This section of the FEDERAL REGISTER

contains regulatory documents having general

applicability and legal effect, most of which

are keyed to and codified in the Code of

Federal Regulations, which is published under

50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by

the Superintendent of Documents. Prices of

new books are listed in the first FEDERAL

REGISTER issue of each week.

Rules and Regulations Federal Register

48731

Vol. 62, No. 180

Wednesday, September 17, 1997

OFFICE OF PERSONNEL

MANAGEMENT

5 CFR Parts 870, 871, 872, 873, and 874

RIN 3206–AF32, 3206–AG79, 3206–AG68

Federal Employees’ Group Life

Insurance Program: Merger of Life

Insurance Regulations; Living

Benefits; Assignment of Life Insurance

AGENCY: Office of Personnel

Management.

ACTION: Final rule.

SUMMARY: The Office of Personnel

Management (OPM) is issuing final

regulations to combine the five parts of

title 5 of the Code of Federal

Regulations relating to the Federal

Employees’ Group Life Insurance

(FEGLI) Program and to simplify the

language of the regulations. This will

ease administration and aid in

understanding the Program. We also are

issuing final regulations to implement

the FEGLI Living Benefits Act and

assignment of life insurance.

EFFECTIVE DATE: October 17, 1997.

FOR FURTHER INFORMATION CONTACT:

Karen Leibach, 202–606–0004.

SUPPLEMENTARY INFORMATION: On May 3,

1995, OPM published proposed

regulations (60 FR 21759), merging the

five parts of title 5 of the Code of

Federal Regulations relating to the

Federal Employees’ Group Life

Insurance Program. The merger deletes

parts 871, 872, 873, and 874 and

combines the information now

contained in those parts into an

expanded part 870. This results in a

complete presentation of material in one

place.

In addition to merging the regulations,

we reorganized the material;

incorporated some material formerly

found in Federal Personnel Manual

(FPM) Supplement 870–1, which was

abolished as of December 31, 1994; and

simplified the language to make the

regulations easier to understand.

We received one comment from a

retiree organization, which expressed

approval of the consolidation and the

simplified language.

We made changes to reflect statutory

changes since the proposed regulations

were prepared and made other minor

language modifications and

clarifications.

On June 15, 1995, OPM published

interim regulations (60 FR 31371),

implementing Pub. L. 103–409, the

FEGLI Living Benefits Act, which

permits terminally ill individuals

covered by FEGLI to elect a lump sum

payment of their Basic insurance as a

living benefit.

We received one comment from an

individual who suggested allowing

covered individuals to make such an

election prior to their becoming

terminally ill and allowing someone

other than the insured to make the

election. The Living Benefits Act states

that terminally ill individual may elect

a Living Benefit. Terminally ill is

defined as having a life expectancy of 9

months or less. Therefore, OPM does

not have the statutory authority to

permit such elections prior to an

individual’s being diagnosed as

terminally ill. We reviewed the

requirement that only the insured may

elect a Living Benefit. At the present

time we are not experiencing a problem

in this area. However, we will continue

to monitor the situation to determine

whether any changes should be made in

the future.

We made one significant change to

the Living Benefits regulations. The

interim regulations state that if an

individual elects a Living Benefit, he/

she cannot then assign any remaining

insurance. We reevaluated that position

and have revised the regulations to state

that an individual can assign his/her

remaining insurance (if any) following a

Living Benefit election. We also made

changes in numbering and language to

conform the Living Benefits regulations

to the order and style of the merged

regulations.

On October 4, 1995, OPM published

interim regulations (60 FR 51881),

implementing Section 4 of Public Law

103–336, which permits all insured

Federal employees and former

employees to irrevocably assign

ownership of their FEGLI insurance.

Previously, only judges could assign

ownership of their insurance.

We received one comment from a

Federal agency asking whether the

reference to ‘‘other person(s)’’ was

intended to prevent the assignee from

designating a corporation as a

contingent beneficiary and also

suggesting that the regulations include

instructions concerning procedures for

reassigning the insurance. The

regulations in place at the time included

a ‘‘corporation’’ in the definition of

‘‘person.’’ The definition of

‘‘assignment’’ also specifically includes

transfer of ownership to a corporation.

We do not believe that regulations are

the appropriate forum for detailed

instructions. Instructions more properly

belong in handbooks, operating

manuals, and other guidance to

agencies.

The commentor also suggested some

perfecting language changes. We

accepted some of these suggestions. We

also made changes in numbering and

language to conform the assignment

regulations to the order and style of the

merged regulations.

Regulatory Flexibility Act

I certify that these regulations will not

have a significant economic impact on

a substantial number of small entities,

because the regulations will affect only

Federal employees, annuitants, and

compensationers.

List of Subjects in 5 CFR Parts 870, 871,

872, 873 and 874

Administrative practice and

procedure, Government employees,

Hostages, Iraq, Kuwait, Lebanon, Life

insurance, Retirement.

U.S. Office of Personnel Management.

Janice R. Lachance,

Acting Director.

Accordingly, OPM is amending title 5,

Code of Federal Regulations, as follows:

1. Part 870 is revised to read as

follows:

PART 870—FEDERAL EMPLOYEES’

GROUP LIFE INSURANCE PROGRAM

Subpart A—Administration and General

Provisions

Sec.

870.101 Definitions.

870.102 The policy

870.103 Correction of errors.

870.104 Initial decision and

reconsideration.
48732 Federal Register / Vol. 62, No. 180 / Wednesday, September 17, 1997 / Rules and Regulations

Subpart B—Types and Amount of Insurance

870.201 Types of insurance.

870.202 Basic insurance amount (BIA).

870.203 Post-election BIA.

870.204 Annual rates of pay.

870.205 Amount of Optional insurance.

870.206 Accidental death and

dismemberment.

Subpart C—Eligibility

870.301 Eligibility for life insurance.

870.302 Exclusions.

Subpart D—Cost of Insurance

870.401 Withholdings and contributions for

Basic insurance.

870.402 Withholdings for Optional

insurance.

870.403 Withholdings and contributions

following a Living Benefit election.

870.404 Withholdings and contributions

provisions that apply to both Basic and

Optional insurance.

870.405 Direct premium payments under 5

U.S.C. chapter 84 (Federal Employees’

Retirement System—FERS).

Subpart E—Coverage

870.501 Basic insurance: effective dates of

automatic coverage.

870.502 Basic insurance: waiver/

cancellation of insurance.

870.503 Basic insurance: cancelling a

waiver.

870.504 Optional insurance: election.

870.505 Optional insurance: waiver/

cancellation of insurance.

870.506 Optional insurance: cancelling a

waiver.

870.507 Open enrollment periods.

870.508 Nonpay status.

870.509 Transfers to international

organizations.

Subpart F—Termination and Conversion

870.601 Termination of Basic insurance.

870.602 Termination of Optional insurance.

870.603 Conversion of Basic and Optional

insurance.

Subpart G—Annuitants and

Compensationers

870.701 Eligibility for life insurance.

870.702 Election of Basic insurance.

870.703 Amount of life insurance.

870.704 Reinstatment of life insurance.

870.705 Reemployed annuitants.

870.706 MRA-plus-10 annuitants.

Subpart H—Order of Precedence and

Designation of Beneficiary

870.801 Order of precedence and payment

of benefits.

870.802 Designation of beneficiary.

870.803 Child incapable of self-support.

Subpart I—Assignments of Life Insurance.

870.901 Assignments permitted.

870.902 Making an assignment.

870.903 Effective date of assignment.

870.904 Amount of insurance.

870.905 Withholdings.

870.906 Cancellation of insurance.

870.907 Termination and conversion.

870.908 Annuitants and compensationers.

870.909 Designations and changes of

beneficiary.

870.910 Notification of current addresses.

Subpart J—Benefits for United States

Hostages in Iraq and Kuwait and United

States Hostages Captured in Lebanon

870.1001 Purpose.

870.1002 Definitions.

870.1003 Coverage and amount of

insurance.

870.1004 Effective date of insurance.

870.1005 Premiums.

870.1006 Cancellation of insurance.

870.1007 Termination and conversion.

870.1008 Order of precedence and

designation of beneficiary.

870.1009 Responsibilities of the U.S.

Department of State.

Subpart K—Living Benefits

870.1101 Eligibility for a Living Benefit.

870.1102 Amount of a Living Benefit.

870.1103 Election procedures.

Authority: 5 U.S.C. 8716.

Subpart A—Administration and

General Provisions

§ 870.101 Definitions.

Annuitant means a former employee

entitled to an annuity under a

retirement system established for

employees. This includes the retirement

system of a nonappropriated fund

instrumentality of the Department of

Defense or the Coast Guard.

Assign and assignment refer to an

individual’s irrevocable transfer to

another individual, corporation, or

trustee all ownership of FEGLI coverage

(except Option C).

Assignee means the individual,

corporation, or trustee to which an

individual irrevocably transfers

ownership of FEGLI coverage (except

Option C).

Child, as used in the definition of

family member for Option C coverage,

means a legitimate child, an adopted

child, a stepchild who lives with the

employee or former employee in a

regular parent-child relationship, or a

recognized natural child. It does not

include a stillborn child, a grandchild,

or a foster child. The child must be

under age 22 or, if age 22 or over, must

be incapable of self-support because of

a mental or physical disability which

existed before the child reached age 22.

Child, as used in the order of

precedence for payment of benefits,

means a legitimate child, an adopted

child, or a recognized natural child, of

any age. It does not include a stepchild,

a stillborn child, a grandchild, or a

foster child. An individual who has

reached age 18 is considered an adult

and can receive a benefit payment in

his/her name. However, if the age of

adulthood where the individual has his/

her legal residence is set at a lower age,

the individual is considered an adult

upon reaching that lower age. Adopted

children do not inherit from their birth

parents under the order of precedence

stated in 5 U.S.C. 8705, other than as

designated beneficiaries, but inherent

from their adoptive parents. However, a

child who is adopted by the spouse of

a birth parent inherits from that birth

parent.

Compensation means compensation

under subchapter I of chapter 81 of title

5, United States Code, which is payable

because of an on-the-job injury or

disease.

Compensationer means an employee

or former employee who is entitled to

compensation and whom the

Department of Labor determines is

unable to return to duty.

Date of retirement, as used in 5 U.S.C.

8706(b)(1)(A), means the starting date of

annuity.

Dependent means living with or

receiving regular and substantial

support from the insured individual.

Duly appointed representative of the

insured’s estate means an individual

named in a court order granting the

individual the authority to receive, or

the right to possess, the insured’s

property; the order must be issued by a

court having jurisdiction over the

insured’s estate. Where the law of the

insured’s legal residence provides for

the administration of estates through

alternative procedures which do away

with the need for a court order, this

term also means an individual who

shows that he/she is entitled to receive,

or possess, the insured’s property under

the terms of those alternative

procedures.

Employee means an individual

defined by section 8701(a) of title 5,

United States Code.

Employing office means the agency

office or retirement system office that

has responsibility for life insurance

actions.

(1) The Administrative Office of the

United States Courts is the employing

office for judges of the following courts:

(i) All United States Courts of

Appeals;

(ii) All United States District Courts;

(iii) The Court of International Trade;

(iv) The Court of Federal Claims; and

(v) The District Courts of Guam, the

Northern Mariana Islands, and the

Virgin Islands.

(2) The Washington Headquarters

Services is the employing office for

judges of the United States Court of

Appeals for the Armed Forces.

(3) The United States Tax Court is the

employing office for judges of the

United States Tax Court.

(4) The United States Court of

Veterans Appeals is the employing
Federal Register / Vol. 62, No. 180 / Wednesday, September 17, 1997 / Rules and Regulations 48733

office for judges of the United States

Court of Veterans Appeals.

Family member means a spouse

(including a valid common law

marriage) and unmarried dependent

child(ren).

Immediate annuity means:

(1) An annuity that begins no later

than 1 month after the date the

insurance would otherwise stop (the

date of separation from service), and

(2) An annuity under § 842.204(a)(1)

of this title for which the starting date

has been postponed under § 842.204(c)

of this title.

Judge means an individual appointed

as a Federal justice or judge under

Article I or Article III of the

Constitution.

OFEGLI means the Office of Federal

Employees’ Group Life Insurance,

which pays benefits under the policy.

OPM means the Office of Personnel

Management.

OWCP means the Office of Workers’

Compensation Programs, U.S.

Department of Labor, which administers

subchapter I of chapter 81 of title 5,

United States Code.

Parent means the mother or father of

a legitimate child or an adopted child.

The term parent includes the mother of

a recognized natural child; it also

includes the father of a recognized

natural child if the recognized natural

child meets the definition provided

below.

Recognized natural child, with

respect to paternity, is one for whom the

father meets one of the following:

(1) (i) Has acknowledged paternity in

writing;

(ii) Was ordered by a court to provide

support;

(iii) Before his death, was pronounced

by a court to be the father;

(iv) Was established as the father by

a certified copy of the public record of

birth or church record of baptism, if the

insured was the informant and named

himself as the father of the child; or

(v) Established paternity on public

records, such as records of schools or

social welfare agencies, which show

that with his knowledge the insured was

named as the father of the child.

(2) If paternity is not established by

paragraph (1) of this definition, such

evidence as the child’s eligibility as a

recognized natural child under other

State or Federal programs or proof that

the insured included the child as a

dependent child on his income tax

returns may be considered when

attempting to establish paternity.

Reconsideration means the final level

of administrative review of an

employing office’s initial decision to

determine if the employing office

followed the law and regulations

correctly in making the initial decision

concerning FEGLI eligibility and

coverage.

Service means civilian service which

is creditable under subchapter III of

chapter 83 or chapter 84 of title 5,

United States Code. This includes

service under a nonappropriated fund

instrumentality of the Department of

Defense or the Coast Guard for an

individual who elected to remain under

a retirement system established for

employees described in section 2105(c)

of title 5.

Terminally ill means having a medical

prognosis of a life expectancy of 9

months or less.

Underdeduction means a failure to

withhold the required amount of life

insurance deductions from an

individual’s pay, annuity, or

compensation. This includes

nondeductions (when none of the

required amount was withheld) and

partial deductions (when only part of

the required amount was withheld).

§ 870.102 The policy.

Basic, Option A, Option B, and

Option C benefits are payable according

to a contract with the company or

companies that issue a policy under

§ 8709 of title 5, United States Code.

Any court action to obtain money due

from this insurance policy must be

taken against the company that issues

the policy.

§ 870.103 Correction of errors.

(a) The employing office may make

corrections of administrative errors

regarding coverage or changes in

coverage. Retroactive corrections are

subject to the provisions of § 870.401(f).

(b) OPM may order correction of an

error after reviewing evidence that it

would be against equity and good

conscience not to do so.

§ 870.104 Initial decision and

reconsideration.

(a) An individual may ask his/her

agency or retirement system to

reconsider its initial decision denying

life insurance coverage, the opportunity

to change coverage, or the opportunity

to assign insurance.

(b) An employing office’s decision is

an initial decision when the employing

office gives it in writing and informs the

individual of the right to an

independent level of review

(reconsideration) by the appropriate

agency or retirement system.

(c) A request for reconsideration must

be made in writing and must include

the employee’s (or annuitant’s) name,

address, date of birth, Social Security

number, reason(s) for the request, and,

if applicable, retirement claim number.

(d) A request for reconsideration must

be made within 30 calendar days from

the date of the initial decision. This

time limit may be extended when the

individual shows that he/she was not

notified of the time limit and was not

otherwise aware of it or that he/she was

unable, due to reasons beyond his/her

control, to make the request within the

time limit.

(e) The reconsideration must take

place at or above the level at which the

initial decision was made.

(f) After reconsideration, the agency

or retirement system must issue a final

decision to the insured individual. This

decision must be in writing and must

fully state the findings.

Subpart B—Types and Amount of

Insurance

§ 870.201 Types of insurance.

(a) There are two types of life

insurance under the FEGLI Program:

Basic and Optional.

(b) There are three types of Optional

insurance: Option A (standard optional

insurance), Option B (additional

optional insurance), and Option C

(family optional insurance).

§ 870.202 Basic insurance amount (BIA).

(a)(1) An employee’s Basic insurance

amount (BIA) is either:

(i) His/her annual rate of basic pay,

rounded to the next higher thousand,

plus $2,000; or

(ii) $10,000; whichever is higher,

unless an employee has elected a Living

Benefit under subpart K of this part.

However, the BIA can never be more

than the annual rate of pay for Level II

Executive Schedule positions under

§ 5313 of title 5, U.S.C., rounded to the

next higher thousand, plus $2,000.

(2) The BIA of an individual who is

eligible to continue Basic Life insurance

coverage as an annuitant or

compensationer is the BIA in effect at

the time his/her insurance as an

employee would stop under § 870.601.

(b) An employee’s BIA automatically

changes whenever annual pay is

increased or decreased by an amount

sufficient to raise or lower pay to a

different $1,000 bracket, unless the

employee has elected a Living Benefit

under subpart K of this part.

(c) The amount of an employee’s

Basic Life insurance coverage is equal to

his/her BIA multiplied by the

appropriate factor based on the

employee’s age, as follows:

Age Factor

35 or under ................................... 2.0
48734 Federal Register / Vol. 62, No. 180 / Wednesday, September 17, 1997 / Rules and Regulations

Age Factor

36 .................................................. 1.9

37 .................................................. 1.8

38 .................................................. 1.7

39 .................................................. 1.6

40 .................................................. 1.5

41 .................................................. 1.4

42 .................................................. 1.3

43 .................................................. 1.2

44 .................................................. 1.1

45 or over ..................................... 1.0

§ 870.203 Post-election BIA.

(a) The BIA of an individual who

elects a Living Benefit under subpart K

of this part is the amount of insurance

left after the effective date of the Living

Benefit election. This amount is the

individual’s post-election BIA.

(1) the post-election BIA of an

individual who elects a full Living

Benefit is 0.

(2) The post-election BIA of an

employee who elects a partial Living

Benefit is the BIA as of the date OFEGLI

receives the completed Living Benefit

application (the ‘‘pre-election’’ BIA),

reduced by the percentage which the

partial lump-sum payment represents of

the full Living Benefit payment the

employee could have received if he/she

elected a full Living Benefit; this

amount is rounded up or down to the

nearest multiple of $1,000 or, if midway

between multiples, to the next higher

multiple.

(b) The post-election BIA cannot

change after the effective date of the

Living Benefit election.

(c) For purposes of computing the

payment of benefits upon the death of

an insured individual who elected a

partial Living Benefit, the post-election

BIA will be multiplied by the age factor

in effect on the date OFEGLI received

the completed Living Benefit

application.

§ 870.204 Annual rates of pay.

(a) (1) An insured employee’s annual

pay is his/her annual rate of basic pay

as fixed by law or regulation.

(2) Annual pay for this purpose

includes the following:

(i) Interim geographic adjustments

and locality-based comparability

payments as provided by Pub. L. 101–

509 (104 Stat. 1479);

(ii) Premium pay for standby duty for

Federal civilian firefighters under 5

U.S.C. 5545(c)(1);

(iii) Premium pay for overtime

inspectional service for customs officers

as provided by Pub. L. 103–66 107 Stat.

453);

(iv) For a law enforcement officer as

defined under 5 U.S.C. 8331(20) and

§§ 831.902 and 842.802 of this title,

premium pay for administratively

uncontrollable overtime under 5 U.S.C.

5545(c)(2);

(v) Night differential pay for wage

employees;

(vi) Environmental differential pay for

employees exposed to danger or

physical hardship;

(vii) Tropical differential pay for

citizen employees in Panama;

(viii) Special pay adjustments for law

enforcement officers;

(ix) Availability pay for criminal

investigators under 5 U.S.C. 5545a; and

(x) Bonuses for physicians and

dentists of the Department of Veterans

Affairs under Pub. L. 96–330 (94 Stat.

1030).

(b) To convert a pay rate of other than

annual salary to an annual rate,

multiply the pay rate by the number of

pay units in a 52-week work year.

(c) The annual pay for a part-time

employee is his/her basic pay applied to

his/her tour of duty in a 52-week work

year.

(d) The annual pay for an employee

on piecework rates is the total basic

earnings for the previous calendar year,

not counting premium pay for overtime

or holidays.

(e) The annual pay for an employee

with a regular schedule who works at

different pay rates is the weighted

average of the rates at which the

employee is paid, projected to an annual

basis.

(f) The annual pay for a non-Postal

intermittent employee or an employee

who works at different pay rates without

a regular schedule is the annual rate

which he/she is receiving at the end of

the pay period.

(g) If an employee legally serves in

more than 1 position at the same time,

and at least 1 of those positions entitles

him/her to life insurance coverage, the

annual pay is the sum of the annual

basic pay fixed by law or regulation for

each position. Exception: this doesn’t

apply to part-time flexible schedule

employees in the Postal Service.

§ 870.205 Amount of Optional insurance.

(a) Option A coverage is $10,000.

However, if an employee’s annual rate

of pay is more than the sum of the

annual rate of basic pay for Level II

Executive Schedule positions under 5

U.S.C. 5313 plus $10,000, Option A

coverage automatically increases. The

amount of Option A coverage in this

case is the difference between the

employee’s annual rate of pay, (rounded

to the next higher thousand if not

already an even thousand), and the

maximum allowable BIA.

(b) (1) Option B coverage comes in 1,

2, 3, 4, or 5 multiples of an employee’s

annual pay (after the pay has been

rounded to the next higher thousand, if

not already an even thousand). A

multiple cannot be more than the

annual rate of basic pay for Level II

Executive Schedule positions under 5

U.S.C. 5313, rounded to the next higher

thousand.

(2) The amount of Option B coverage

automatically changes whenever annual

pay is increased or decreased by an

amount sufficient to raise or lower pay

to a different $1,000 bracket.

(c) Option C coverage is $5,000

payable upon the death of a spouse and

$2,500 payable upon the death of an

eligible child. Payments are made to the

insured individual.

§ 870.206 Accidental death and

dismemberment.

(a) (1) Accidental death and

dismemberment coverage is an

automatic part of Basic and Option A

insurance for employees.

(2) There is no accidental death and

dismemberment coverage with Options

B and C.

(3) Individuals who are insured as

annuitants or compensationers do not

have accidental death and

dismemberment coverage.

(b) (1) Under Basic insurance,

accidental death benefits are equal to

the BIA, but without the age factor

described in § 870.202(c).

(2) Under Option A, accidental death

benefits are equal to the amount of

Option A.

(c)(1) Under Basic insurance,

accidental dismemberment benefits for

the loss of a hand, foot, or eye are equal

to one-half the BIA. For loss of 2 or

more of these in a single accident,

benefits are equal to the BIA.

(2) Under Option A, accidental

dismemberment benefits for the loss of

a hand, foot, or eye are equal to one-half

the amount of Option A. For loss of 2

or more of these in a single accident,

benefits are equal to the amount of

Option A.

(3) Accidental dismemberment

benefits are paid to the employee.

Subpart C—Eligibility

§ 870.301 Eligibility for life insurance.

(a) Each nonexcluded employee is

automatically insured for Basic

insurance unless he/she waives it.

(b)(1) Optional insurance must be

specifically elected; it is not automatic.

(2) An employee may elect one or

more types of Optional insurance if:

(i) He/she has Basic insurance;

(ii) He/she doesn’t have a waiver of

that type (or types) of Optional

insurance still in effect; and
Federal Register / Vol. 62, No. 180 / Wednesday, September 17, 1997 / Rules and Regulations 48735

(iii) His/her periodic pay, after all

other deductions, is enough to cover the

full cost.

§ 870.302 Exclusions.

(a) The following employees are

excluded from life insurance coverage

by law:

(1) An employee of a corporation

supervised by the Farm Credit

Administration, if private interests elect

or appoint a member of the board of

directors.

(2) An individual who is not a citizen

or national of the United States and

whose permanent duty station is outside

the United States. Exception: an

individual who met the definition of

employee on September 30, 1979, by

service in an Executive agency, the

United States Postal Service, or the

Smithsonian Institution in the area

which was then known as the Canal

Zone.

(3) An individual first employed by

the Government of the District of

Columbia on or after October 1, 1987.

Exceptions:

(i) An employee of St. Elizabeths

Hospital, who accepts employment with

the District of Columbia Government

following Federal employment without

a break in service, as provided in

section 6 of Pub. L. 98–621 (98 Stat.

3379);

(ii) An employee of the District of

Columbia Financial Responsibility and

Management Assistance Authority

(Authority), who makes an election

under the Technical Corrections to

Financial Responsibility and

Management Assistance Act (section

153 of Pub. L. 104–134 (110 Stat. 1321))

to be considered a Federal employee for

life insurance and other benefits

purposes; employees of the Authority

who are former Federal employees are

subject to the provisions of

§§ 870.503(d) and 870.705 of this part;

(iii) The Corrections Trustee and the

Pretrial Services, Defense Services,

Parole, Adult Probation and Offender

Supervision Trustee and employees of

these Trustees who accept employment

with the District of Columbia

government within 3 days after

separating from the Federal

Government; and

(iv) Effective October 1, 1997, judicial

and nonjudicial employees of the

District of Columbia Courts, as provided

by Pub. L. 105–33 (111 Stat. 251).

(4) Teachers in Department of Defense

dependents schools overseas, if

employed by the Federal Government in

a nonteaching position during the recess

period between school years.

(b) The following employees are also

excluded from life insurance coverage:

(1) An employee serving under an

appointment limited to 1 year or less.

Exceptions:

(i) An employee whose full-time or

part-time temporary appointment has a

regular tour of duty and follows a

position in which he/she was insured,

with no break in service or with a break

in service of no more than 3 days;

(ii) An acting postmaster;

(iii) A Presidential appointee

appointed to fill an unexpired term; and

(iv) Certain employees who receive

provisional appointments as defined in

§ 316.403 of this title.

(2) An employee who is employed for

an uncertain or purely temporary

period, who is employed for brief

periods at intervals, or who is expected

to work less than 6 months in each year.

Exception: an employee who is

employed under an OPM-approved

career-related work-study program

under Schedule B lasting at least 1 year

and who is expected to be in pay status

for at least one-third of the total period

of time from the date of the first

appointment to the completion of the

work-study program.

(3) An intermittent employee (a nonfull-time employee without a regularly

scheduled tour of duty). Exception: an

employee whose intermittent

appointment follows, with no break in

service or with a break in service of no

more than 3 days, a position in which

he/she was insured and to which he/she

is expected to return.

(4) An employee whose pay, on an

annual basis, is $12 a year or less.

(5) A beneficiary or patient employee

in a Government hospital or home.

(6) An employee paid on a contract or

fee basis. Exception: an employee who

is a United States citizen, who is

appointed by a contract between the

employee and the Federal employing

authority which requires his/her

personal service, and who is paid on the

basis of units of time.

(7) An employee paid on a piecework

basis. Exception: an employee whose

work schedule provides for full-time or

part-time service with a regularly

scheduled tour of duty.

(c) OPM makes the final

determination about whether the above

categories apply to a specific employee

or group of employees.

Subpart D—Cost of Insurance

§ 870.401 Withholdings and contributions

for Basic insurance.

(a) The cost of Basic insurance is

shared between the insured individual

and the Government. The employee

pays two thirds of the cost, and the

Government pays one-third.

(b)(1) During each pay period in

which an insured employee is in pay

status for any part of the period, $0.165

must be withheld from the employee’s

biweekly pay for each $1,000 of the

employee’s BIA. The amount withheld

from the pay of an employee who is

paid on other than a biweekly basis

must be prorated and adjusted to the

nearest one-tenth of 1 cent.

(2) The amount withheld from the pay

of an insured employee whose annual

pay is paid during a period shorter than

52 work weeks is the amount obtained

by converting the biweekly rate to an

annual rate and prorating the annual

rate over the number of installments of

pay regularly paid during the year.

(3) The amount withheld from the pay

of an insured employee whose BIA

changes during a pay period is based on

the BIA in force at the end of the pay

period.

(c) For each pay period in which an

employee is insured, the employing

agency must contribute an amount equal

to one-half the amount withheld from

the employee’s pay. This agency

contribution must come from the

appropriation or fund that is used for

the payment of the employee’s pay. For

an elected official, the contribution

must come from the appropriation or

fund that is available for payment of

other salaries in the same office.

(d)(1) For an annuitant who elects to

continue Basic insurance and chooses

the maximum reduction of 75 percent

after age 65 under § 870.702(a)(2), the

amount withheld monthly is $0.3575 for

each $1,000 of the BIA. For a

compensationer who makes this

election, the amount withheld weekly is

$0.0825 for each $1,000. These

withholdings stop the month after the

month in which the annuitant reaches

age 65. There are no withholdings from

individuals who retired or began

receiving compensation before January

1, 1990, and who elected the 75 percent

reduction. For the purpose of this

paragraph, an individual who separates

from service after meeting the

requirements for an immediate annuity

under 5 U.S.C. 8412(g) is considered to

retire on the day before the annuity

begins.

(2) For an annuitant who elects to

continue Basic insurance and chooses

the maximum reduction of 50 percent

after age 65 under § 870.702(a)(3), the

amount withheld monthly is $0.8775 for

each $1,000 of the BIA until the month

after the month in which the annuitant

reaches age 65; the amount is then

reduced to $0.52 for each $1,000. For a

compensationer who makes this

election, the amount withheld weekly is

$0.2025 for each $1,000 of the BIA until
48736 Federal Register / Vol. 62, No. 180 / Wednesday, September 17, 1997 / Rules and Regulations

age 65; the amount is then reduced to

$0.12 for each $1,000.

(3) For an annuitant who elects to

continue Basic insurance and chooses

no reduction after age 65 under

§ 870.702(a)(4), the amount withheld

monthly is $2,0475 for each $1,000 of

the BIA until the month after the month

in which the annuitant reaches age 65;

the amount is then reduced to $1.69 for

each $1,000. For a compensationer who

makes this election, the amount

withheld weekly is $0.4725 for each

$1,000 of the BIA until age 65; the

amount is then reduced to $0.39 for

each $1,000.

(e)(1) For each period in which an

annuitant or compensationer is insured,

OPM must contribute an amount equal

to one-half the amount that would be

withheld under paragraph (d)(1) of this

section. Exception: for USPS employees

who become annuitants or

compensationers after December 31,

1989, the Postal Service pays the

Government contributions.

(2) The Government contribution is

the same amount whether the

individual elects a maximum 75 percent

reduction, a maximum 50 percent

reduction, or no reduction.

(3) The Government contribution

stops the month after the month in

which the individual reaches age 65.

(f) When an agency withholds less

than or none of the proper amount of

Basic life insurance deductions from an

individual’s pay, annuity, or

compensation, the agency must submit

an amount equal to the sum of the

uncollected deduction and any

applicable agency contributions

required under 5 U.S.C. 8708 to OPM

for deposit in the Employees’ Life

Insurance Fund.

§ 870.402 Withholdings for Optional

insurance.

(a) The insured individual pays the

full cost of all Optional insurance. There

is no Government contribution toward

the cost of any Optional insurance.

(b) During each pay period in any part

of which an insured employee is in pay

status, the employing agency must

withhold the full cost of Optional

insurance from his/her pay.

(c) Subject to the provisions for

reemployed annuitants in § 870.705, the

full cost of Optional insurance must be

withheld from the annuity of an

annuitant and from the compensation of

a compensationer. These withholdings

stop the month after the month in which

an annuitant or compensationer reaches

age 65.

(d)(1) The biweekly cost per $10,000

of Option A coverage is:

For persons under age 35 ................ $0.40

For persons ages 35 through 39 ...... .50

For persons ages 40 through 44 ...... .70

For persons ages 45 through 49 ...... 1.10

For persons ages 50 through 54 ...... 1.80

For persons ages 55 through 59 ...... 3.00

For persons ages 60 and over ......... 7.00

(2) The amount withheld from pay,

annuity, or compensation paid on other

than a biweekly basis must be prorated

and adjusted to the nearest cent.

(e)(1) The biweekly cost per $1,000 of

Option B coverage is:

For persons under age 35 ................ $0.04

For persons ages 35 through 39 ...... .05

For persons ages 40 through 44 ...... .07

For persons ages 45 through 49 ...... .11

For persons ages 50 through 54 ...... .18

For persons ages 55 through 59 ...... .30

For persons ages 60 and over ......... .70

(2) The amount withheld from pay,

annuity, or compensation paid on other

than a biweekly basis must be prorated

and adjusted to the nearest one-tenth of

1 cent.

(f)(1) The biweekly cost of Option C

coverage is based on the age of the

employee, annuitant, or

compensationer. the cost is:

For persons under age 35 ................ $0.30

For persons ages 35 through 39 ...... .31

For persons ages 40 through 44 ...... .52

For persons ages 45 through 49 ...... .70

For persons ages 50 through 54 ...... 1.00

For persons ages 55 through 59 ...... 1.50

For persons ages 60 and over ......... 2.60

(2) The amount withheld from pay,

annuity, or compensation paid on other

than a biweekly basis must be prorated

and adjusted to the nearest cent.

(g) For the purpose of this subpart, an

individual is considered to reach age 35,

40, 45, 50, 55, or 60 on the first day of

the first pay period beginning on or after

the January 1 following his/her

corresponding birthday.

(h) The amount withheld from the pay

of an insured employee whose annual

pay is paid during a period shorter than

52 work weeks is the amount obtained

by converting this biweekly rate for his/

her age group to an annual rate and

prorating the annual rate over the

number of installments of pay regularly

paid during the year.

(i) When an agency withholds less

than or none of the proper amount of

Optional life insurance deductions from

an individual’s pay, annuity, or

compensation, the agency must submit

an amount equal to the uncollected

deductions required under 5 U.S.C.

8714a, 8714b, and 8714c to OPM for

deposit in the Employees’ Life

Insurance Fund.

§ 870.403 Withholdings and contributions

following a Living Benefit election.

(a) Withholdings and contributions

for Basic insurance for an individual

who elects a full Living Benefit under

subpart K of this part stop at the end of

the pay period in which the Living

Benefit election is effective.

(b) Withholdings and contributions

for Basic insurance for an employee

who elects partial Living Benefit under

subpart K of this part are based on the

post-election BIA. This reduction in

withholdings and contributions starts at

the end of the pay period in which the

Living Benefit election is effective.

(c) Withholdings and contributions

for Basic insurance for an annuitant or

compensationer who elected a partial

Living Benefit as an employee are based

on the post-election BIA.

(d) There is no change in

withholdings for Optional insurance for

individuals who elect a Living Benefit.

§ 870.404 Withholdings and contributions

provisions that apply to both Basic and

Optional insurance.

(a) Withholdings (and Government

contributions, when applicable) are

based on the amount of insurance in

force at the end of the pay period.

(b) Withholdings are not required for

the period between the end of the pay

period in which an employee separates

from service and the date his/her

annuity or compensation begins.

(c) No payment is required while an

insured employee is in nonpay status

for up to 12 months. Exception: an

employee who is in nonpay status while

receiving compensation.

(d) The deposit described in

§§ 870.401(f) and 870.402(i) must be

made no later than 60 calendar days

after the date the employing office

determines the amount of the

underdeduction that has occurred,

regardless of whether or when the

underdeduction is recovered by the

agency. The agency must determine

whether to waive collection of the

overpayment of pay, in accordance with

5 U.S.C. 5584, as implemented by 4 CFR

chapter I, subchapter G. However, if the

agency involved is excluded from the

provisions of 5 U.S.C. 5584, it may use

any applicable authority to waive the

collection.

(e) Effective October 21, 1972, when

there is an official finding that an

employee was suspended or fired

erroneously, no withholdings are made

from the back pay. Exception: if death

or accidental dismemberment occurs

during the period between the

employee’s removal and the finding that

the agency action was erroneous,
Federal Register / Vol. 62, No. 180 / Wednesday, September 17, 1997 / Rules and Regulations 48737

premiums are withheld from the back

pay awarded.

(f) If an individual’s periodic pay,

compensation, or annuity isn’t sufficient

to cover the full withholdings, any

amount available for life insurance

withholding must be applied first to

Basic insurance, with any remainder

applied to Optional insurance (first to

Option B, then Option A, then Option

C).

§ 870.405 Direct premium payments under

5 U.S.C. chapter 84 (Federal Employees’

Retirement System—FERS).

(a) If the FERS annuity, excluding

subchapter III of 5 U.S.C. chapter 84

(Thrift Savings Plan), is too low to cover

premiums for Basic insurance, the

retirement system must notify the

annuitant (or the assignee, if the

insurance has been assigned under

subpart I of this part) of the opportunity

to pay his/her share of the Basic

insurance premium directly to the

retirement system.

(b) The retirement system must

establish a method for accepting these

direct premium payments. The

retirement system must provide the

annuitant with a premium payment

schedule and the requirements for

continued enrollment.

(c) The annuitant must send the

retirement system the required premium

for every pay period during which the

coverage continues, excluding the 31-

day temporary extension of coverage

provided in § 870.601. The annuitant

must make payment after the pay period

in which he/she is covered, according to

the schedule established by the

retirement system. If it does not receive

payment by the due date, the retirement

system must notify the annuitant that

coverage will be continued only if he/

she makes payment within 15 days after

receiving the notice. The Basic

insurance of an annuitant who doesn’t

pay within the specified time limit

terminates. An individual whose

coverage terminates because of

nonpayment of premium cannot re-elect

or reinstate coverage, except as provided

in paragraph (d) of this section.

(d) If, for reasons beyond his/her

control, an annuitant is unable to pay

within 15 days after receiving the

notice, he/she may request

reinstatement of coverage by writing to

the retirement system. Such a request

must be made within 30 calendar days

from the date of termination and must

be accompanied by proof that the

annuitant was prevented from paying

within the time limit for reasons beyond

his/her control. The retirement system

will decide if the individual is eligible

for reinstatement of coverage. If

eligibility is approved, the coverage is

reinstated back to the date of

termination.

(e) Termination of coverage for failure

to pay premiums within the time limit

established according to paragraph (c) of

this section is effective at the end of the

last pay period for which payment has

been received on time.

(f) The retirement system must submit

all direct premium payments, along

with its regular life insurance

premiums, to OPM according to

procedures set by OPM.

Subpart E—Coverage

§ 870.501 Basic insurance: effective dates

of automatic coverage.

(a)(1) When an employee is appointed

or transferred to a position in which he/

she is eligible for insurance, the

employee is automatically insured for

Basic insurance on the day he/she

enters on duty in pay status, unless,

before the end of the first pay period,

the employee files a waiver of Basic

insurance with the employing office or

had previously filed a waiver which

remains in effect.

(2) An insured employee who moves

to another covered position is

automatically insured on the effective

date of the move, unless the employee

files a waiver of Basic insurance with

the new employing office before the end

of the first pay period in the new

position.

(3) When an employee of the District

of Columbia Financial Responsibility

and Management Assistance Authority

elects to be considered a Federal

employee under section 153 of Pub. L.

104–134 (110 Stat. 1321), he/she is

automatically insured on (i) the date the

employee enters on duty in pay status

with the Authority, or (ii) the date the

Authority receives the employee’s

election to be considered a Federal

employee, whichever is later.

(b) An employee who returns to pay

and duty status after a period of more

than 12 months of nonpay status is

automatically insured at the time he/she

actually enters on duty in pay status,

unless, before the end of the first pay

period, the employee files a waiver of

Basic insurance coverage with the

employing office or had previously filed

a waiver which remains in effect.

(c) For an employee who serves in

cooperation with a non-Federal agency

and who is paid in whole or in part from

non-Federal funds, OPM sets the

effective date. This date must be part of

an agreement between OPM and the

non-Federal agency. The agreement

must provide either:

(1) That the required withholdings

and contributions be made from

Federally controlled funds and

deposited into the Employees’ Life

Insurance Fund on a timely basis, or

(2) That the cooperating non-Federal

agency, by written agreement with the

Federal agency, make the required

withholdings and contributions from

non-Federal funds and transmit that

amount to the Federal agency for

deposit into the Employees’ Life

Insurance Fund on a timely basis.

(d) If an employee waived Basic

insurance on or before February 28,

1981, the waiver was automatically

cancelled effective on the 1st day the

employee entered on duty in pay status

on or after April 1, 1981. Basic

insurance coverage was automatically

effective on the date of the waiver’s

cancellation, unless the employee filed

a new waiver of Basic insurance with

the employing office before the end of

the pay period during which the

coverage became effective.

§ 870.502 Basic insurance: waiver/

cancellation of insurance.

(a) An insured individual may cancel

his/her Basic insurance at any time by

filing a waiver of Basic insurance

coverage. An employee files with the

employing office. An annuitant files

with OPM or other office that

administers his/her retirement system. If

still employed, a compensationer files

with the employing office, and if not

still employed, with OPM. The waiver

is effective, and the insurance stops, at

the end of the pay period in which the

waiver is properly filed. Exception: an

individual who has assigned his/her

insurance under subpart I of this part

cannot cancel the insurance.

(b) An individual who cancels his/her

Basic insurance automatically cancels

all forms of Optional insurance.

§ 870.503 Basic insurance: cancelling a

waiver.

(a) An annuitant or compensationer

who has filed a waiver of Basic

insurance cannot cancel the waiver.

(b) An employee who has filed a

waiver of Basic insurance may cancel

the waiver and become insured if:

(1) At least 1 year has passed since the

effective date of the waiver, and

(2) He/she provides satisfactory

medical evidence of insurability.

(c) OFEGLI reviews the Request for

Insurance filed by an employee who has

compiled with paragraph (b) of this

section and decides whether to approve

it. The insurance is effective when, after

OFEGLI’s approval, the employee

actually enters on duty in pay status in

a position in which he/she is eligible for
48738 Federal Register / Vol. 62, No. 180 / Wednesday, September 17, 1997 / Rules and Regulations

insurance. If the employee doesn’t enter

on duty in pay status within 31 days

following the date of OFEGLI’s

approval, the approval is automatically

revoked and the employee is not

insured.

(d) When an employee who has been

separated from service for at least 180

days is reinstated on or after April 1,

1981, a previous waiver of Basic

insurance is automatically cancelled.

Unless the employee files a new waiver,

Basic insurance becomes effective on

the 1st day he/she actually enters on

duty in pay status in a position in which

he/she is eligible for coverage.

Exception: for employees who waived

Basic insurance after February 28, 1981,

separated, and returned to Federal

service before December 9, 1983, the

waiver remained in effect; these

employees were permitted to elect Basic

insurance by applying to their

employing office before March 7, 1984.

§ 879.504 Optional insurance: election.

(a)(1) Each employee must elect or

waiver Option A, Option B, and Option

C coverage, in a manner designated by

OPM, within 31 days after becoming

eligible unless during earlier

employment he/she filed an election or

waiver which remains in effect. The 31-

day time limit for Option B or Option

C begins on the 1st day after February

28, 1981, on which an individual meets

the definition of an employee.

(2) An employee of the District of

Columbia Financial Responsibility and

Management Assistance Authority who

elects to be considered a Federal

employee under section 153 of Pub. L.

104–134 (110 Stat. 1321) must elect or

waive Option A, Option B, and Option

C coverage within 31 days after the later

of:

(i) The date his/her employment with

the Authority begins, or

(ii) The date the Authority receives

his/her election to be considered a

Federal employee.

(3) Within 6 months after an

employee becomes eligible, an

employing office may determine that the

employee was unable, for reasons

beyond his/her control, to elect any type

of Optional insurance within the time

limit. In this case, the employee must

elect or waive that type of Optional

insurance 31 days after he/she is

notified of the determination. The

insurance is retroactive to the 1st day of

the first pay period beginning after the

date the individual became eligible or

after April 1, 1981, whichever is later.

The individual must pay the full cost of

the insurance from that date for the time

that he/she is in pay status, retired, or

receiving compensation and under age

65.

(b) Any employee who doesn’t file a

Life Insurance Election with his/her

employing office, in a manner

designated by OPM, specifically electing

any type of Optional insurance is

considered to have waived it and does

not have that type of Optional

insurance.

(c) For the purpose of having Option

A as an employee, an election of this

insurance filed on or before February

28, 1981, is considered to have been

cancelled effective at the end of the pay

period which included March 31, 1981,

unless the employee didn’t actually

enter on duty in pay status during the

1st pay period which began on or after

April 1, 1981. In that case the election

is considered to have been cancelled on

the first day after the end of the next pay

period in which the employee actually

entered on duty in pay status. In order

to have Option A as an employee after

the date of this cancellation, an

employee must specifically elect the

coverage by filing the Life Insurance

Election with his/her employing office

subject to the provisions of § 870.504(a)

or § 870.506(b).

(d) Optional insurance is effective the

1st day an employee actually enters on

duty in pay status on or after the day the

employing office receives the election.

(e) For an employee whose Optional

insurance stopped for a reason other

than a waiver, the insurance is

reinstated on the 1st day he/she actually

enters on duty in pay status in a

position in which he/she again becomes

eligible.

§ 870.505 Optional insurance: waiver/

cancellation of insurance.

(a) An insured individual may cancel

entirely any type of Optional insurance,

or reduce the number of multiples of

his/her Option B insurance, at any time

by filing a waiver of Optional insurance

coverage. An employee files with the

employing office. An annuitant files

with OPM or other office that

administers his/her retirement system. If

still employed, a compensationer files

with the employing office, and if not

still employed, with OPM. Exception:

an individual who has assigned his/her

insurance under subpart I of this part

cannot cancel Option A or Option B

coverage.

(b) A cancellation of Optional

insurance becomes effective, and

Optional insurance stops, at the end of

the pay period in which the waiver is

properly filed. Exception: if Option C is

cancelled because there are no eligible

family members, the effective date is

retroactive to the end of the pay period

in which there stopped being any

eligible family members.

(c) A waiver of Optional insurance

remains in effect until it is cancelled as

provided in § 870.506.

§ 870.506 Optional insurance: cancelling a

waiver.

(a) When there is a change in family

circumstances. (1) A waiver of Option A

cannot be cancelled due to a change in

family circumstances.

(2) An employee who has waived

Option B coverage may elect it, and an

employee who has Option B of fewer

than five multiples of annual pay may

increase the number of multiples, upon

his/her marriage or divorce, upon a

spouse’s death, or upon acquiring an

eligible child.

(3) The number of multiples of Option

B coverage that an employee can obtain

or add (which can’t exceed a total of

five) is limited to the following:

(i) For marriage, the number of

additional family members (spouse and

eligible children) acquired with the

marriage;

(ii) For acquisition of children, the

number of eligible children acquired;

and

(iii) For divorce or death of a spouse,

the total number of eligible children of

the employee.

(4) An employee who has waived

Option C coverage may elect it upon

his/her marriage or upon acquiring an

eligible child. An employee may also

elect Option C coverage upon divorce or

death of a spouse if the employee has

any eligible children.

(5)(i) The employee must file an

election under paragraph (a)(2) or (a)(4)

of this section with the employing

office, in a manner designated by OPM,

along with proof of the event, no later

than 60 days following the date of the

event that permits the election; the

employee may instead file the election

before the event and provide proof no

later than 60 days following the event.

(ii) This 60-day time limit may be

extended if the individual isn’t serving

in a covered position on the date of the

event or if the individual separates from

covered service prior to the end of the

60-day time limit. This extension cannot

exceed the 31-day time limit for electing

insurance following employment in a

covered position or, for an election

under paragraph (a)(4) of this section,

the 31-day period following the 1st day

on which the individual becomes

eligible to cancel a waiver of Basic

insurance.

(6)(i) The effective date of Option B

insurance elected under paragraph (a)(1)

of this section is the 1st day the

employee actually enters on duty in pay
Federal Register / Vol. 62, No. 180 / Wednesday, September 17, 1997 / Rules and Regulations 48739

status on or after the day the employing

office receives the election.

(ii) The effective date of Option C

insurance elected under this paragraph

is the day the employing office receives

the election, or the date of the event,

whichever is later.

(b) When there is no change in family

circumstances. (1) An employee who

has waived Option A or Option B

coverage may elect it if:

(i) At least 1 year has passed since the

effective date of the waiver, and

(ii) He/she provides satisfactory

medical evidence of insurability.

(2) An employee who has Option B

coverage of fewer than five multiples of

annual pay may increase the number of

multiples if:

(i) At least 1 year has passed since the

effective date of his/her last election of

fewer than five multiples (including a

reduction in the number of multiples),

and

(ii) He/she provides satisfactory

medical evidence of insurability.

(iii) The requirement for at least 1

year to have passed since the effective

date of the last election doesn’t apply

when an employee elected fewer than

five multiples because of the limitation

under paragraph (a)(3) of this section.

(3) A waiver of Option C cannot be

cancelled without a change in family

circumstances, unless authorized during

an open enrollment period.

(c) OFEGLI reviews the request filed

by an employee who has complied with

paragraph (b) of this section and decides

whether to approve it. The Optional

insurance is effective when, after

OFEGLI’s approval, the employee

actually enters on duty in pay status in

a position in which he/she is eligible for

insurance and files a Life Insurance

Election. If the employee doesn’t enter

on duty in pay status within 31 days

following the date of OFEGLI’s

approval, the approval is automatically

revoked and the employee does not

have the Optional insurance requested.

(d) If an employee waived Option A

insurance on or before February 28,

1981, the waiver was automatically

cancelled effective on the 1st day the

employee entered on duty in pay status

on or after April 1, 1981. Option A was

effective on the date of the waiver’s

cancellation, if the employee filed an

election of Option A during the March

1, 1981, through March 31, 1981, open

enrollment period. If the employee

didn’t file the election with his/her

employing office during the March 1981

open enrollment period, the employee is

considered to have waived Option A on

March 31, 1981.

(e) When an employee who has been

separated from service for at least 180

days is reinstated on or after April 1,

1981, a previous waiver of Optional

insurance is automatically cancelled, as

follows:

(1) An employee who returned to

service between April 1, 1981, and

December 8, 1983, after a 180-day break

in service was permitted to elect any

form of Optional insurance by applying

to his/her employing office before

March 7, 1984.

(2) An employee who returns to

service after December 8, 1983,

following a 180-day break in service

may elect any form of Optional

insurance by applying to his/her

employing office within 31 days after

reinstatement. Coverage is effective on

the 1st day the employee actually enters

on duty in pay status in a position in

which he/she is eligible for insurance

on or after the date the employing office

receives the election. If the employee

doesn’t file a Life Insurance Election, in

a manner designated by OPM, within

the 31-day period, the employee is

considered to have waived Optional

insurance. However, an employee who

fails to file during the 31-day period due

to reasons beyond his/her control may

enroll belatedly under the conditions

stated in § 870.504(a)(3).

(f) An annuitant or compensationer is

not eligible to cancel a waiver of any

type of Optional insurance or to

increase multiples of Option B under

this section.

§ 870.507 Open enrollment periods.

(a) There are no regularly scheduled

open enrollment periods for life

insurance. Open enrollment periods are

held only when specifically scheduled

by OPM.

(b) During an open enrollment period,

unless OPM announces otherwise,

eligible employees may cancel their

existing waivers of Basic and/or

Optional insurance by electing the

insurance in a manner designated by

OPM.

(c)(1) OPM sets the effective date for

all insurance elected during an open

enrollment period. The newly elected

insurance is effective on the 1st day of

the first pay period which begins on or

after the OPM-established date and

which follows a pay period during

which the employee was in pay and

duty status for at least 32 hours, unless

OPM announces otherwise.

(2) A part-time employee must be in

pay and duty status for one-half the

regularly scheduled tour of duty shown

on his/her current Standard Form 50 for

newly elected coverage to become

effective, unless OPM announces

otherwise.

(3) An employee who has no regularly

scheduled tour of duty or who is

employed on an intermittent basis must

be in pay and duty status for one-half

the hours customarily worked before

newly elected coverage can become

effective, unless OPM announces

otherwise. For the purpose of this

paragraph, employing offices can

determine the number of hours

customarily worked by averaging the

number of hours worked in the most

recent calender year quarter prior to the

start of the open enrollment period.

(d) Within 6 months after an open

enrollment period ends, an employing

office may determine that an employee

was unable, for reasons beyond his/her

control, to cancel an existing waiver by

electing to be insured during the open

enrollment period. In this case, if the

employee wants coverage, he/she must

submit an election within 31 days after

being notified of the determination.

Coverage is retroactive to the first pay

period which begins on or after the

effective date set by OPM and which

follows a pay period during which the

employee was in pay and duty status for

at least 32 hours, unless OPM

announces otherwise. If the employee

doesn’t file an election within this 31-

day time limit, he/she will be

considered to have waived coverage.

§ 870.508 Nonpay status.

(a) An employee who is in nonpay

status is entitled to continue life

insurance for up to 12 months. No

premium payments are required, unless

the employee is receiving

compensation.

(b) If an insured employee who is

entitled to free insurance while in

nonpay status accepts a temporary

appointment to a position in which he/

she would normally be excluded from

insurance, the insurance continues. The

amount of Basic insurance is based on

whichever position’s salary is higher.

Withholdings are made from the

employee’s pay in the temporary

position.

(c) If an insured employee goes on

leave without pay (LWOP) to serve as a

full-time officer or employee of an

employee organization, within 60 days

of the start of the LWOP he/she may

elect to continue life insurance. The

insurance continues for the length of the

appointment, even if the LWOP lasts

longer than 12 months. The employee

must pay to the employing office the

full cost of Basic and Optional

insurance. There is no Government

contribution for these employees.

(d) If an insured employee goes on

LWOP while assigned to a State

government, local government, or
48740 Federal Register / Vol. 62, No. 180 / Wednesday, September 17, 1997 / Rules and Regulations

institution of higher education, life

insurance continues for the length of the

assignment, even if the LWOP lasts

longer than 12 months. The employee

must pay his/her premiums to the

Federal agency on a current basis. The

agency must continue to pay its

contribution as long as the employee

makes his/her payments.

§ 870.509 Transfers to international

organizations.

An employee transferred to an

international organization may continue

life insurance coverage as provided in 5

U.S.C. 3582. Regulations governing

these transfers are in part 352 of this

title.

Subpart F—Termination and

Conversion

§ 870.601 Termination of Basic insurance.

(a) Except as provided in § 870.701,

the Basic insurance of an insured

employee stops on the date he/she

separates from service, subject to a 31-

day extension of coverage.

(b) The Basic insurance of an

employee who separates from service

after meeting the requirement for an

immediate annuity under

§ 842.204(a)(1) of this title and who

postpones receiving the annuity, as

provided by § 842.204(c) of this title,

stops on the date he/she separates from

service, subject to a 31-day extension of

coverage.

(c) The Basic insurance of an insured

employee who moves without a break in

service to a position in which he/she is

excluded from life insurance stops on

his/her last day in the former position,

subject to a 31-day extension of

coverage.

(d)(1) Except as provided in § 870.701,

the Basic insurance of an insured

employee who is in nonpay status stops

on the date the employee completes 12

months in nonpay status, subject to a

31-day extension of coverage. The 12

months’ nonpay status may be broken

by periods of less than 4 consecutive

months in pay status. If an employee

has at least 4 consecutive months in pay

status after a period of nonpay status,

he/she is entitled to begin the 12

months’ continuation of Basic insurance

again. If an employee has used up his/

her 12 months’ continuation in nonpay

status and returns to duty for less than

4 consecutive months, his/her Basic

insurance stops on the 32nd day after

the last day of the last pay period in pay

status.

(2) For the purpose of paragraph (d)(1)

of this section, 4 consecutive months in

pay status means any 4-month period

during which the employee is in pay

status for at least part of each pay

period.

(3) For the purpose of paragraph (d)(1)

of this section, an individual who is

entitled to benefits under part 353 of

this chapter is considered to be an

employee in nonpay status.

§ 870.602 Termination of Optional

insurance.

(a) The Optional insurance of an

insured employee stops when his/her

Basic insurance stops, subject to the

same 31-day extension of coverage.

(b) The Optional insurance of an

employee who separates from service

after meeting the requirement for an

immediate annuity under

§ 842.204(a)(1) of this title and who

postpones receiving the annuity, as

provided by § 842.204(c) of this title,

stops on the date he/she separates from

service, subject to a 31-day extension of

coverage.

(c) If an insured employee isn’t

eligible to continue Optional coverage

as an annuitant or compensationer as

provided by § 870.701, the Optional

insurance stops on the date that his/her

Basic insurance is continued or

reinstated under the provisions of

§ 870.701, subject to a 31-day extension

of coverage.

(d) If, at the time of an individual’s

election of Basic insurance during

receipt of annuity or compensation, he/

she elects no Basic life insurance as

provided by § 870.702(a)(1), the

Optional insurance stops at the end of

the month in which the election is

received in OPM, subject to a 31-day

extension of coverage.

(e) Except as provided in § 870.405,

Optional insurance stops, subject to a

31-day extension of coverage, at the end

of the pay period in which it’s

determined that an individual’s periodic

pay, compensation, or annuity, after all

other deductions, isn’t enough to cover

the full cost of the Optional insurance.

If an individual has more than one type

of Optional insurance and his/her pay,

compensation, or annuity is sufficient to

cover some but not all of the insurance,

Option C terminates first, followed by

Option A, and then the multiples of

Option B.

§ 870.603 Conversion of Basic and

Optional insurance.

(a)(1) When group coverage

terminates for any reason other than

voluntary cancellation, an employee

may apply to convert all or any part of

his/her Basic and Optional insurance to

an individual policy; no medical

examination is required. The premiums

for the individual policy are based on

the employee’s age and class of risk. An

employee is eligible to convert the

policy only if he/she doesn’t return,

within 3 calendar days from the

terminating event, to a position covered

under the group plan. If insurance has

been assigned under subpart I of this

part, it is the assignee(s), not the

employee, who has(have) the right to

convert.

(2) The employing agency must notify

the employee/assignee(s) of the loss of

coverage and the right to convert to an

individual policy either before or

immediately after the event causing the

loss of coverage.

(3) The employee/assignee(s) must

submit the request for conversion

information to OFEGLI. It must be

postmarked within 31 days following

the date of the terminating event or

within 31 days of the date the

employee/assignee received the notice

of loss of group coverage and right to

convert, whichever is later.

(4) An employee/assignee who fails to

use his/her conversion right within 31

days after receiving notice of the right

to convert or within 31 days of the

terminating event, whichever is later, is

considered to have refused coverage,

unless OFEGLI determines the failure

was for reasons beyond the employee’s

control, as described in paragraph (a)(5)

of this section.

(5) When an agency fails to provide

the notification required in paragraph

(a)(2) of this section, or the employee/

assignee fails to request conversion

information within the time limit set in

paragraph (a)(3) of this section for

reasons beyond his/her control, the

employee may make a belated request

by writing to OFEGLI. The employee/

assignee must make the request within

6 months after becoming eligible to

convert the insurance. The employee/

assignee must show that he/she wasn’t

notified of the loss of coverage and the

right to convert and was not otherwise

aware of it or that he/she was unable to

convert to an individual policy for

reasons beyond his/her control. OFEGLI

will determine if the employee/assignee

is eligible to convert. If the request is

approved, the employee must convert

within 31 days of that determination.

(b) The individual conversion policy

is effective the day after the group

coverage ends. The employee/assignee

must pay the premiums for any period

retroactive to that date.

(c) The 31-day extension of coverage

provided under this subpart does not

depend upon timely notification of the

right to convert to an individual policy.

The extension cannot be continued

beyond 31 days.
Federal Register / Vol. 62, No. 180 / Wednesday, September 17, 1997 / Rules and Regulations 48741

Subpart G—Annuitants and

Compensationers

§ 870.701 Eligibility for life insurance.

(a) When an insured employee retires,

Basic life insurance (but not accidental

death and dismemberment) continues or

is reinstated if he/she:

(1) Is entitled to retire on an

immediate annuity under a retirement

system for civilian employees, including

the retirement system of a

nonappropriated fund instrumentality

of the Department of Defense or the

Coast Guard;

(2) Was insured for the 5 years of

service immediately before the date the

annuity starts, or for the full period(s) of

service during which he/she was

eligible to be insured if less than 5

years; and

(3) Has not converted to an individual

policy as described in § 870.603. If it is

determined that an individual is eligible

to continue the group coverage as an

annuitant after he/she has already

converted to an individual policy, the

group enrollment may be reinstated. If

the individual wants the group coverage

reinstated, the conversion policy must

be voided, the group policy must be

reinstated retroactively, and the

premiums already paid on the

conversion policy must be refunded to

the individual.

(b) Following separation or the

completion of 12 months’ nonpay

status, a compensationer’s Basic life

insurance (but not accidental death and

dismemberment) continues or is

reinstated if he/she:

(1) Has been insured for the 5 years

of service immediately before the date of

entitlement to compensation, or for the

full period(s) of service during which

he/she was eligible to be insured if less

than 5 years; and

(2) Has not converted to an individual

policy as described in § 870.603. If it is

not determined that an individual is

eligible to continue the group coverage

as a compensationer until after he/she

has converted, the group enrollment

may be reinstated. If the individual

wants the group coverage reinstated, the

conversion policy must be voided, the

group policy must be reinstated

retroactively, and the premiums already

paid on the conversion policy must be

refunded to the individual.

(c) An individual who meets the

requirements under paragraphs (a) or (b)

of this section or § 870.706 for

continuation or reinstatement of life

insurance must complete an election, in

a manner designated by OPM, at the

time entitlement is established. For the

election to be valid, OPM must receive

the election before OPM has made a

final decision on the individual’s

application for annuity or supplemental

annuity or an individual’s request to

continue life insurance as a

compensationer. If there is no valid

election, OPM considers the individual

to have chosen the option described in

paragraph (a)(2) of § 870.702.

(d) If the annuity or compensation of

an insured individual is terminated, or

if the Department of Labor finds that an

insured compensationer is able to return

to duty, his/her Basic life insurance

held as an annuitant or compensationer

stops on the date of the termination or

finding. There is no 31-day extension of

coverage or conversion right.

(e)(1) An annuitant or compensationer

who is eligible to continue or have

reinstated Basic insurance is also

eligible to continue or have reinstated

Optional insurance if he/she meets the

same coverage requirements for

Optional insurance as those stated in

paragraph (a) or (b) of this section for

Basic insurance.

(2) For the purpose of continuing

insurance as an annuitant or

compensationer, an employee is not

considered to have been eligible for

Option C during any period when the

employee had no eligible family

members.

§ 870.702 Election of Basic insurance.

(a) Unless he/she has elected a Living

Benefit, an individual who makes an

election under § 870.701(c) must select

one of the following options:

(1) Termination of the insurance. The

individual’s insurance stops upon

conversion to an individual policy as

provided under § 870.603. If the

individual doesn’t convert to an

individual policy, insurance stops at the

end of the month in which OPM or the

employing office receives the election;

(2) Continuation or reinstatement of

Basic insurance with a maximum

reduction of 75 percent during

retirement. Premiums are withheld from

annuity or compensation (except as

provided under 870.401(d)(1)). The

amount of Basic Life insurance in force

reduces by 2 percent of the BIA each

month until the maximum reduction is

reached. This reduction starts at the

beginning of the 2nd month after the

date the insurance would otherwise

have stopped or the date of the insured’s

65th birthday, whichever is later;

(3) Continuation or reinstatement of

Basic insurance with a maximum

reduction of 50 percent during

retirement. Premiums are withheld from

annuity or compensation. The amount

of Basic insurance in force reduces by

1 percent of the BIA each month until

the maximum reduction is reached. This

reduction starts at the beginning of the

2nd month after the date the insurance

would otherwise have stopped or the

date of the insured’s 65th birthday,

whichever is later; or

(4) Continuation or reinstatement of

Basic insurance with no reduction after

age 65. Premiums are withheld from

annuity or compensation.

(b)(1) Unless an employee has elected

a partial Living Benefit under subpart K

of this part or an individual has

assigned the insurance under subpart I

of this part, an insured individual may

cancel an election under paragraph

(a)(3) or (a)(4) of this section at any time.

The amount of Basic insurance

automatically switches to the amount

that would have been in force if the

individual had originally elected the 75

percent reduction. This revised amount

is effective at the end of the month in

which OPM receives the request to

cancel the previous election.

(2) If an individual files a waiver of

insurance, the coverage stops without a

31-day extension of coverage or

conversion right. This is effective at the

end of the month in which OPM

receives the waiver.

(c) Unless he/she chooses to terminate

his/her insurance, an employee who has

elected a partial Living Benefit must

choose the no reduction election under

paragraph (a)(4) of this section. He/she

cannot later change to the 75 percent

reduction.

(d) If an employee has assigned his/

her insurance, he/she cannot cancel an

election under paragraph (a)(3) or (a)(4)

of this section. Only the assignee(s) may

cancel this election. Exception: if the

employee elected a partial Living

Benefit before assigning the remainder

of his/her insurance, the assignee(s)

cannot cancel the election under

paragraph (a)(4) of this section.

§ 870.703 Amount of life insurance.

(a)(1) The amount of Basic insurance

an annuitant or compensationer can

continue is his/her BIA on the date

insurance would otherwise have

stopped because of separation from

service or completion of 12 months in

nonpay status. The amount of Basic

insurance in force is the BIA minus any

reductions applicable under

§ 870.702(a).

(2) For the purpose of paying benefits

upon the death of an insured individual

under age 45 who is retired or receiving

compensation, the BIA will be

multiplied by the appropriate age factor

shown in § 870.202(c). Exceptions:

(i) If the insured individual retired or

started receiving compensation before

October 10, 1980, or
48742 Federal Register / Vol. 62, No. 180 / Wednesday, September 17, 1997 / Rules and Regulations

(ii) If the insured individual elected a

partial Living Benefit as an employee

under subpart K of this part.

(3)(i) For an annuitant or

compensationer who elected a partial

Living Benefit as an employee, the

amount of Basic insurance he/she can

continue is the post-election BIA, as

shown in § 870.203(a)(2).

(ii) For the purpose of paying benefits

upon the death of an insured annuitant

or compensationer under age 45 who

elected a partial Living Benefit as an

employee, the BIA will be multiplied by

the age factor in effect on the date

OFEGLI received the completed Living

Benefit application.

(b)(1) The amount of Option A

coverage an annuitant or

compensationer can continue is the

amount in force on the date insurance

would otherwise stop.

(2) An annuitant’s or

compensationer’s Option A coverage

reduces by 2 percent a month up to a

maximum reduction of 75 percent. This

reduction starts at the beginning of the

2nd month after the date the insurance

would otherwise have stopped or the

date of the insured’s 65th birthday,

whichever is later.

(c)(1) The number of multiples of

Option B coverage an annuitant or

compensationer can continue is the

smallest number of multiples in force

during the applicable period of service

required to continue Option B.

(2) Each multiple of an annuitant’s or

compensationer’s Option B coverage

reduces by 2 percent a month. This

reduction starts at the beginning of the

2nd month after the date the insurance

would otherwise have stopped or the

insured’s 65th birthday, whichever is

later. At 12:00 noon on the day before

the 50th reduction, the insurance stops,

with no extension of coverage or

conversion right.

(d) The amount of an annuitant’s or

compensationer’s Option C coverage on

each family member reduces by 2

percent a month. This reduction starts at

the beginning of the 2nd month after the

date the insurance would otherwise

have stopped or the annuitant’s or

compensationer’s 65th birthday,

whichever is later. At 12:00 noon on the

day before the 50th reduction, the

insurance stops, with no extension of

coverage or conversion right.

(e)(1) Judges retiring under 28 U.S.C.

371 (a) and (b), 28 U.S.C. 372(a), and 26

U.S.C. 7447 are considered employees

under the FEGLI law. Basic and

Optional insurance for these judges

continues without interruption or

reduction upon retirement.

(2) If a judge chooses to receive

compensation instead of an annuity,

his/her Basic and Optional insurance

reduces as stated in § 870.702 and

paragraphs (b), (c), and (d) of this

section.

§ 870.704 Reinstatement of life insurance.

(a) An annuitant whose disability

annuity terminates because he/she

recovers from the disability or because

his/her earning capacity returns, and

whose disability annuity is later

restored under 5 U.S.C. 8337(e) (after

December 31, 1983), may elect to

resume the Basic insurance held

immediately before his/her disability

annuity terminated. OPM must receive

the election within 60 days after OPM

mails a notice of insurance eligibility

and an election form.

(b) An annuitant described in

paragraph (a) of this section may elect

to resume any Optional insurance held

immediately before the annuity

terminated if:

(1) He/she has made an election under

paragraph (a) of this section; and

(2) OPM receives the election within

60 days after OPM mails a notice of

insurance eligibility and an election

form.

(c) Basic and Optional insurance

reinstated under paragraphs (a) and (b)

of this section is effective on the 1st day

of the month after the date OPM

receives the election. Any applicable

annuity withholdings are also reinstated

on the 1st day of the month after OPM

receives the election.

(d) The amounts of Basic and

Optional insurance reinstated under

paragraphs (a) and (b) of this section are

the amounts that would have been in

force if the individuals’s annuity hadn’t

terminated.

§ 870.705 Reemployed annuitants.

(a)(1) If an insured annuitant is

appointed to a position in which he/she

is eligible for insurance, the amount of

his/her Basic life insurance as an

annuitant (and any applicable annuity

withholdings) is suspended on the day

before the 1st day in pay status under

the appointment, unless the reemployed

annuitant waives all insurance coverage.

The Basic insurance benefit payable

upon the death of a reemployed

annuitant who has Basic insurance in

force as an employee can’t be less than

the benefit which would have been

payable if the individual hadn’t been

reemployed.

(2) Except as provided in paragraph

(b) of this section, the Basic insurance

obtained as an employee stops with no

31-day extension of coverage or

conversion right, on the date

reemployed terminates. Any suspended

Basic insurance (and any applicable

annuity withholdings) is reinstated on

the day following termination of the

reemployment.

(b) Basic insurance obtained during

reemployment can be continued after

the reemployment terminates if:

(1) The annuitant qualifies for a

supplemental annuity or receives a new

retirement right;

(2) He/she has had Basic insurance as

an employee for at least 5 years of

service immediately before separation

from reemployment or for the full

period(s) during which such coverage

was available to him/her, whichever is

less; and

(3) He/she doesn’t convert to

nongroup insurance when Basic

insurance as an employee would

otherwise terminate.

(c) If the Basic insurance obtained

during reemployment is continued as

provided in paragraph (b) of this

section, any suspended Basic life

insurance stops, with no 31-day

extension of coverage or conversion

right.

(d) (1) An annuitant appointed to a

position in which he/she is eligible for

Basic insurance, is also eligible for

Optional insurance as an employee,

unless he/she has on file an uncancelled

waiver of Basic or Optional insurance.

(2) If the individual has Option A or

C as an annuitant, that insurance (and

applicable annuity withholdings) is

suspended on the day before his/her 1st

day in pay status under the

appointment. Unless he/she waives

Option A or C (or waives Basic

insurance), he/she obtains Option A or

C as an employee.

(3) If the individual has Option B as

an annuitant, that insurance (and

applicable annuity withholdings)

continues as if the individual weren’t

reemployed, unless:

(i) The individual files with his/her

employing office an election of Option

B, in a manner designated by OPM,

within 31 days after the date of

reemployment. in this case Option B

(and applicable annuity withholdings)

as an annuitant is suspended on the

date that Option B as an employee

becomes effective; or

(ii) The individual waives Basic

insurance.

(4) The Option B benefit payable upon

the death of a reemployed annuitant is

the amount in effect as an annuitant,

unless he/she elected to have Option B

as an employee.

(5) Except as provided in paragraph

(e) of this section, the Optional

insurance obtained as an employee

stops, with no 31-day extension or

conversion right, on the date

reemployment terminates. The amount
Federal Register / Vol. 62, No. 180 / Wednesday, September 17, 1997 / Rules and Regulations 48743

of suspended Optional insurance which

remains in force after applicable

monthly reductions after age 65 (and

corresponding withholdings) is

reinstated on the day after

reemployment terminates.

(e) Optional life insurance obtained

during reemployment may be continued

after the reemployment terminates if the

annuitant:

(1) Qualifies for a supplemental

annuity or receives a new retirement

right;

(2) Continues his/her Basic life

insurance under paragraph (a) (2), (3), or

(4) of § 870.702; and

(3) Has had Optional insurance as an

employee for at least the 5 years of

service immediately before separation

from reemployment or for the full

period(s) of service during which it was

available to him/her, whichever is less.

(f) If Optional insurance obtained

during reemployment is continued as

provided in paragraph (e) of this

section, any suspended Optional

insurance stops, with no 31-day

extension of coverage or conversion

right.

(g) If a reemployed annuitant waives

life insurance as an employee, the

waiver also cancels his/her life

insurance as an annuitant.

§ 870.706 MRA-plus-10 annuitants.

(a) The Basic insurance of an

individual whose coverage terminates

under § 870.601(b), and who meets the

requirements for continuing Basic

insurance after retirement as stated in

§ 870.701(a), resumes on the starting

date of annuity or on the date OPM

receives the application for annuity,

whichever is later. The individual must

file an election as provided in

§ 870.701(c) so that OPM receives it

within 60 days after OPM mails a notice

of insurance eligibility and an election

form.

(b) Optional insurance of an

individual whose coverage terminates

under § 870.602(b), and who meets the

requirements for continuing Optional

insurance after retirement under

§ 870.701(e), resumes on the starting

date of annuity or on the date OPM

receives the application for annuity,

whichever is later.

Subpart H—Order of Precedence and

Designation of Beneficiary

§ 870.801 Order of precedence and

payment of benefits.

(a) Benefits are paid according to the

order of precedence stated in 5 U.S.C.

8705(a), as follows:

(1) to the designated beneficiary (or

beneficiaries);

(2) If none, to the widow(er);

(3) If none, to the child, or children

in equal shares, with the share of any

deceased child going to his/her

children;

(4) If none, to the parents in equal

shares or the entire amount to the

surviving parent;

(5) If none, to the executor or

administrator of the estate;

(6) If none, to the next of kin

according to the laws of the State in

which the insured individual legally

resided.

(b) If an insured individual provides

in a valid designation of beneficiary for

insurance benefits to be payable to the

insured’s estate, or to the Executor,

Administrator, or other representative of

the insured’s estate, or if the benefits

would otherwise be payable to the duly

appointed representative of the

insured’s estate under the order of

precedence specified in 5 U.S.C.

8705(a), payment of the benefits to the

duly appointed representative of the

insured’s estate bars recovery by any

other person.

(c) Option A and B insurance in force

on a person on the date of his/her death

is paid, on receipt of a valid claim, in

the same order of precedence and under

the same conditions as Basic insurance.

A designation of beneficiary for Basic

insurance is also a designation of

beneficiary for Options A and B, unless

the insured individual states otherwise

in his/her designation.

(d) Upon the death of an insured

family member, Option C benefits are

paid to the employee, annuitant, or

compensationer responsible for

withholdings under § 870.402(f), except

as provided in paragraph (e) of this

section.

(e) If an employee, annuitant, or

compensationer entitled to receive

Option C benefits dies before the

benefits are paid, the Option C benefits

are paid to the individual(s) entitled to

receive Basic life insurance benefits

under the statutory order of precedence.

However, if the insurance has been

assigned in accordance with subpart I of

this part, any prior designations of

beneficiary were cancelled; benefits in

this instance are paid under the

statutory order of precedence, starting

with the second on the list.

§ 870.802 Designation of beneficiary.

(a) If an insured individual wants

benefits paid differently from the order

of precedence, he/she must file a

designation of beneficiary. A

designation of beneficiary cannot be

filed by anyone other than the insured

individual. Exception: if the insurance

has been assigned under subpart I of

this part, the insured individual cannot

designate a beneficiary; only the

assignee(s) can designate beneficiaries.

(b) A designation of beneficiary must

be in writing, signed by the insured

individual, and witnessed and signed by

two people. The employing office (or

OPM, in the case of an individual

receiving an annuity or compensation)

must receive the designation before the

death of the insured.

(c) A designation, change, or

cancellation of beneficiary in a will or

any other document not witnessed and

filed as required by this section has no

legal effect with respect to benefits

under the chapter.

(d) A witness to a designation of

beneficiary cannot be named as a

beneficiary.

(e) Any individual, firm, corporation,

or legal entity can be named as a

beneficiary, except an agency of the

Federal or District of Columbia

Government.

(f) An insured individual (or an

assignee) may change his/her

beneficiary at any time without the

knowledge or consent of the previous

beneficiary. This right cannot be waived

or restricted.

(g) (1) A designation of beneficiary is

automatically cancelled 31 days after

the individual stops being insured.

(2) An assignment under subpart I of

this part automatically cancels an

insured individual’s designation of

beneficiary.

(h) An insured individual may

provide that a designated beneficiary is

entitled to the insurance benefits only if

the beneficiary survives him/her for a

specified period of time (not more than

30 days). If the beneficiary doesn’t

survive for the specified period,

insurance benefits will be paid as if the

beneficiary had died before the insured.

§ 870.803 Child incapable of self-support.

(a) When it receives a claim for

Option C benefits because of the death

of a child age 22 or older, OFEGLI

determines, based on whatever evidence

it considers necessary, whether the

deceased child was incapable of selfsupport because of a mental or physical

disability which existed before the child

reached age 22.

(b) If an employee elects Option C

under § 870.506(a) (3), and the

opportunity to elect is based solely on

the acquisition of a child age 22 or

older, the employee must submit to the

employing office, at the time of making

the election, a doctor’s certificate stating

that the child is incapable of selfsupport because of a physical or mental

disability which existed before the child

reached age 22 and which is expected
48744 Federal Register / Vol. 62, No. 180 / Wednesday, September 17, 1997 / Rules and Regulations

to continue for more than 1 year. The

certificate must include the name of the

child, the type of disability, how long it

has existed, and its expected future

course and duration. The certificate

must be signed by the doctor and show

his/her office address.

Subpart I—Assignments of Life

Insurance

§ 870.901 Assignments permitted.

(a) (1) Section 208 of the Bankruptcy

Amendments and Federal Judgeship Act

of 1984, Pub. L. 98–353 (98 Stat. 355),

effective July 10, 1984, permits Federal

judges to irrevocably assign their FEGLI

coverage to one or more individuals,

corporations, or trustees. Section 4 of

Pub. L. 103–336 (108 Stat. 2661),

effective October 3, 1994, extended this

right to all Federal employees,

annuitants, and compensationers.

(2) An individual may assign

ownership of all life insurance under

this part, except Option C. If an

individual wishing to make an

assignment owns more than one type of

coverage, he/she must assign all the

insurance; an individual cannot assign

only a portion of the coverage. Option

C cannot be assigned.

(b) An individual cannot name

conditional assignees in case the

primary assignee dies before the insured

individual.

(c) If the insurance is assigned to two

or more individuals, corporations, or

trustees, the insured individual must

specify percentage shares, rather than

dollar amounts or types of insurance, to

go to each assignee.

(d) If an individual who has made an

assignment later elects increased

insurance coverage under § 870.506 or

during an open enrollment period, the

increased coverage is considered

included in the already existing

assignment. The right to increase

coverage remains with the insured

individual, rather than transferring to

the assignee.

(e) An individual who assigns

ownership of insurance continues to be

the insured individual, but the assignee

receives those rights of an insured

individual that are specified in this part.

(f) Once assigned, the value of the

insurance increases or decreases

automatically as provided by this part.

Exception: if the insured individual

elected a Living Benefit before assigning

the remainder of his/her insurance, the

amount of Basic insurance does not

increase or decrease.

(g) An insured individual who has

assigned his/her insurance cannot elect

a Living Benefit; nor can an assignee

elect a Living Benefit on behalf of the

insured individual.

(h) An insured individual who has

elected a Living Benefit under subpart K

of this part may assign the remainder of

his/her insurance. The assignment

would affect Option A, Option B, and,

for an employee who elected a partial

Living Benefit, Basic insurance.

§ 870.902 Making an assignment.

To assign insurance, an insured

individual must complete an approved

assignment form. Only the insured

individual may make an assignment; no

one can assign on behalf of an insured

individual. The individual must submit

the completed and signed form to the

employing office indicating the intent to

irrevocably assign all ownership of the

insurance; the form must also be signed

by 2 witnesses. (Assignments submitted

prior to November 28, 1986, were

accepted without an approved

assignment form.)

§ 870.903 Effective date of assignment.

An assignment under this subpart is

effective on the date the employing

office receives the properly completed,

signed, and witnessed assignment form.

§ 870.904 Amount of insurance.

The amount of insurance is the

amount of the insured individual’s

Basic insurance, plus any Option A and

Option B coverage.

§ 870.905 Withholdings.

Premium withholdings for assigned

insurance are withheld from the salary,

annuity, or compensation of the insured

individual, as provided in subpart D of

this part.

§ 870.906 Cancellation of insurance.

(a) The right to cancel (or reduce)

insurance transfers to the assignee; the

insured individual cannot cancel (or

reduce) insurance after making an

assignment.

(b) The assignee has the right to

cancel insurance according to the

provisions of §§ 870,502 and 870.505.

When there is more than one assignee,

all assignees must agree to the

cancellation. A cancellation of Basic

insurance also cancels all Optional

insurance.

§ 870.907 Termination and conversion.

(a) Assigned insurance terminates

under the conditions stated in subpart F

of this part.

(b)(1) When an insured individual’s

insurance terminates, an assignee has

the right to convert all or part of the

group insurance to an individual policy

on the insured individual. The

conditions stated in subpart F of this

part apply to assignees who elect to

convert.

(2) When there is more than one

assignee, each assignee has the right to

convert all or part of his/her share of the

insurance. Any assignee who doesn’t

convert loses all ownership of the

insurance.

(3) When there is more than one

assignee, the maximum amount of

insurance each assignee will be able to

convert is determined by the dollar

amount corresponding to the assignee’s

share of the total insurance. This

amount will be rounded up to the next

higher thousand, if it’s not already an

even thousand dollar amount.

(4) Premiums for converted life

insurance are based on the insured

individual’s age and class of risk at the

time the conversion policy is issued.

(5) The employing office must notify

each assignee of the conversion right at

the time the assigned group insurance

terminates.

(c) The assignment terminates 31 days

after the insurance terminates, unless

the insured individual is reemployed in

or returns to a position in which he/she

is entitled to coverage under this

chapter within 31 days after the

insurance terminates.

§ 870.908 Annuitants and

compensationers.

(a) If an employee assigns Basic

insurance and later becomes eligible to

continue such insurance coverage as an

annuitant or compensationer as

provided in § 870.701:

(1) At the time he/she retires or

becomes eligible as a compensationer,

the insured individual may elect

unreduced or partially reduced

insurance coverage as provided in

§ 870.702(a). This right remains with the

insured individual and does not transfer

to the assignee. Exception: if the insured

individual elected a partial Living

Benefit as an employee under subpart K

of this part, he/she can only elect

unreduced insurance coverage.

(2) After the individual has made the

election described in paragraph (a)(1) of

this section, the assignee (or, if more

than one, all of the assignees acting

together) may, at any time, elect to

cancel the annuitant’s or

compensationer’s election of increased

coverage, as provided in § 870.702(b).

The right to cancel the election transfers

to the assignee; the annuitant or

compensationer cannot cancel the

election after making an assignment.

Exception: if the individual elected a

partial Living Benefit as an employee

under subpart K of this part, the

assignee(s) cannot cancel the election of

unreduced insurance coverage.
Federal Register / Vol. 62, No. 180 / Wednesday, September 17, 1997 / Rules and Regulations 48745

(b) When more than one assignee has

been named, at the time the insured

individual becomes eligible to continue

coverage as an annuitant or

compensationer, some assignees may

choose to convert their part of the

insurance, while others may choose to

continue the coverage during the

insured individual’s retirement or

receipt of compensation. The amount of

each type of continued insurance is

determined by the total percentage of

the shares of the assignees who choose

to continue the coverage.

(c)(1) When an annuitant who has

assigned his/her insurance is

reemployed in a position in which he/

she is entitled to life insurance

coverage, the coverage he/she acquires

as a reemployed annuitant is subject to

the existing assignment.

(2) The right of a reemployed

annuitant to elect Option B coverage as

an employee rather than as an annuitant

under § 870.705(d)(3) remains with the

insured individual and does not transfer

to the assignee. Any Option B coverage

elected as an employee is subject to the

existing assignment.

§ 870.909 Designations and changes of

beneficiary.

(a)(1) An assignment automatically

cancels an insured individual’s prior

designation of beneficiary. After making

an assignment, an individual cannot

designate a beneficiary; the right to

designate beneficiaries transfers to the

assignee.

(2) Each assignee may designate a

beneficiary or beneficiaries to receive

insurance benefits upon the death of the

insured individual and may also later

change the beneficiaries. An assignee

may designate himself/herself the

primary beneficiary and name another

contingent beneficiary(ies) to receive

insurance benefits if the assignee dies

before the insured individual.

(b) Benefits for assigned insurance are

paid to the assignee(s) if the assignee(s)

did not designate a beneficiary.

(c) Benefits for assigned insurance are

paid to an assignee’s estate if the

assignee dies before the insured

individual and:

(1) The assignee (or the assignee’s

heirs) did not designate a beneficiary; or

(2) The assignee’s designated

beneficiary dies before the insured

individual.

(d) The provisions of § 870.802 apply

to designations of beneficiary made by

assignees.

§ 870.910 Notification of current

addresses.

Each assignee and each beneficiary of

an assignee must keep the office where

the assignment is filed informed of his/

her current address.

Subpart J—Benefits for United States

Hostages in Iraq and Kuwait and

United States Hostages Captured in

Lebanon

§ 870.1001 Purpose.

This subpart sets forth the conditions

for life insurance coverage according to

the provisions of section 599C of Pub.

L. 101–513 (104 Stat. 2035).

§ 870.1002 Definitions.

In this subpart:

Hostage and hostage status have the

meaning set forth in section 599C of

Pub. L. 101–513 (104 Stat. 2035).

Pay period for individuals insured

under this subpart means the pay period

set by the U.S. Department of State.

Period of eligibility means the period

beginning on the effective date set forth

in § 870.1004 and ending 12 months

after hostage status ends for hostages in

Iraq and Kuwait and 60 months after

hostage status ends for hostages

captured in Lebanon.

§ 870.1003 Coverage and amount of

insurance.

(a) An individual is covered under

this subpart when the U.S. Department

of State determines that the individual

is eligible under section 599C of Pub. L.

101–513 (104 Stat. 2035).

(b)(1) The amount of Basic life

insurance for these individuals is the

amount specified in § 870.202, subject

to the applicable conditions stated in

this subpart.

(2) The BIA under § 870.202 is the

amount of the payment specified in

section 599C(b)(2) of Pub. L. 101–513

(104 Stat. 2035), rounded to the next

higher $1,000, plus $2,000.

(c) Individuals who have Basic

insurance under this section also have

group accidental death and

dismemberment insurance.

(d) Individuals insured by this

subpart are not eligible for Optional

insurance.

(e) Individuals insured by this subpart

are not considered employees for the

purpose of this part.

(f) Eligibility for insurance under this

subpart depends on the availability of

funds under section 599C(e) of Pub. L.

101–513 (104 Stat. 2035).

§ 870.1004 Effective date of insurance.

Insurance under this subpart was

effective on August 2, 1990, for hostages

in Iraq and Kuwait and on June 1, 1982,

for hostages captured in Lebanon,

unless the U.S. Department of State sets

a later date.

§ 870.1005 Premiums.

(a) Government contributions and

employee withholdings required under

subpart D of this part are paid from the

funds provided under section 599C(e) of

Pub. L. 101–513 (104 Stat. 2035).

(b) If an individual isn’t insured for

the full pay period, premiums are paid

only for the days he/she is actually

insured. The daily premium is the

monthly premium multiplied by 12 and

divided by 365.

(c) OPM may accept the payments

required by this section in advance from

a State Department appropriation, if

necessary to fund the 12-month period

of coverage beginning the earlier or:

(1) The day after sanctions or

hostilities end; or

(2) The day after the individual’s

hostage status ends.

(d) OPM will place any funds

received under paragraph (c) of this

section in an account set up for that

purpose. OPM will make the deposit

required under 5 U.S.C. 8714 from the

account when the appropriate pay

period occurs.

§ 870.1006 Cancellation of insurance.

(a) An individual who is insured

under this subpart may cancel his/her

insurance at any time by written

request. The cancellation is effective on

the 1st day of the pay period after the

pay period in which the U.S.

Department of State receives the

request.

(b) Cancellation must be requested by

the insured individual and cannot be

requested by a representative acting on

the individual’s behalf.

(c) An individual who cancels the

insurance under this section cannot

obtain the insurance again, unless the

U.S. Department of State determines

that it would be against equity and good

conscience not to allow the individual

to be insured.

§ 870.1007 Termination and conversion.

(a) Insurance under this subpart

terminates 12 months after hostage

status ends, unless the individual

cancels the insurance earlier.

(b) Insured individuals whose

coverage terminates are eligible for the

31-day extension of coverage and

conversion as set forth in subpart F of

this part, unless the individual

cancelled the coverage.

§ 870.1008 Order of precedence and

designation of beneficiary.

Insurance benefits are paid under the

order of precedence set forth in 5 U.S.C.

8705(a) and under the provisions of

subpart H of this part.
48746 Federal Register / Vol. 62, No. 180 / Wednesday, September 17, 1997 / Rules and Regulations

§ 870.1009 Responsibilities of the U.S.

Department of State.

(a) The U.S. Department of State

functions as the ‘‘employing office’’ for

individuals insured under this subpart.

(b) The U.S. Department of State must

determine the eligibility of individuals

under Pub. L. 101–513 (104 Stat. 2035)

for insurance under this subpart. This

includes determining whether an

individual is barred from insurance

under chapter 87 of title 5 U.S.C.

because of other life insurance as

provided in section 599C of Pub. L.

101–513 (104 Stat. 2035).

Subpart K—Living Benefits

§ 870.1101 Eligibility for a Living Benefit.

(a) Effective July 25, 1995, an insured

individual who is certified by his/her

doctor as terminally ill, as defined in

§ 870.101, may elect to receive a lumpsum payment of Basic insurance.

(b) Optional insurance is not available

for payment as a Living Benefit.

(c)(1) The effective date of a Living

Benefit election is the date on which the

Living Benefit payment is cashed or

deposited. Once an election becomes

effective, it can’t be revoked. No further

election of Living Benefits can be made.

(2) If the insured individual dies

before cashing or depositing the Living

Benefit payment, the payment must be

returned to OFEGLI.

(d) If the insured individual has

assigned his/her insurance, he/she

cannot elect a Living Benefit; nor can an

assignee elect a Living Benefit on behalf

of an insured individual.

(e) If an individual has elected a

Living Benefit, he/she may assign his/

her remaining insurance.

§ 870.1102 Amount of a Living Benefit.

(a)(1) An employee may elect to

receive either:

(i) A full Living Benefit, which is all

of his/her Basic insurance, or

(ii) A partial Living Benefit, which is

a portion of his/her Basic insurance, in

a multiple of $1,000.

(2) An annuitant or compensationer

may only elect to receive a full Living

Benefit.

(b) The amount of Basic insurance

elected as a Living Benefit will be

reduced by an actuarial amount

representing the amount of interest lost

to the Fund because of the early

payment of benefits.

(c)(1) If an individual elects a full

Living Benefit, the post-election BIA

will be 0. If an employee elects a partial

Living Benefit, the post-election BIA

will be the BIA reduced in proportion

to the amount of Basic insurance elected

as a Living Benefit, as prescribed by

Pub. L. 103–409 (108 Stat. 4231).

(2) The post-election BIA cannot

change after the effective date of a

Living Benefit election.

(d)(1) If an employee elects a full

Living Benefit, Basic accidental death

and dismemberment coverage

terminates as of the effective date of the

election.

(2) If an employee elects a partial

Living Benefit, Basic accidental death

and dismemberment coverage is

reduced to equal the post-election BIA.

§ 870.1103 Election procedures.

(a) The insured individual must

request information on Living Benefits

and an application form directly from

OFEGLI.

(b)(1) Only the insured individual can

apply for a Living Benefit; no one can

apply on his/her behalf.

(2) The insured individual must

complete the first part of the application

and have his/her physician complete

the second part. The completed

application must be submitted directly

to OFEGLI.

(c)(1) OFEGLI reviews the application,

obtains certification from the insured’s

employing office regarding the amount

of insurance and the absence of an

assignment, and determines whether the

individual meets the requirements to

elect a Living Benefit.

(2) If OFEGLI needs additional

information, it will contact the insured

or the insured’s physician.

(3) Under certain circumstances,

OFEGLI may require a medical

examination before making a decision.

In these cases, OFEGLI is financially

responsible for the cost of the medical

examination.

(d)(1) If the application is approved,

OFEGLI sends the insured a check for

the Living Benefit payment and an

explanation of benefits.

(i) Until the check has been cashed or

deposited, the individual may change

his/her mind about electing a Living

Benefit; if this happens, the individual

must mark the check ‘‘void’’ and return

it to OFEGLI.

(ii) Once the insured individual has

chased or deposited the payment, the

Living Benefit election becomes

effective and cannot be revoked;

OFEGLI then sends explanations of

benefits to the insured’s employing

office, so it can make the necessary

changes in withholdings and

deductions.

(2) If the application is not approved,

OFEGLI will notify the insured

individual and the employing office.

The decision is not subject to

administrative review; however, the

individual can submit additional

medical information or reapply at a later

date if future circumstances warrant.

PART 871—[REMOVED]

2. Part 871 is removed.

PART 872—[REMOVED]

3. Part 872 is removed.

PART 873—[REMOVED]

4. Part 873 is removed.

PART 874—[REMOVED]

5. Part 874 is removed.

[FR Doc. 97–24585 Filed 9–16–97; 8:45 am]

BILLING CODE 6325–01–M

OFFICE OF GOVERNMENT ETHICS

5 CFR Parts 2634 and 2635

RINs 3209–AA00 and 3209–AA04

Removal of Superseded References to

the Former Honorarium Ban, Revisions

to Conform With Procurement Integrity

Changes and Conflict-of-Interest

Exemptions, and Other Updates

AGENCY: Office of Government Ethics

(OGE).

ACTION: Final rule; technical

amendments.

SUMMARY: The Office of Government

Ethics is removing superseded

references to the former statutory

honorarium bar from the executive

branch regulations on standards of

ethical conduct and financial

disclosure. In addition, revisions to the

standards of conduct regulation are

being made to reflect statutory changes

on procurement integrity and a new

regulation on conflict-of-interest

exemptions. Finally, OGE is removing

outdated references in the standards of

conduct regulation to certain

grandfathered agency regulations, and

making other minor updates to

references and text.

EFFECTIVE DATE: September 17, 1997.

ADDRESSES: Office of Government

Ethics, Suite 500, 1201 New York

Avenue, NW., Washington, DC 20005–

3917, Attn.: Mr. G. Sid Smith. A copy

of the OGE Memorandum noted in the

SUPPLEMENTARY INFORMATION section

below may be obtained from OGE’s

World Wide Web Site on the Internet at

http://www.usoge.gov, from OGE’s

ethics bulletin board TEBBS (‘‘The

Ethics Bulletin Board System’’) at 202–

208–8030, or by contacting Mr. Smith at

OGE.

FOR FURTHER INFORMATION CONTACT: G.

Sid Smith, Associate General Counsel,