do anything. When you do not elect the full amount of Optional insurance available, you are waiving any Optional insurance not chosen.
If you have been designated as an Emergency Essential Employee or are deploying in support of a contingency operation, and if you have previously waived FEGLI coverage, P.L. 110-417 allows you to enroll in basic FEGLI coverage. This law also provides an opportunity for employees already enrolled in FEGLI to increase existing coverage under Option A and/or Option B.
You may cancel your Basic and/or Optional insurance coverage at any time, unless you’ve assigned your insurance. When you cancel Basic insurance, you automatically cancel all of your Optional insurance. Canceling Optional insurance has no effect on Basic insurance. The cancellation is effective at the end of the pay period in which it is cancelled.
Canceling a Waiver of FEGLI. You can obtain Basic insurance and/or Options A and B by canceling your waiver if at least one year has passed since the effective date of your waiver and you provide satisfactory medical evidence of insurability. You must have Basic insurance to elect Optional insurance.
If you want to cancel a waiver, you must complete the SF 2822, Request for Insurance. This form is a combination:
• Request to cancel a waiver.
• Medical certificate. And
• Authorization for insurance.
You must sign the request portion and have your personal doctor complete the medical certificate. You are responsible for any fee charged for medical examination and certification. Your doctor must send the completed SF 2822 to the Office of Federal Employees’ Group Life Insurance (OFEGLI), and OFEGLI must receive the form within 60 days from the date of the medical examination. If OFEGLI approves coverage, Basic insurance becomes effective on the first day you enter on duty in a pay status after OFEGLI’s approval. You are allowed 60 days from the date of OFEGLI’s approval to cancel your waiver of Option A and/or Option B, regardless of when your employing office notifies you of OFEGLI’s decision. The effective date is the first day you enter on duty in pay status on or after the day your employing office receives your Life Insurance Election form after OFEGLI approves your request.
You can cancel a waiver of Option B and/or Option C (or increase the multiples you carry) because of one of these events:
• Death of a spouse
• Acquiring an eligible child
When Is Open Season?
OPM will hold a FEGLI Open Season from 1 Sep 2016 through 30 Sep 2016. During this time, eligible employees can elect or increase their FEGLI life insurance coverage. The effective date for changes to FEGLI coverage under an Open Season election will be delayed one full year to the beginning of the first full pay period on or after 1 Oct 2017. If you find that you want to drop your optional coverage – you can do that at anytime through your HR office. It does NOT require the OPEN SEASON.
Check out our article on Federal Employee Life Insurance.