[Federal Register Volume 65, Number 209 (Friday, October 27, 2000)]
[Proposed Rules]
[Pages 64530-64553]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-27513]



[[Page 64529]]

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Part IV





Office of Personnel Management





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5 CFR Part 870



Federal Employees' Group Life Program: Miscellaneous Changes and 
Clarifications and Plain Language Rewrite; Proposed Rule

Federal Register / Vol. 65 , No. 209 / Friday, October 27, 2000 / 
Proposed Rules

[[Page 64530]]


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OFFICE OF PERSONNEL MANAGEMENT

5 CFR Part 870

RIN 3206-AG63


Federal Employees' Group Life Insurance Program: Miscellaneous 
Changes and Clarifications and Plain Language Rewrite

AGENCY: Office of Personnel Management.

ACTION: Proposed rule.

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SUMMARY: The Office of Personnel Management (OPM) is proposing a 
complete rewrite of the Federal Employees' Group Life Insurance (FEGLI) 
regulations. We are changing the format of the regulations and using 
plain language to make the regulations easier to understand. We are 
also proposing some miscellaneous changes, clarifications, and 
corrections, which are spelled out in the Supplementary Information.

DATES: OPM must receive comments on or before December 26, 2000.

ADDRESSES: Send written comments to Abby L. Block, Chief, Insurance 
Policy and Information Division, Office of Insurance Programs, 
Retirement and Insurance Service, Office of Personnel Management, 1900 
E Street NW., Washington, DC 20415-3666; or deliver to OPM, Room 3425, 
1900 E Street NW., Washington, DC; or FAX to (202) 606-0633.

FOR FURTHER INFORMATION CONTACT: Karen Leibach, (202) 606-0004.

SUPPLEMENTARY INFORMATION: In line with the President's Memorandum of 
June 1, 1998 (Plain Language in Government Writing), the Office of 
Personnel Management (OPM) is rewriting the Federal Employees' Group 
Life Insurance (FEGLI) regulations. We are writing most of the sections 
in question and answer format, using tables, and addressing the 
regulations to the intended reader (usually the insured or eligible 
individual). We are also using simpler language as much as possible. 
The purpose is to make the regulations easier to understand.
    These regulations also propose various changes, clarifications, and 
corrections. These are:

Changes

    (1) We recognize that sometimes there are situations in which a 
terminally ill person is not able to elect a living benefit. In 
consideration of these individuals, we are changing subpart K to allow 
someone to elect a living benefit on behalf of an insured individual in 
certain circumstances. The requirements are that the insured person 
must be physically or mentally incapable of making the election; the 
applicant must have a power of attorney or court order that would allow 
him/her to make such an election; and the applicant must either be the 
sole beneficiary or have the written and signed consent of each 
beneficiary.
    (2) There are occasional situations in which a person's employment 
may be creditable under subchapter III of chapter 83 or chapter 84 of 
title 5, United States Code, but may not give the person eligibility 
for FEGLI. For determining whether an employee is eligible to continue 
FEGLI as an annuitant or compensationer, we are changing the definition 
of ``service'' to mean service during which the employee is eligible 
for FEGLI.
    (3) We are removing the exclusion for employees whose annual pay is 
$12 per year or less, since it's a rather outdated provision. It's not 
very likely that there are any employees this would apply to. Any 
employee earning a salary of $12 or less per year is probably already 
excluded under other provisions.
    (4) We are adding information to the regulations about the 
circumstances allowing family members to convert Option C coverage. 
Family members may convert Option C if the insured employee/annuitant/
compensationer dies, or if the insurance terminates and the insured 
individual doesn't convert the coverage. Family members may not convert 
if they lose eligibility as covered family members.
    (5) We are changing the regulations to simplify what happens when 
an employee transfers from a covered position to an excluded position. 
Currently, some such transfers allow the employee to keep FEGLI 
coverage, some cause him/her to lose the coverage, and one allows the 
employee to keep coverage if he/she expects to return to the covered 
position. The new regulations will allow all employees to keep their 
FEGLI coverage, if they transfer to a position excluded by regulation 
with a break in service of not more than 3 days. This does not apply to 
positions excluded by law.
    (6) We are expanding the regulations to include a list of medical 
conditions that automatically allow a child age 22 and over to be 
covered under Option C coverage. These are the same conditions that 
allow an overage dependent to be covered under a self and family 
enrollment under the Federal Employees Health Benefits (FEHB) Program.
    (7) The current regulations state that under Full Reduction, Option 
B and Option C coverage terminates at 12:00 noon on the day before the 
50th reduction. We are changing this to the end of the last day of the 
month in which the 49th reduction occurs. This allows for a full day of 
coverage on the last day before the coverage ends.
    (8) When reemployed annuitants separate, they may keep the 
insurance they got through reemployment if they qualify for a 
supplemental annuity or receive a new retirement right. However, some 
retirement systems don't allow their annuitants to get a supplemental 
annuity or new retirement right. To be fair to these annuitants, we are 
revising the regulations to allow them to keep their reemployment-
acquired insurance if they would otherwise qualify for a supplemental 
annuity or new retirement right--but are unable to receive it due to 
the provisions of their retirement system.
    (9) The regulations currently state that a child qualifies as a 
recognized natural child if a court determines that the insured person 
is the child's father, and the court makes that determination before 
the man dies. We are expanding the regulations to allow a court 
determination of paternity based on the results of DNA testing both 
before and after the death of the insured.
    (10) The regulations currently include information on reemployed 
annuitants. We have expanded the regulations to include information on 
reemployed compensationers.
    (11) Current regulations require that an employee who is retiring 
or becoming insured as a compensationer must choose the number of 
multiples of Option B and Option C he/she wants to continue into 
retirement. Any multiples not continued cancel, and the employee does 
not get the 31-day extension of coverage or right to convert. Since 
some employees may wish to convert their insurance, instead of 
continuing it into retirement or compensation, we are changing the 
regulations to say that any multiples not continued terminate, rather 
than cancel. This will give the employee the 31-day extension of 
coverage and the right to convert.
    (12) We are changing the time frames for conversion and portability 
to make them the same. Currently the time frame for conversion is a 
postmark within 31 days from the date of the terminating event or 31 
days from the date the employee or assignee receives the notice of loss 
of group coverage and right to convert, whichever is later. The 
individual may also request conversion within 6 months after becoming 
eligible, if he/she was unable to do so on time because of reasons 
beyond his/her control. The current time frame for

[[Page 64531]]

portability is a request within 60 days from the date of the 
terminating event. We are making the time frame the same for both 
conversion and portability. OFEGLI (for conversion) or the Portability 
Office (for portability) must receive a request within 65 days from the 
date of the terminating event, with the 6-month ``reasons beyond 
control'' provision for both. We are also changing the regulations to 
state that an individual who wants to port Option B must submit the 
request to the Portability Office; currently the individual must send 
the request to both the employing office and the Portability Office.
    (13) If a disability annuitant's annuity stops because he/she 
recovers or returns to earning capacity, or if a compensationer's 
compensation stops because the Department of Labor finds that he/she is 
able to return to work, the individual's FEGLI stops. Current 
regulations state that the person does not receive the 31-day extension 
of coverage or right to convert. We are changing the regulations to 
allow these individuals to have the 31-day extension and the 
opportunity to convert their coverage.
    (14) Current regulations spell out pay and duty status requirements 
before open season elections become effective. We are removing the 
specific requirements and stating that we will announce the 
requirements for a particular open season in a Federal Register notice. 
This gives us the flexibility to vary the requirements with the needs 
of each open season.

Clarifications

    (1) We are clarifying the regulations to state that a faxed 
designation of beneficiary is acceptable in certain circumstances. The 
appropriate office must receive the faxed designation before the 
insured person dies, and the office must receive the original 
designation within 30 days of when it received the faxed version. The 
original must be identical to the faxed copy.
    (2) We are stating in the regulations that a witness to an 
assignment must be someone other than the assignee.
    (3) A witness to a designation cannot be named as a beneficiary. We 
are revising the regulations to show what happens if an agency or 
retirement system erroneously accepts such a designation. The witness/
beneficiary is disqualified from receiving benefits. If that person is 
the only beneficiary listed, the designation is not valid. Benefits 
will then be paid according to the last designation on file; if there 
is none, benefits will go to whoever is next under the order of 
precedence. If the designation lists another beneficiary or 
beneficiaries, they will get the disqualified person's share.
    (4) At the time of retirement or becoming insured as a 
compensationer, an employee must make an election for post-65 reduction 
of Basic insurance. We are making it clear that if a person doesn't 
make this election, he/she automatically gets 75% Reduction.
    (5) We are clarifying the regulations to state that only the 
insured person (or the assignee) has the right to convert when 
insurance terminates. No one may convert on behalf of the insured 
person. (There is an exception that allows family members to convert 
Option C coverage in certain circumstances. We discussed this 
previously in item (4) under Changes.) We are also making it clear that 
only the employee may elect Optional insurance and make the initial 
post-65 reduction election for Basic, Option B, and Option C. No one 
may make such an election on behalf of the employee. And we are making 
it clear that only the insured person (or the assignee) can cancel 
FEGLI. No one may cancel insurance on behalf of the insured person.
    (6) We have changed ``change in family circumstances'' to ``life 
event.'' This is a simpler phrase and is consistent with more common 
usage. We have also changed ``open enrollment period'' to ``open 
season'' for the same reasons. This doesn't mean that FEGLI open 
seasons will become annual events, as FEHB open seasons are. FEGLI open 
seasons will remain occasional events, as scheduled by OPM.
    (7) Acquiring an eligible child is a life event that allows an 
employee to make an Option B and/or Option C election. We are 
clarifying the regulations to state that the definition of child for 
life events purposes is the same as the definition of child as an 
eligible family member.
    (8) We are expanding the definitions section to include definitions 
of ``accidental death and dismemberment,'' ``beneficiary,'' 
``cancellation,'' ``days,'' ``living benefits,'' ``port'' and ``ported 
coverage,'' ``separation,'' ``termination,'' and ``we.''
    (9) If an insured person cancels his/her insurance, the insurance 
stops at the end of the pay period in which the person files the 
waiver. We are clarifying the regulations to say that this is the end 
of the last day of that pay period.
    (10) We are dropping the phrase ``if not already an even thousand'' 
from the requirement for rounding annual pay to determine the amount of 
Option B coverage. If the salary is already an even thousand, there is 
no need to round; so the phrase is unnecessary.
    (11) We are clarifying the regulations to state that, even though 
there is no longer a maximum on the amount of Basic insurance and 
Option B, if an employee's salary is ``capped'' by law, the Basic and 
Option B FEGLI amounts are based on the capped salary (the amount the 
employee is actually being paid), not the amount the salary would be 
without the cap.
    (12) There are no waivers of the ``5-year/all-opportunity'' 
requirements for continuing FEGLI as an annuitant or compensationer. We 
are clarifying the regulations to state this.

Corrections

    (1) We are correcting the regulations to reflect that accidental 
death and dismemberment benefits apply to loss of sight, not just to 
loss of an eye.
    (2) Employees who have an interim appointment under Sec. 772.102 of 
this chapter are eligible for coverage unless their position is 
excluded by law. This provision was inadvertently removed from the 
regulations.
    (3) We are correcting the regulations concerning how long FEGLI 
continues for persons covered under the hostage provisions (subpart J). 
For hostages in Iraq and Kuwait, coverage terminates 12 months after 
hostage status ends. For hostages captured in Lebanon, coverage 
terminates 60 months after hostage status ends.
    (4) We are correcting Sec. 870.103 to show that OPM has the 
authority to correct administrative errors. The word ``administrative'' 
was inadvertently removed from the regulations.

Regulatory Flexibility Act

    I certify that this regulation will not have a significant economic 
impact on a substantial number of small entities, because the 
regulation only affects life insurance benefits of Federal employees 
and retirees.

List of Subjects in 5 CFR Part 870

    Administrative practice and procedure, Government employees, 
Hostages, Iraq, Kuwait, Lebanon, Life insurance, Retirement.

Office of Personnel Management.
Janice R. Lachance,
Director.
    OPM is proposing to amend 5 CFR part 870 as follows:
    Part 870 is revised to read as follows:

[[Page 64532]]

PART 870--FEDERAL EMPLOYEES' GROUP LIFE INSURANCE PROGRAM

Subpart A--Administration and General Provisions
Sec.
870.101   Definitions.
870.102   How is FEGLI set up?
870.103   Who can correct an error in my coverage?
870.104   What if I get coverage by mistake?
870.105   What if I think my agency or retirement system made the 
wrong decision about my coverage?
870.106   How long do I have to request a reconsideration?
870.107   Can I get an extension of this time limit?
870.108   Who does the reconsideration?
870.109   What if someone thinks OFEGLI paid benefits incorrectly?
870.110   Special information for census workers.
Subpart B--Types and Amounts of Insurance
870.201   What types of insurance does the FEGLI Program have?
870.202   What is my Basic insurance amount (BIA)?
870.203   Does my BIA ever change?
870.204   Is the BIA the amount my survivors will receive when I 
die?
870.205   What is the post-election BIA?
870.206   What do you mean by my annual rate of pay?
870.207   What is included in my annual pay?
870.208   What if my pay isn't annual or full-time or regular?
870.209   What is the amount of my Optional insurance?
870.210   Are these the amounts that will be paid when I die or if a 
family member dies?
870.211   Does FEGLI have accidental death and dismemberment 
benefits?
870.212   What is the amount of my AD&D coverage?
Subpart C--Eligibility
870.301   Am I eligible for Basic or Optional insurance?
870.302   What is an excluded position?
870.303   Who is excluded by law?
870.304   Who is excluded by regulation?
870.305   Are there any other exceptions to these exclusions?
870.306   Are foster children eligible as family members under my 
Option C coverage?
870.307   What do I have to do to cover a disabled child over age 
22?
Subpart D--Cost of Insurance
870.401   Who pays for FEGLI?
870.402   How much do I have to pay for Basic insurance?
870.403   How much do I pay if I'm insured as an annuitant or 
compensationer?
870.404   How does the Government contribution for Basic insurance 
work?
870.405   How much do I have to pay for Optional insurance?
870.406   When I move from one age group to another, when do I start 
paying the higher premiums?
870.407   What happens to my withholding if I elect a living 
benefit?
870.408   What happens if my employing office doesn't withhold 
enough?
870.409   What if my pay is too low to make the withholdings?
870.410   What else should I know about withholdings and 
contributions?
Subpart E--Coverage
870.501   How do I get Basic insurance?
870.502   How do I get Optional insurance?
870.503   When does Optional insurance become effective?
870.504   Are there any extensions to the 31-day time limit for 
electing Optional insurance?
870.505   Can I cancel my insurance?
870.506   How long does my waiver last?
870.507   How can I cancel my waiver and get insurance?
870.508   How do I cancel my waiver by getting a physical exam?
870.509   What happens after OFEGLI makes its decision?
870.510   What is a life event?
870.511   How do I cancel my waiver if I have a life event?
870.512   When can I make a life event election?
870.513   How many multiples of Options B and C can I elect due to a 
life event?
870.514   When does my Option B and Option C life event coverage 
become effective?
870.515   Are there any extensions to the time limit for making a 
life event election?
870.516   How often does OPM have FEGLI open seasons?
870.517   What coverage can I elect during an open season?
870.518   What is the effective date for open season elections?
870.519   Are there any extensions to the open season dates?
870.520   Can annuitants and compensationers get FEGLI coverage?
870.521   What happens if I leave Government and then return to 
service?
870.522   What happens if I go into a nonpay status?
870.523   Special nonpay situations.
Subpart F--Termination and Conversion
870.601   When does my Basic insurance stop?
870.602   When does my Optional insurance stop?
870.603   Can I convert my insurance to a private policy?
870.604   How long do I have to convert my insurance?
870.605   Are there any extensions to the time limit for conversion?
870.606   When is my conversion policy effective?
870.607   Can my family members convert my Option C coverage?
Subpart G--Annuitants and Compensationers
870.701   Can I keep my life insurance when I retire?
870.702   Can I keep my life insurance if I become a compensationer?
870.703   Do I have to meet the 5-year/all-opportunity requirement 
for all my insurance?
870.704   How much insurance can I continue as an annuitant or 
compensationer?
870.705   Are these the amounts that will be paid when I die or if a 
family member dies?
870.706   What kind of election can I make about reductions in my 
Basic insurance?
870.707   Can I change my post-65 reduction election for Basic 
insurance?
870.708   What kind of election can I make about reductions in my 
Optional insurance?
870.709   When do I have to make the post-65 reduction election for 
Option B and Option C?
870.710   What if I was already retired or insured as a 
compensationer on April 24, 1999?
870.711   Can I change my post-65 reduction election for Option B or 
Option C?
870.712   Do the post-65 reductions apply to all annuitants and 
compensationers?
870.713   What if I'm an MRA+10 annuitant?
870.714   What if I don't want to continue my insurance as an 
annuitant or compensationer?
870.715   When does my insurance as an annuitant or compensationer 
stop?
870.716   Can my insurance be reinstated?
870.717   What happens if I retire and then come back to work for 
the Federal Government?
870.718   Can I elect more life insurance if I return to service?
870.719   What happens if I die or a family member dies after I 
return to service?
870.720   What happens when I separate from service again?
870.721   What happens if I come back to work part-time, but I'm 
still receiving compensation?
Subpart H--Order of Precedence and Designation of Beneficiary
870.801   Who gets the life insurance benefits when I die?
870.802   What are the requirements for a court order to be valid?
870.803   Can I designate a beneficiary?
870.804   How do I make a designation?
870.805   Where do I have to file my designation form?
870.806   Can I change my designation?
870.807   How long does my designation last?
870.808   How does OFEGLI pay Option C benefits if an eligible 
family member dies?
Subpart I--Assignment
870.901   Who is allowed to make an assignment?
870.902   What insurance can I assign?
870.903   Who can I assign my insurance to?
870.904   Can I change or cancel my assignment?
870.905   How do I make an assignment?
870.906   Where do I have to file my assignment form?
870.907   When is my assignment effective?
870.908   Can I elect more insurance after I make an assignment?

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870.909   Can I cancel or reduce my insurance after I make an 
assignment?
870.910   Who pays the premiums after I make an assignment?
870.911   What happens when I retire or become insured as a 
compensationer?
870.912   What happens if my insurance terminates after I make an 
assignment?
870.913   How long does my assignment last?
870.914   Can I designate a beneficiary after I've assigned my 
insurance?
870.915   If I've assigned my insurance, who gets the life insurance 
benefits when I die?
870.916   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   Special definitions for this subpart.
870.1003   Who is eligible for FEGLI under this subpart?
870.1004   What is the amount of insurance for those eligible as 
hostages?
870.1005   What is the effective date of this coverage?
870.1006   How are the premiums paid?
870.1007   Can a person insured as a hostage cancel the insurance?
870.1008   How are benefits paid when a person insured as a hostage 
dies?
870.1009   How long does the insurance continue?
870.1010   State Department responsibilities.
Subpart K--Living Benefits
870.1101   Who is eligible for a living benefit?
870.1102   How much can I elect as a living benefit?
870.1103   How do I apply for a living benefit?
870.1104   What happens after OFEGLI approves my application?
870.1105   What if OFEGLI doesn't approve my application?
870.1106   What happens to the rest of my coverage after I elect a 
living benefit?
870.1107   What happens if I live longer than 9 months?
Subpart L--Portability
870.1201   Portability permitted.
870.1202   What are the eligibility requirements for portability?
870.1203   How much Option B can I port?
870.1204   What is the cost of the ported coverage?
870.1205   How do I port my coverage?
870.1206   Are there any extensions to the time limit for porting?
870.1207   When is my ported coverage effective?
870.1208   What about designations, assignments, and court orders?
870.1209   Can I cancel my ported coverage?
870.1210   How long does my ported coverage last?
870.1211   What happens if I come back to work?

    Authority: 5 U.S.C. 8716; subpart J also issued under section 
599C of Pub. L. 101-513, 104 Stat. 2064, as amended; 
Sec. 870.302(a)(3)(ii) also issued under section 153 of Pub. L. 104-
134, 110 Stat. 1321; Sec. 870.302(a)(3) also issued under sections 
11202(f), 11232(e), and 11246(b) and (c) of Pub. L. 105-33, 111 
Stat. 251 and section 7(e) of Pub. L. 105-274, 112 Stat. 2419.

Subpart A--Administration and General Provisions


Sec. 870.101  Definitions.

    Accidental death and dismemberment means death or bodily injury 
caused solely through violent, external, and accidental means. This has 
meaning for FEGLI if, as a direct result of the bodily injuries, 
independent of all other causes, you die or lose your hand, foot, or 
eyesight within 90 days of the accidental injury. If your physical or 
mental condition or treatment for your physical or mental condition 
contributes to your death or dismemberment, we do not consider your 
injury to be accidental.
    Annuitant means a former employee who is entitled to an annuity 
(pension) 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 mean the insured individual's transfer of 
ownership of the FEGLI coverage to another individual, corporation, 
trust, or other entity. An assignment is irrevocable (permanent--it 
cannot be undone) and includes all FEGLI coverage, except Option C.
    Assignee means the individual, corporation, trust, or other entity 
to whom an insured individual irrevocably transfers ownership of FEGLI 
coverage (except Option C).
    Beneficiary means the individual, corporation, trust, or other 
entity that receives FEGLI benefits when you die.
    Cancellation means FEGLI stops. We consider it to be a voluntary 
action. The insured individual does not get a temporary extension of 
coverage or right to convert. Reducing the number of multiples of 
Option B or Option C is a cancellation of those multiples.
    Child (a)--as used in the definition of family member for Option C 
coverage and as used with life events--means the following:
    (1) A legitimate child;
    (2) An adopted child;
    (3) A stepchild or foster child who lives with the employee or 
former employee in a regular parent-child relationship; or
    (4) A recognized natural child.
    (b) This definition does not include a stillborn child or a 
grandchild (unless the grandchild meets all the requirements of a 
foster child).
    (c) The child must be under age 22. A child age 22 or over is 
eligible if the child is incapable of self-support because of a 
physical or mental disability which existed before the child reached 
age 22.
    Child (a)--as used in the order of precedence for payment of 
benefits--means the following:
    (1) A legitimate child;
    (2) An adopted child; or
    (3) A recognized natural child.
    (b) The child may be of any age.
    (c) This definition does not include the following:
    (1) A stepchild;
    (2) A stillborn child;
    (3) A grandchild; or
    (4) A foster child.
    (d) Adopted children inherit from their adoptive parents under the 
order of precedence, not from their birth parents (unless they are 
designated beneficiaries).
    (e) A child who has reached age 18 is considered an adult and can 
receive a benefit payment in his/her name. But if the age of adulthood 
where the individual has legal residence is set at a lower age, the 
child is considered an adult on reaching that lower age.
    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 individual who is receiving compensation 
and who the Department of Labor determines is unable to return to duty.
    Court order (a) means one of the following:
    (1) A court decree of divorce, annulment, or legal separation; or
    (2) A court-approved property settlement agreement relating to a 
court decree of divorce, annulment, or legal separation.
    (b) A court order has meaning for FEGLI if it requires FEGLI 
benefits to be paid to a specific person or persons.
    Date of retirement means the commencing (starting) date of the 
annuity.
    Days means calendar days.
    Dependent means living with or receiving regular and substantial 
support from the insured individual.
    Employee means an individual who meets the definition of 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.
    (a) The Administrative Office of the United States Courts is the 
employing office for judges of the following courts:
    (1) All United States Courts of Appeals;

[[Page 64534]]

    (2) All United States District Courts;
    (3) The Court of International Trade;
    (4) The Court of Federal Claims; and
    (5) The District Courts of Guam, the Northern Mariana Islands, and 
the Virgin Islands.
    (b) The Washington Headquarters Services is the employing office 
for judges of the United States Court of Appeals for the Armed Forces.
    (c) The United States Tax Court is the employing office for judges 
of the United States Tax Court.
    (d) The United States Court of Veterans Appeals is the employing 
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:
    (a) An annuity that begins no later than 1 month after the date the 
insurance would otherwise stop (the date of separation from service); 
or
    (b) An annuity under Sec. 842.204(a)(1) of this chapter for which 
the starting date has been postponed under Sec. 842.204(c) of this 
title (called an MRA+10 annuity).
    Judge means an individual appointed as a Federal justice or judge 
under Article I or Article III of the Constitution.
    Living benefits means life insurance benefits that are paid to an 
insured person while the person is living.
    OFEGLI means the Office of Federal Employees' Group Life Insurance, 
which pays benefits under the FEGLI contract.
    OPM means the Office of Personnel Management.
    OWCP means the Office of Workers' Compensation Programs, U.S. 
Department of Labor.
    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 child meets the definition of recognized natural child.
    Port and ported coverage mean continuing FEGLI group coverage that 
would otherwise terminate.
    Portability Office means the office OPM designates to manage ported 
coverage and to collect premiums for ported coverage.
    Recognized natural child means a biological child born outside of 
marriage. An insured individual is considered to be the father of such 
a child under the following conditions:
    (a)(1) The man acknowledges paternity in writing;
    (2) A court orders the man to provide support;
    (3) Before the man dies, a court pronounces him to be the father 
(if the court bases its determination on the results of DNA testing, it 
is also acceptable after the man dies);
    (4) The man names himself as the father of the child on a certified 
copy of the public record of birth or church record of baptism; or
    (5) Public records, such as records of schools or social welfare 
agencies, show that--with his knowledge--the insured is named as the 
father of the child.
    (b) If paragraph (a) of this definition does not establish 
paternity, OFEGLI may consider other proof to establish paternity. This 
includes evidence of 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 on his income tax returns.
    Reconsideration means the final level of administrative review of 
an employing office's initial decision. The purpose of a 
reconsideration is to determine if the employing office followed the 
law and regulations correctly in making the initial decision concerning 
FEGLI eligibility and coverage.
    Regular parent-child relationship means that the employee or former 
employee is exercising parental authority, responsibility, and control 
over the child. The employee or former employee is caring for, 
supporting, and disciplining the child and is making the decisions 
about the child's education and medical care.
    Separation means leaving Federal service, either by resignation or 
by retirement.
    Service means Federal civilian service that is creditable under 
subchapter III of chapter 83 or chapter 84 of title 5, United States 
Code. For the purpose of continuing FEGLI as an annuitant or 
compensationer, it means service during which an employee is eligible 
to be covered under FEGLI. 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 U.S.C.
    Terminally ill means having a medical prognosis of a life 
expectancy of 9 months or less.
    Termination means FEGLI stops. We consider it to be an involuntary 
action. The insured individual gets a temporary extension of coverage 
and right to convert.
    Underdeduction means not withholding the required amount of life 
insurance deductions from an individual's pay, annuity, or 
compensation. This includes nondeductions (when none of the required 
amount is withheld) and partial deductions (when only part of the 
required amount is withheld).
    We means OPM (the Office of Personnel Management).


Sec. 870.102  How is FEGLI set up?

    The Federal Employees' Group Life Insurance (FEGLI) Program is 
authorized by law (chapter 87 of title 5, United States Code). The 
Office of Personnel Management (OPM) administers the Program and sets 
the premiums. OPM has a contract with an insurance company to provide 
group life insurance coverage for Federal employees under the FEGLI 
Program. The company has an office called OFEGLI (the Office of Federal 
Employees' Group Life Insurance) to pay benefits.


Sec. 870.103  Who can correct an error in my coverage?

    (a) Your employing office may correct administrative errors about 
your coverage or changes in coverage. If the correction is retroactive, 
your employing office must follow the provisions of Sec. 870.408.
    (b) OPM may order correction of an administrative error if we have 
evidence that it would be against equity (fairness) and good conscience 
not to order the correction.


Sec. 870.104  What if I get coverage by mistake?

    (a) If you become insured in error, your coverage will remain in 
effect if at least 2 years pass before the error is discovered and you 
paid the applicable premiums during that time. This applies to errors 
discovered on or after October 30, 1998.
    (b) If you are allowed to continue your insurance into retirement 
or compensation in error, your coverage will remain in effect if at 
least 2 years pass before the error is discovered and you paid the 
applicable premiums during that time. This applies to such errors 
discovered on or after October 30, 1998.
    (c) If you are allowed to keep erroneous coverage because of this 
provision, but you don't want the coverage, you may cancel the coverage 
on a prospective basis. You will not get a refund of your premiums.


Sec. 870.105  What if I think my agency or retirement system made the 
wrong decision about my coverage?

    (a) You may ask your agency or retirement system to reconsider its 
initial decision denying you life

[[Page 64535]]

insurance coverage, the opportunity to change your coverage, the 
opportunity to designate a beneficiary, or the opportunity to assign 
your insurance.
    (b) Your employing office's decision is an initial decision when 
the employing office gives it to you in writing and tells you about the 
right to a reconsideration.
    (c) If you want a reconsideration, you must make your request in 
writing and follow the instructions in the initial decision notice. 
Your request must include the following:
    (1) Your name;
    (2) Your address;
    (3) Your date of birth;
    (4) Your Social Security number;
    (5) The reason(s) for your reconsideration request;
    (6) A copy of the initial decision; and
    (7) If you are retired, your retirement claim number.


Sec. 870.106  How long do I have to request a reconsideration?

    You must request a reconsideration within 30 days from the date of 
the initial decision.


Sec. 870.107  Can I get an extension of this time limit?

    Yes. To get an extension you must show either:
    (a) That your employing office did not notify you of the time limit 
and you were not aware of it by any other means; or
    (b) That you were not able to make the request on time because of 
reasons beyond your control.


Sec. 870.108  Who does the reconsideration?

    (a) Your agency or retirement system performs the reconsideration. 
They must do so at or above the level where they made the initial 
decision.
    (b) After performing the reconsideration, the agency or retirement 
system must issue a final decision. The agency or retirement system 
must give you the final decision in writing and must state the findings 
fully.


Sec. 870.109  What if someone thinks OFEGLI paid benefits incorrectly?

    (a) If you (or your beneficiaries) think OFEGLI made an error in 
paying benefits, you must contact OFEGLI directly.
    (b) If you (or your beneficiaries) think you are due money from 
FEGLI benefits and that you need to go to court to get the money, you 
must take court action against the company that we contract with, not 
against OPM.


Sec. 870.110  Special information for census workers.

    If you are a Federal employee, whether in pay status or nonpay 
status, and you are hired for a temporary, intermittent, position with 
the decennial (every 10 years) census, your census employment has no 
effect on:
    (a) The amount of your Basic or Option B insurance;
    (b) The withholdings or Government contribution for your insurance; 
or
    (c) The determination of when 12 months in nonpay status ends.

Subpart B--Types and Amounts of Insurance


Sec. 870.201  What types of insurance does the FEGLI Program have?

    (a) The FEGLI Program has 2 types of life insurance: Basic and 
Optional.
    (b) There are 3 types of Optional insurance: Option A (standard 
optional insurance), Option B (additional optional insurance), and 
Option C (family optional insurance).


Sec. 870.202  What is my Basic insurance amount (BIA)?

    (a)(1) Unless you elected a living benefit under subpart K of this 
part, if you are an employee, your Basic insurance amount (BIA) is the 
higher of:
    (i) Your annual rate of basic pay, rounded to the next higher 
thousand, plus $2,000; or
    (ii) $10,000. Note: If your pay is ``capped'' by law, the amount of 
your Basic insurance is based on the capped amount, the amount you are 
actually being paid. It is not based on the amount your pay would be 
without the cap.
    (2) If you elected a living benefit, see Sec. 870.205.
    (3) Effective for pay periods beginning on or after October 30, 
1998, there is no maximum BIA.
    (b) If you are eligible to continue your Basic insurance coverage 
as an annuitant or compensationer, your BIA is the BIA that is in 
effect at the time your insurance as an employee would stop under 
Sec. 870.601.


Sec. 870.203  Does my BIA ever change?

    (a) If you are an employee, your BIA automatically changes whenever 
your annual pay increases or decreases enough to move you to a 
different $1,000 bracket, unless you elected a living benefit under 
subpart K of this part. (If that applies to you, see Sec. 870.205.)
    (b) If you are insured as an annuitant or compensationer, your BIA 
will not change.


Sec. 870.204  Is the BIA the amount my survivors will receive when I 
die?

    (a) Your BIA is the starting point for determining the amount that 
OFEGLI will pay when you die.
    (b) If you are under age 45 when you die, your beneficiaries will 
receive a higher amount. This is called an ``extra benefit.'' OFEGLI 
multiplies your BIA by a factor, depending on your age at the time of 
your death. These are the factors:

------------------------------------------------------------------------
                              Age                                Factor
------------------------------------------------------------------------
35 or under...................................................       2.0
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
------------------------------------------------------------------------

    (c) If you are insured as an annuitant or compensationer and are 
age 65 or over, the amount of benefits paid may be reduced, depending 
on the election you made. See Sec. 870.706.
    (d) Depending on the cause of your death, your beneficiaries also 
may receive an accidental death benefit. See Sec. 870.212.


Sec. 870.205  What is the post-election BIA?

    (a) The post-election BIA is the amount of Basic insurance left 
after you elect a living benefit. (See subpart K of this part)
    (1) If you elect a full living benefit, the post-election BIA is 
$0.
    (2) If you elect a partial living benefit, you still have some 
Basic insurance left. OFEGLI determines this amount by taking your BIA 
on the date OFEGLI receives your completed living benefit application 
and reducing it by a percentage. This percentage represents the amount 
of your partial living benefit payment, compared to the amount you 
could have received if you elected a full living benefit. The amount 
that is left is rounded up or down to the nearest multiple of $1,000. 
(If it's midway between multiples, it is rounded up to the next higher 
multiple.)
    (b) The post-election BIA cannot change, so changes in pay will 
have no effect on it.
    (c) If you elect a partial living benefit and are under age 45 when 
you die, OFEGLI will multiply your post-election BIA by the ``extra 
benefit'' factor that was in effect on the date OFEGLI received your 
completed living benefit application.

[[Page 64536]]

Sec. 870.206  What do you mean by my annual rate of pay?

    Your annual pay is your annual rate of basic pay as fixed by law or 
regulation.


Sec. 870.207  What is included in my annual pay?

    Your annual pay includes the following:
    (a) Interim geographic adjustments and locality-based comparability 
payments, as provided by Pub. L. 101-509 (104 Stat. 1479);
    (b) Premium pay for standby duty under 5 U.S.C. 5545(c)(1);
    (c) If you are a customs officer, premium pay for overtime 
inspectional service, as provided by Pub. L. 103-66 (107 Stat. 453);
    (d) If you are a law enforcement officer as defined under 5 U.S.C. 
8331(20) and Secs. 831.902 and 842.802 of this chapter, premium pay for 
administratively uncontrollable overtime under 5 U.S.C. 5545(c)(2);
    (e) If you are a wage employee, night differential pay;
    (f) If you are an employee exposed to danger or physical hardship, 
environmental differential pay;
    (g) If you are a citizen employee in Panama, tropical differential 
pay;
    (h) If you are a law enforcement officer, special pay adjustments;
    (i) If you are a criminal investigator, availability pay under 5 
U.S.C. 5545a;
    (j) If you are a physician or dentist of the Department of Veterans 
Affairs, bonuses as provided by Pub. L. 96-330 (94 Stat. 1030); and
    (k) If you are a firefighter, straight-time pay for regular 
overtime hours, as provided in 5 U.S.C. 5545b and part 550, subpart M, 
of this chapter.


Sec. 870.208  What if my pay isn't annual or full-time or regular?

    (a) If your pay is not annual, your employing office will convert 
your pay to an annual rate. The way to do this is to multiply your pay 
rate by the number of pay units in a 52-week work year.
    (b) If you are a part-time employee, your annual pay is your basic 
pay applied to your tour of duty in a 52-week work year.
    (c) If you are on piecework rates, your annual pay is your total 
basic earnings for the previous calendar year, not counting premium pay 
for overtime or holidays.
    (d) If you have a regular schedule but work at different pay rates, 
your annual pay is the weighted average of the rates at which you are 
paid, projected to an annual basis.
    (e) If you are a non-Postal intermittent employee or an employee 
who works at different pay rates without a regular schedule, your 
annual pay is the annual rate that you are receiving at the end of the 
pay period.
    (f) If you legally serve in more than one position at the same 
time, and at least one of those positions entitles you to life 
insurance coverage, your 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.


Sec. 870.209  What is the amount of my Optional insurance?

    (a) Option A coverage is $10,000. Effective for pay periods 
beginning on or after October 30, 1998, Option A cannot be more than 
$10,000. Exception: This does not apply if you retired or became 
insured as a compensationer with a higher amount of Option A before the 
removal of the maximum on Basic insurance (the first pay period 
beginning on or after October 30, 1998).
    (b)(1) Option B coverage comes in 1, 2, 3, 4, or 5 multiples of 
your annual pay (after rounding the pay to the next higher thousand).


    Note: If your pay is ``capped'' by law, the amount of your 
Option B coverage is based on the capped amount, the amount you are 
actually being paid. It is not based on the amount your pay would be 
without the cap.

    (2) Effective for pay periods beginning on or after October 30, 
1998, there is no maximum amount for each multiple.
    (3) The amount of your Option B coverage automatically changes 
whenever your annual pay increases or decreases enough to move you to a 
different $1,000 bracket.
    (c) Effective April 24, 1999, Option C coverage comes in 1, 2, 3, 
4, or 5 multiples of the following amounts: $5,000 on the death of a 
spouse and $2,500 on the death of an eligible child.


Sec. 870.210  Are these the amounts that will be paid when I die or if 
a family member dies?

    (a) The amounts given in Sec. 870.209 are the starting points for 
determining the amount that OFEGLI will pay when you die or when a 
covered family member dies.
    (b) There is no extra benefit if you or your family member is under 
age 45 at the time of death.
    (c) If you are insured as an annuitant or compensationer and are 
age 65 or over, the amount of benefits paid for Option A will be 
reduced. The amount of benefits for Options B and C may also be 
reduced, depending on the elections you made. See Sec. 870.708.


Sec. 870.211  Does FEGLI have accidental death and dismemberment 
benefits?

    (a)(1) If you are an employee, you automatically have accidental 
death and dismemberment (AD&D) benefits with Basic insurance. You also 
automatically have AD&D benefits with Option A, if you have that 
coverage.
    (2) There are no AD&D benefits with Options B and C.
    (b) If you are insured as an annuitant or compensationer, you do 
not have AD&D benefits.


Sec. 870.212  What is the amount of my AD&D coverage?

    (a) Accidental death benefit:
    (1) Under Basic insurance, this is equal to your BIA, but without 
the extra benefit described in Sec. 870.204(b).
    (2) Under Option A, this is $10,000.
    (b) The accidental dismemberment benefit is for the loss of your 
hand, foot, or vision.
    (1) Under Basic insurance, the benefit is equal to one-half your 
BIA (without the extra benefit). If you lose more than 1 hand or foot 
or the vision in both eyes in the same accident, the benefit is equal 
to the whole BIA (without the extra benefit).
    (2) Under Option A, the benefit is $5,000. If you lose more than 1 
hand or foot or the vision in both eyes in the same accident, the 
benefit is $10,000.
    (c)(1) OFEGLI pays accidental death benefits to your beneficiaries 
(see subpart H of this part).
    (2) OFEGLI pays accidental dismemberment benefits to you.

Subpart C--Eligibility


Sec. 870.301  Am I eligible for Basic or Optional insurance?

    (a) Unless you are in an excluded position, you are eligible for 
FEGLI coverage.
    (b)(1) You get Basic insurance automatically. If you don't want 
Basic insurance, you have to waive it.
    (2) Optional insurance is not automatic. If you want Optional 
insurance, you must elect it.
    (c) You may elect one or more types of Optional insurance if:
    (1) You have Basic insurance; and
    (2) You do not have a waiver of that type (or types) of Optional 
insurance still in effect.


Sec. 870.302  What is an excluded position?

    The law excludes some employees from FEGLI coverage, and the 
regulation excludes some employees. OPM makes the final determination 
about whether an exclusion applies to a specific employee or group of 
employees.


Sec. 870.303  Who is excluded by law?

    The law excludes you if you are:

[[Page 64537]]

    (a) An employee of a corporation supervised by the Farm Credit 
Administration, if private interests elect or appoint a member of the 
board of directors.
    (b) An employee who is not a citizen or national of the United 
States and your permanent duty station is outside the United States. 
Exception: You are not excluded if you 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 that 
was then known as the Canal Zone.
    (c) An individual first employed by the Government of the District 
of Columbia on or after October 1, 1987. Exceptions: You are not 
excluded if:
    (1) You are an employee of St. Elizabeths Hospital, and you went to 
work for the District of Columbia Government immediately following 
Federal employment, without any break in service, as provided in 
section 6 of Pub. L. 98-621 (98 Stat. 3379).
    (2) You are an employee of the District of Columbia Financial 
Responsibility and Management Assistance Authority (Authority). To 
qualify, you must make an election under section 153 of Pub. L. 104-134 
(110 Stat. 1321) to be considered a Federal employee for life insurance 
and other benefits purposes. If you are an Authority employee who is a 
former Federal employee, you are subject to the provisions of 
Secs. 870.507, 870.717, and 870.718.
    (3) You are the Corrections Trustee or the Pretrial Services, 
Parole, Adult Probation and Offender Supervision Trustee. You also are 
not excluded if you are an employee of one of these Trustees, and you 
went to work for the District of Columbia Government within 3 days 
after separating from the Federal Government.
    (4) Effective October 1, 1997, you are a judicial or nonjudicial 
employee of the District of Columbia Courts, as provided by Pub. L. 
105-33 (111 Stat. 251).
    (5) Effective April 1, 1999, you are an employee of the Public 
Defender Service of the District of Columbia, as provided by Pub. L. 
105-274 (112 Stat. 2419).


Sec. 870.304  Who is excluded by regulation?

    OPM excludes you if you are:
    (a) Serving under an appointment limited to 1 year or less. 
Exceptions: You are eligible if:
    (1) You are an acting postmaster;
    (2) You are a Presidential appointee appointed to fill an unexpired 
term; or
    (3) You are an employee with a provisional appointment, as defined 
in Sec. 316.403 of this chapter.
    (b) Employed for an uncertain or purely temporary period. We also 
exclude you if you are employed for brief periods at intervals, or if 
you are expected to work fewer than 6 months in each year. Exception: 
You are eligible if you are employed under an OPM-approved career-
related work-study program under Schedule B. To qualify, your work-
study program must last at least 1 year, and you must be expected to be 
in pay status for at least one-third of the total period of time from 
the date of your first appointment to the date you complete the work-
study program.
    (c) An intermittent employee (a non-full-time employee without a 
regularly scheduled tour of duty).
    (d) A beneficiary or patient employee in a Government hospital or 
home.
    (e) Paid on a contract or fee basis. Exception: You are eligible if 
you are a United States citizen, and you are appointed by a contract 
between you and the Federal employing authority. To qualify, your 
contract must require your personal service, and you must be paid on 
the basis of units of time.
    (f) Paid on a piecework basis. Exception: You are eligible if your 
work schedule provides for full-time or part-time service, and you have 
a regularly scheduled tour of duty.


Sec. 870.305  Are there any other exceptions to these exclusions?

    (a) If you have FEGLI and you transfer to a position excluded by 
regulation (see Sec. 870.304), your FEGLI continues, unless you have a 
break in service of more than 3 days. You cannot continue your FEGLI if 
your position is excluded by law (see Sec. 870.303).
    (b) If you have an interim appointment under Sec. 772.102 of this 
chapter, you are eligible for coverage even if your position is 
excluded by regulation. You are not eligible for coverage if your 
position is excluded by law.


Sec. 870.306  Are foster children eligible as family members under my 
Option C coverage?

    (a) Effective October 30, 1998, foster children are eligible for 
coverage as family members under Option C.
    (b) To qualify for coverage as a foster child, the child must meet 
the following requirements:
    (1) The child must live with you;
    (2) The parent-child relationship (as defined in Sec. 870.101) must 
be with you, not the biological parent;
    (3) You must be the primary source of financial support for the 
child; and
    (4) You must expect to raise the child to adulthood.
    (c) A child does not qualify as a foster child if:
    (1) A welfare or social service agency places the child in your 
home; and
    (2) There is an agreement by which the agency retains control of 
the child or pays you for maintenance.
    (d)(1) If you want to cover a foster child, you must sign a 
certification stating that the child meets all the requirements. The 
certification must also state that you will notify your employing 
office if one of these situations happens:
    (i) The child marries;
    (ii) The child moves out of your home; or
    (iii) The child stops being financially dependent on you.
    (2) Your employing office must keep the signed certification in 
your file, along with other life insurance forms.
    (e) If your foster child moves out of your home to live with a 
biological parent, the child loses eligibility. The child cannot again 
be covered as a foster child unless:
    (1) The biological parent dies;
    (2) The biological parent is imprisoned;
    (3) The biological parent becomes unable to care for the child due 
to a disability; or
    (4) You get a court order taking parental responsibility away from 
the biological parent.


Sec. 870.307  What do I have to do to cover a disabled child over age 
22?

    (a)(1) A child age 22 or over is an eligible family member if the 
child is incapable of self-support because of a physical or mental 
disability that existed before the child reached age 22.
    (2) You must provide your employing office with a doctor's 
certificate about your child's disability. The doctor must sign the 
certificate, and the certificate must show the doctor's office address. 
The certificate must state the following:
    (i) That your child is incapable of self-support because of a 
physical or mental disability;
    (ii) That the disability started before the child reached age 22; 
and
    (iii) That the disability is expected to continue for more than 1 
year. The certificate must also include:
    (iv) Your child's name;
    (v) The type of disability;
    (vi) How long the disability has existed; and
    (vii) The disability's expected future course and duration.
    (b) If the doctor's certificate shows that your child has one of 
the following conditions, your child is eligible:
    (1) AIDS--CDC classes A3, B3, C1, C2, and C3 (not seropositivity 
alone);
    (2) Advanced muscular dystrophy;
    (3) Any malignancy with metastases, or any malignancy that is 
untreatable;
    (4) Chronic hepatic failure;

[[Page 64538]]

    (5) Chronic neurological disease, whatever the reason, with severe 
mental retardation or neurological impairment. These diseases include:
    (i) Cerebral palsy,
    (ii) Encephalopathies,
    (iii) Uncontrollable seizure disorder, and
    (iv) Ectodermal dysplasia;
    (6) Chronic renal failure;
    (7) Inborn errors of metabolism with complications, such as the 
following:
    (i) Phenylketonuria,
    (ii) Homocysteinuria,
    (iii) Primary hyperoxaluria,
    (iv) Adrenoleukodystrophy,
    (v) Tay-Sachs disease,
    (vi) Nieman-Pick disease,
    (vii) Gaucher disease,
    (viii) Glycogen storage diseases,
    (ix) Mucopolysacharide disease, and
    (x) Lesch-Nyhan disease;
    (8) Mental retardation with IQ of 70 or less;
    (9) Osteogenesis imperfecta;
    (10) Severe congenital or acquired heart disease with 
decompensation;
    (11) Severe autism;
    (12) Severe juvenile rheumatoid arthritis;
    (13) Severe mental illness requiring prolonged or repeated 
hospitalization;
    (14) Severe organic mental disorder; or
    (15) Xeroderm pigmentosa.
    (c) If your child does not have one of the conditions listed in 
paragraph (b) of this section, your employing office will arrange for a 
medical review of the doctor's certificate to determine whether your 
child is eligible.

Subpart D--Cost of Insurance


Sec. 870.401  Who pays for FEGLI?

    (a) You and the Government share the cost of Basic insurance. You 
pay two-thirds, and the Government pays one-third.
    (b) You pay the full cost of Optional insurance. There is no 
Government contribution for any Optional insurance.


Sec. 870.402  How much do I have to pay for Basic insurance?

    (a)(1) Basic insurance costs $0.1550 biweekly for each $1,000 of 
your BIA. Your employing office must withhold that amount from your pay 
for each pay period during which you are in pay status for any part of 
the time.
    (2) If your pay isn't biweekly, your employing office must prorate 
the amount withheld and adjust it to the nearest one-tenth of 1 cent.
    (3) If your BIA changes during the pay period, the amount withheld 
from your pay is based on your BIA on the last day of the pay period.
    (b) There is no cost for the extra benefit described in 
Sec. 870.205, and there is no cost for AD&D coverage.


Sec. 870.403  How much do I pay if I'm insured as an annuitant or 
compensationer?

    (a) If you are insured as an annuitant or compensationer, the 
amount you pay depends on the election you made about the level of 
reduction you want at age 65 (see Sec. 870.706). Your retirement system 
withholds your payment from your annuity. OWCP withholds your payment 
from your compensation.
    (b)(1) When you become insured as an annuitant, you pay the 
following amount for Basic insurance:

 
------------------------------------------------------------------------
                                    Monthly
                                withholding for     Monthly withholding
           Election              each $1,000 of    for each $1,000 of of
                                your BIA before    your BIA after age 65
                                     age 65
------------------------------------------------------------------------
75% Reduction................            $0.3358  None--Basic
                                                  insurance is free.
50% Reduction................             0.9258  $0.59.
No Reduction.................             2.3758  $2.04.
------------------------------------------------------------------------

    (2) The changes in withholding take place the month after the month 
in which you turn 65. (If you retired before January 1, 1990, and 
elected 75% Reduction, you paid no premiums.) For the purpose of this 
paragraph, if you separate from service after meeting the requirements 
for an immediate annuity under 5 U.S.C. 8412(g), you are considered to 
retire on the day before your annuity begins.
    (c)(1) When you become insured as a compensationer, you pay the 
following amount for Basic insurance.

------------------------------------------------------------------------
                                     Weekly
                                withholding for   Weekly withholding for
           Election              each $1,000 of     each $1,000 of your
                                your BIA before      BIA after age 65
                                     age 65
------------------------------------------------------------------------
75% Reduction................            $0.0775  None--Basic
                                                  insurance is free.
50% Reduction................             0.2175  $0.14.
No Reduction.................             0.5475  $0.47.
------------------------------------------------------------------------

    (2) The changes in withholding take place the month after the month 
in which you turn 65. (If you began receiving compensation before 
January 1, 1990, and elected 75% Reduction, you paid no premiums.)


Sec. 870.404  How does the Government contribution for Basic insurance 
work?

    (a)(1) If you are an employee, for each pay period in which you are 
insured, your employing office must contribute an amount equal to one-
half the amount withheld from your pay.
    (2) Your agency's contribution must come from the appropriation or 
fund that is used to pay your salary. If you are an elected official, 
the Government contribution must come from the appropriation or fund 
that is available to pay other salaries in the same office.
    (b)(1) If you are insured as an annuitant or compensationer, OPM 
makes the Government contribution. Exception: If you are a Postal 
Service employee who becomes insured as an annuitant or compensationer 
after December 31, 1989, the Postal Service pays the Government 
contribution.
    (2) The amount OPM must pay is equal to one-half the amount that 
would be withheld from your annuity or

[[Page 64539]]

compensation if you elect 75% Reduction. The amount of the Government 
contribution is the same whether you elect 75% Reduction, 50% 
Reduction, or No Reduction.
    (3) The Government contribution stops the month after the month in 
which you turn 65.


Sec. 870.405  How much do I have to pay for Optional insurance?

    (a) The cost of Optional insurance depends on your age.
    (b)(1) Your employing office must withhold the full cost of 
Optional insurance from your pay for each pay period during which you 
are in pay status for any part of the time.
    (2) Unless you are a reemployed annuitant or compensationer (see 
Secs. 870.717 and 870.721), your retirement system must withhold the 
full cost of Optional insurance from your annuity, and OWCP must 
withhold the full cost of Optional insurance from your compensation.
    (c)(1) The cost for $10,000 of Option A coverage is:

------------------------------------------------------------------------
                                                               Biweekly
                             Age                                 cost
------------------------------------------------------------------------
If you are under age 35.....................................       $0.30
Ages 35 through 39..........................................         .40
Ages 40 through 44..........................................         .60
Ages 45 through 49..........................................         .90
Ages 50 through 54..........................................        1.40
Ages 55 through 59..........................................        2.70
Ages 60 and over............................................        6.00
------------------------------------------------------------------------

    (2) If your pay isn't biweekly, your employing office must prorate 
the amount and adjust it to the nearest cent.
    (3) If you are insured as an annuitant or compensationer, your 
Option A coverage is free, starting the month after the month in which 
you turn 65.
    (d)(1) The cost for each $1,000 of Option B coverage is:

------------------------------------------------------------------------
                                                               Biweekly
                             Age                                 cost
------------------------------------------------------------------------
If you are under age 35.....................................       $0.03
Ages 35 through 39..........................................         .04
Ages 40 through 44..........................................         .06
Ages 45 through 49..........................................         .10
Ages 50 through 54..........................................         .15
Ages 55 through 59..........................................         .31
Ages 60 and over............................................         .70
------------------------------------------------------------------------

    (2) If your pay isn't biweekly, your employing office must prorate 
the amount and adjust it to the nearest one-tenth of 1 cent.
    (3) If you are insured as an annuitant or compensationer, whether 
or not you continue to pay premiums after you turn 65 depends on the 
election you make. See Sec. 870.708.
    (i) If you elect Full Reduction, your Option B coverage is free, 
starting the month after the month in which you turn 65.
    (ii) If you elect No Reduction, you continue to pay the premiums 
for your age group, as long as you remain insured.
    (e)(1) The cost for each multiple of Option C is:

------------------------------------------------------------------------
                                                               Biweekly
                             Age                                 cost
------------------------------------------------------------------------
If you are under age 35.....................................       $0.27
Ages 35 through 39..........................................         .34
Ages 40 through 44..........................................         .46
Ages 45 through 49..........................................         .60
Ages 50 through 54..........................................         .90
Ages 55 through 59..........................................        1.45
Ages 60 through 64..........................................        2.60
Ages 65 through 69..........................................        3.00
Ages 70 and over............................................        3.40
------------------------------------------------------------------------

    (2) If your pay isn't biweekly, your employing office must prorate 
the amount and adjust it to the nearest cent.
    (3) If you are insured as an annuitant or compensationer, whether 
or not you continue to pay premiums after you turn 65 depends on the 
election you make. See Sec. 870.708.
    (i) If you elect Full Reduction, your Option C coverage is free, 
starting the month after the month in which you turn 65.
    (ii) If you elect No Reduction, you continue to pay the premiums 
for your age group, as long as you remain insured.


Sec. 870.406  When I move from one age group to another, when do I 
start paying the higher premiums?

    Effective April 24, 1999, your premium changes the pay period after 
the one in which you turn 35, 40, 45, 50, 55, or 60, and for Option C, 
65, or 70.


Sec. 870.407  What happens to my withholding if I elect a living 
benefit?

    (a) If you elect a full living benefit, your withholding for Basic 
insurance and the Government contribution stop at the end of the pay 
period in which your living benefit election is effective.
    (b) If you elect a partial living benefit, your withholding for 
Basic insurance and the Government contribution are reduced at the end 
of the pay period in which your living benefit election is effective. 
The new withholding and contribution amounts are based on the post-
election BIA.
    (c) If you elect a living benefit, your withholdings for Optional 
insurance do not change.


Sec. 870.408  What happens if my employing office doesn't withhold 
enough?

    (a)(1) If your employing office does not make any withholdings, or 
withholds too low an amount, it must deposit the correct amount into 
the Employees' Life Insurance Fund within 60 days after it discovers 
the error. Your employing office must make the deposit regardless of 
whether or when it recovers the money from you.
    (2) If your employing office does not withhold enough, you receive 
an overpayment of your pay. If this happens, your agency or retirement 
system must determine whether to collect the money from you or waive 
collection of the overpayment. The provisions for waiving collection of 
an overpayment of pay are in 5 U.S.C. 5584, as spelled out in 4 CFR 
chapter I, subchapter G. If your agency is excluded from these 
provisions, it may use any applicable authority to waive the 
collection.
    (b) If your employing office does not make the Government 
contribution for Basic insurance, or makes too low a contribution, it 
must deposit the correct amount into the Employees' Life Insurance Fund 
within 60 days after it discovers the error.


Sec. 870.409  What if my pay is too low to make the withholdings?

    (a) Since January 1, 1988, annuitants who retired under 5 U.S.C. 
chapter 84 (Federal Employees' Retirement System) have been able to 
make direct premium payments if their annuity became too low to cover 
the premiums. Effective the first pay period beginning on or after 
October 30, 1998, all employees, annuitants, and compensationers whose 
pay, annuity, or compensation is too low to cover the withholdings may 
make direct premium payments.
    (b)(1) You are eligible to make direct premium payments if your 
employing office determines that your pay, annuity, or compensation, 
after all other deductions, is expected to be insufficient to cover the 
withholdings on an ongoing basis, i.e., for the next 6 months or more.
    (2) This section does not apply to employees in nonpay status. If 
you are in nonpay status, see Sec. 870.410(d).
    (c)(1) When your employing office determines that your pay, 
annuity, or compensation will be insufficient on an ongoing basis, it 
must notify you in writing and tell you about the available choices. 
(If you have assigned your coverage under subpart I of this part, your 
employing office must give the notice to your assignee(s).)
    (2) You (or your assignee) must return the notice to your employing 
office within 31 days of receiving it (45 days, if you live overseas). 
(We consider that you receive a mailed notice 5 days after the date of 
the notice.) When you return

[[Page 64540]]

the notice, you must state which of these choices you want:
    (i) To terminate some or all of your insurance; or
    (ii) To make direct premium payments.
    (3) If you do not return the notice within the required time 
frames, your employing office will terminate your insurance.
    (d)(1) Terminated coverage stops at the end of the last pay period 
for which your employing office withheld premiums.
    (2) If your insurance terminates, either by choice or by failure to 
return the notice, you get the 31-day extension of coverage and right 
to convert, as provided in subpart F of this part.
    (e)(1) If you are an employee, and your coverage terminates under 
this section, your employing office will reinstate the terminated 
coverage automatically, when your pay again becomes sufficient to allow 
premium withholdings.
    (2) If you are insured as an annuitant or compensationer, and your 
coverage terminates under this section, your retirement system will not 
reinstate your coverage when your annuity or compensation becomes 
sufficient to cover withholdings.
    (f)(1) Employing offices must establish a method for accepting 
premium payments for insured individuals who choose to pay directly.
    (2) If you are paying premiums directly, you must send the required 
payment for every pay period during which your insurance continues. You 
must make the payment after each pay period, according to the schedule 
your employing office sets up.
    (g)(1) If you are an employee making direct payments, your 
employing office will begin to withhold premiums from your pay 
automatically, when your pay again becomes sufficient to allow 
withholdings. You must stop making direct payments.
    (2) If you are insured as an annuitant or compensationer, you must 
continue to make direct payments, even if your annuity or compensation 
becomes sufficient to allow withholdings.
    (h) Your employing office must submit all direct premium payments 
to OPM, along with the regular life insurance premiums, according to 
OPM's procedures.
    (i)(1) If you are on direct pay, and you don't make the required 
payment on time, your employing office (or its designated agent) must 
notify you. You must make the payment within 15 days after receiving 
the notice (45 days, if you live overseas). (We consider that you 
receive a mailed notice 5 days after the date of the notice.)
    (2) If you do not make the overdue payment, your insurance cancels. 
Cancellation is effective at the end of the last pay period for which 
your employing office (or its designated agent) received payment.
    (3) If your insurance cancels for nonpayment, you do not get the 
31-day extension of coverage or the right to convert provided in 
subpart F of this part.
    (4) Coverage that cancels for nonpayment is not reinstated when 
your pay, annuity, or compensation becomes sufficient to allow 
withholdings. Cancelled coverage cannot be reinstated, except as 
provided in paragraph (i)(5) of this section.
    (5) If you are unable to pay within 15 days of receiving the past 
due notice (45 days, if you live overseas) for reasons beyond your 
control, you may request reinstatement of your coverage. You must make 
the request to your employing office in writing within 30 days from the 
date of cancellation. You must provide proof that you were unable to 
pay within the time limit for reasons beyond your control. Your 
employing office will decide if you are eligible for reinstatement. If 
your employing office approves your request, it will reinstate your 
coverage back to the date of cancellation, and you must pay the back 
premiums.


Sec. 870.410  What else should I know about withholdings and 
contributions?

    (a) If your annual pay is paid during a period shorter than 52 work 
weeks, your employing office must determine the amount to withhold. To 
do this, it converts the biweekly cost to an annual cost and prorates 
it over the number of installments of your pay regularly paid during 
the year.
    (b) Withholdings (and Government contributions, if applicable) are 
based on the amount of insurance you have at the end of the pay period.
    (c) You do not have to pay any premiums for the period between the 
end of the pay period in which you separate from service and the date 
your annuity or compensation begins.
    (d) You do not have to pay any premiums while you are in nonpay 
status for up to 12 months. Exceptions:
    (1) If you are in nonpay status while receiving compensation, you 
do have to pay premiums. OWCP withholds the payments from your 
compensation.
    (2) If you accept another position while you are in nonpay status, 
you do have to pay premiums. The agency that is actually paying you a 
salary withholds the payments from your salary.
    (e) Effective October 21, 1972, if there is an official finding 
that you were suspended or fired erroneously, no withholdings are made 
from your back pay award. Exception: If you die or have an accidental 
dismemberment between your removal and the finding that your agency's 
action was erroneous, premiums are withheld from your back pay award.
    (f) If your pay, annuity, or compensation is high enough to cover 
some of your premium withholdings, but not all of them, your employing 
office must make the withholdings in the following order:
    (1) Basic insurance;
    (2) Option B;
    (3) Option A; then
    (4) Option C.

Subpart E--Coverage


Sec. 870.501  How do I get Basic insurance?

    (a) You get Basic insurance automatically when you are appointed or 
transferred to a position in which you are eligible for FEGLI. The 
coverage is effective the first day you are in pay and duty status. 
Exceptions:
    (1) If you file a waiver with your employing office before the end 
of the first pay period, you will not have Basic insurance.
    (2) If you previously filed a waiver of Basic insurance, and it's 
still in effect, you will not have Basic insurance.
    (b) If you are an employee of the District of Columbia Financial 
Responsibility and Management Assistance Authority, and you elect to be 
considered a Federal employee under section 153 of Pub. L. 104-134 (110 
Stat. 1321), you are insured automatically on the later of:
    (1) The first day you are in pay and duty status with the 
Authority; or
    (2) The date the Authority receives your election to be considered 
a Federal employee.
    (c) If you return to pay and duty status after 12 months or more in 
nonpay status, you automatically get Basic insurance the first day you 
are back in pay and duty status. Exceptions:
    (1) If you file a waiver with your employing office before the end 
of the first pay period back in pay and duty status, you will not have 
Basic insurance.
    (2) If you previously filed a waiver of Basic insurance, and it's 
still in effect, you will not have Basic insurance.
    (d) If you serve in cooperation with a non-Federal agency, and you 
are paid in whole or in part from non-Federal funds, OPM sets the 
effective date for

[[Page 64541]]

your Basic insurance. 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 on time into the Employees' 
Life insurance Fund; 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. The non-Federal agency must send 
the payment to the Federal agency to deposit on time into the 
Employees' Life Insurance Fund.


Sec. 870.502  How do I get Optional insurance?

    (a) You must have Basic insurance before you may elect Optional 
insurance.
    (b)(1) If you want Optional insurance, you must elect it (in a way 
that OPM designates) within 31 days after becoming eligible. The 31-day 
time limit begins on the first day (after February 28, 1981) on which 
you meet the definition of employee. Exception: If you previously filed 
a waiver of Optional insurance, and it's still in effect, you cannot 
elect Optional insurance.
    (2) If you do not elect a particular type of Optional insurance, we 
consider that you waived that type of coverage.
    (3) For Options B and C, if you elect fewer than 5 multiples, we 
consider that you waived the multiples you did not elect.
    (4) Only you may elect Optional insurance. No one may elect it on 
your behalf.
    (c) If you are an employee of the District of Columbia Financial 
Responsibility and Management Assistance Authority, and you elect to be 
considered a Federal employee under section 153 of Public Law 104-134 
(110 Stat. 1321), you may elect Optional insurance. You must make an 
election within 31 days after the later of:
    (1) The date your employment with the Authority begins; or
    (2) The date the Authority receives your election to be considered 
a Federal employee.
    (d) If your Optional insurance stopped for a reason other than a 
waiver, your insurance reinstates automatically on the first day you 
are in pay and duty status in a position in which you again become 
eligible.


Sec. 870.503  When does Optional insurance become effective?

    Optional insurance is effective the first day you are in pay and 
duty status on or after the day your employing office receives your 
election.


Sec. 870.504  Are there any extensions to the 31-day time limit for 
electing Optional insurance?

    (a)(1) The time limit may be extended up to 6 months after the date 
you became eligible. To qualify, you must demonstrate to your employing 
office that you were not able to make your election on time for reasons 
beyond your control.
    (2) If your employing office allows you to make a belated election, 
you must make your election within 31 days after your employing office 
notifies you of the determination.
    (b) If you make a belated election as described in paragraph (a) of 
this section, your Optional insurance coverage is retroactive to the 
first day of the first pay period beginning after the date you became 
eligible (or after April 1, 1981, if that is later). You must pay the 
full cost of your Optional insurance back to that effective date for 
the time that you are in pay status (or retired or receiving 
compensation and under age 65).


Sec. 870.505  Can I cancel my insurance?

    (a) You may cancel some or all of your insurance at any time by 
filing a waiver. Only you may cancel your insurance; no one may cancel 
your insurance on your behalf. Exception: If you have assigned your 
insurance under subpart I of this part, you cannot cancel your Basic, 
Option A, or Option B insurance or reduce the number of multiples of 
Option B.
    (1) If you are an employee, you must file the waiver with your 
agency employing office.
    (2) If you are an annuitant, you must file the waiver with OPM.
    (3) If you are a compensationer within the first 12 months of 
nonpay status, you must file the waiver with your employing office. If 
you have separated or completed 12 months in nonpay status, you must 
file the waiver with OPM.
    (b) Your waiver is effective, and your insurance stops, at the end 
of the last day of the pay period in which you properly file the 
waiver. Exception: If you cancel Option C because you do not have any 
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) If you cancel your Basic insurance, you automatically cancel 
all of your Optional insurance.


Sec. 870.506  How long does my waiver last?

    Your waiver lasts until you:
    (a) Cancel the waiver, as explained in Sec. 870.507 of this part; 
or
    (b) Have a break in service of at least 180 days.


Sec. 870.507  How can I cancel my waiver and get insurance?

    (a) If you are an employee, there are 3 ways you may cancel a 
waiver and become insured:
    (1) Getting a physical exam (providing medical evidence of 
insurability);
    (2) Having a life event; or
    (3) Making an election during an open season.
    (b) You may elect only certain types of insurance with each of 
these, as follows:

----------------------------------------------------------------------------------------------------------------
                                         Basic             Option A            Option B            Option C
----------------------------------------------------------------------------------------------------------------
Physical exam...................  Yes...............  Yes...............  Yes...............  No.
Life event......................  No................  No................  Yes (if you have    Yes (if you have
                                                                           Basic).             Basic).
Open season.....................  As announced by     As announced by     As announced by     As announced by
                                   OPM.                OPM.                OPM.                OPM.
----------------------------------------------------------------------------------------------------------------

Sec. 870.508  How do I cancel my waiver by getting a physical exam?

    (a) You cannot cancel a waiver of Option C by having a physical 
exam.
    (b)(1) You may cancel a waiver of Basic insurance, Option A, and 
Option B by getting a physical exam to provide medical evidence of 
insurability, if at least 1 year has passed since the effective date of 
your waiver. You are responsible for any costs associated with the 
physical exam. Exception: The 1-year requirement doesn't apply to 
Option B coverage if you elected fewer than 5 multiples of Option B 
because of the limitation stated in Sec. 870.513.
    (2) You and your employing office each must complete part of the 
Request for Insurance form. Your doctor also must complete part of the 
form and then send it to OFEGLI.
    (c) OFEGLI reviews the Request for Insurance and decides whether to 
approve it. OFEGLI notifies your agency of its decision, and your 
agency notifies you.

[[Page 64542]]

Sec. 870.509  What happens after OFEGLI makes its decision?

    (a)(1) If OFEGLI approves your Request for Insurance, your Basic 
insurance (if you do not already have Basic) is effective the first day 
you are in pay and duty status after OFEGLI's approval.
    (2) If you are not in pay and duty status within 31 days after 
OFEGLI's approval, the approval is revoked automatically, and you are 
not insured.
    (b)(1) If you want to elect Option A or Option B, you must file an 
election within 31 days after OFEGLI's approval. You may elect any 
number of multiples of Option B, up to the maximum of 5. Your coverage 
is effective the first day you are in pay and duty status on or after 
the day your employing office receives your election. We consider that 
you again waived any coverage that you do not elect.
    (2) If you are not in pay and duty status within 31 days after 
OFEGLI's approval, the approval is revoked automatically, and you do 
not have the Optional insurance.


Sec. 870.510  What is a life event?

    A life event is one of the following:
    (a) Marriage;
    (b) Divorce;
    (c) Death of your spouse; or
    (d) Acquiring an eligible child.


Sec. 870.511  How do I cancel my waiver if I have a life event?

    (a)(1) You cannot cancel a waiver of Basic insurance or Option A 
because of a life event.
    (2) You must have Basic insurance to make an Option B or Option C 
election because of a life event.
    (b)(1) You may elect Option B and/or Option C if you get married or 
acquire an eligible child. If you have Option B or Option C, but you 
have fewer than 5 multiples, you may increase the number of multiples. 
Exception: If your life event is acquiring a foster child, you cannot 
make an Option B election.
    (2) You may elect Option B or Option C if you get divorced or your 
spouse dies only if you have at least 1 eligible child. If you have 
Option B or Option C, but you have fewer than 5 multiples, you may 
increase the number of multiples.
    (3) There are limitations on the number of multiples of Option B 
you may elect with a life event. See Sec. 870.513(a) of this part.
    (c) If you elect Option B and/or Option C, and your life event is 
acquiring a disabled child age 22 or older, you must provide a doctor's 
certificate to your employing office at the time you make the election. 
The doctor's certificate must show that your child meets the 
requirements stated in Sec. 870.307.


Sec. 870.512  When can I make a life event election?

    (a) You must make your election, in a way that OPM designates, and 
provide proof of the event, within 60 days after your life event.
    (b) You may also make your election before the life event. In this 
case you must provide proof of the event within 60 days after the date 
of the life event.
    (c) If you are making an Option C election because of acquiring an 
eligible foster child, you must file the election with your employing 
office no later than 60 days after completing the required 
certification.
    (d) Employees with Option C coverage who had a life event between 
October 30, 1998, and April 23, 1999, had until June 23, 1999, to make 
an election under this section to increase the number of Option C 
multiples.


Sec. 870.513  How many multiples of Options B and C can I elect due to 
a life event?

    (a) For Option B you may elect the following number of multiples 
(the total number of Option B multiples cannot be more than 5):
    (1) For marriage, the number of additional family members (spouse 
and eligible children) you acquire with the marriage.
    (2) For acquiring an eligible child or children, the number of 
eligible children you acquire; foster children are not included in this 
count.
    (3) For divorce or death of your spouse, the total number of 
eligible children you have.
    (4) If you want more multiples of Option B than you can elect with 
a life event, you may elect additional multiples by following the 
procedure given in Sec. 870.508 of this part.
    (b) For Option C you may elect any number of multiples you want, as 
long as the total is not more than 5.


Sec. 870.514  When does my Option B and Option C life event coverage 
become effective?

    (a) For Option B,
    (1) If you file your election on or after the date of your life 
event, coverage becomes effective the first day you are in pay and duty 
status on or after the date your employing office receives your 
election.
    (2) If you file your election before your life event, coverage 
becomes effective the first day you are in pay and duty status on or 
after the date of your life event.
    (b) For Option C:
    (1) If your election is based on a life event other than acquiring 
a foster child,
    (i) If you file your election on or after the date of your life 
event, coverage becomes effective the date your employing office 
receives your election.
    (ii) If you file your election before your life event, coverage 
becomes effective on the date of your life event.
    (iii) If you made an Option C election under Sec. 870.512(d), your 
coverage was effective April 24, 1999.
    (2) If your election is based on acquiring a foster child, your 
coverage is effective the later of:
    (i) The date your employing office receives your election; or
    (ii) The date you complete the certification.
    (3) You do not have to be in pay and duty status for Option C life 
event coverage to become effective.


Sec. 870.515  Are there any extensions to the time limit for making a 
life event election?

    (a) If you are not serving in a covered position on the date of 
your life event, you may make your life event election within 31 days 
after you do become employed in a covered position.
    (b) If you separate from service before the end of the 60-day time 
limit, you may make your life event election within 31 days after you 
return to service in a covered position.
    (c) If you don't have Basic insurance on the date of your life 
event, and you are electing it by having a physical exam, you may make 
an Option C life event election within 31 days after the date OFEGLI 
approves your Request for Insurance.


Sec. 870.516  How often does OPM have FEGLI open seasons?

    OPM does not hold FEGLI open seasons on a regular basis. We 
schedule them only occasionally.


Sec. 870.517  What coverage can I elect during an open season?

    When we schedule an open season, we announce the types of coverage 
you may elect.


Sec. 870.518  What is the effective date for open season elections?

    OPM sets the effective date when we announce an open season. Your 
new coverage becomes effective the first day of the first pay period 
which begins on or after the date we set and which follows a pay period 
in which you meet certain pay and duty status requirements. Before the 
start of an open season, we will announce the pay and duty status 
requirements in a Federal Register notice.

[[Page 64543]]

Sec. 870.519  Are there any extensions to the open season dates?

    (a)(1) The time limit may be extended up to 6 months after the open 
season ends. To qualify, you must demonstrate to your employing office 
that you were not able to make your open season election on time for 
reasons beyond your control.
    (2) If your employing office makes that determination, you must 
make your election within 31 days after your employing office notifies 
you of the determination.
    (b) If you make a belated open season election as described in 
paragraph (a) of this section, your new coverage becomes effective the 
first pay period which begins on or after the effective date OPM set. 
You have to meet the pay and duty status requirements that OPM 
announced in the Federal Register.


Sec. 870.520  Can annuitants and compensationers get FEGLI coverage?

    (a) If you are an annuitant, you cannot elect FEGLI coverage, 
unless you are reemployed in a position in which you are eligible for 
FEGLI.
    (b)(1) If you are a compensationer within the first 12 months of 
nonpay status, you may elect coverage. However, you must be back in pay 
and duty status before your new coverage can become effective. 
Exception: If you make an Option C election due to a life event, you do 
not have to be in pay and duty status for the coverage to become 
effective.
    (2) If you have separated or completed 12 months in nonpay status, 
you cannot elect FEGLI coverage.


Sec. 870.521  What happens if I leave Government and then return to 
service?

    (a) Waivers are cancelled automatically after a 180-day break in 
service.
    (b)(1) When you return to service in a covered position after a 
break of at least 180 days, you get Basic insurance automatically, as 
stated in Sec. 870.501.
    (2) Unless you waive Basic insurance, you may elect any Optional 
insurance within 31 days after your return to service.
    (3) If you do not make a new Optional insurance election, you will 
get back whatever Optional insurance you had immediately before you 
separated from service. Any Optional insurance that you had previously 
waived is waived again.
    (c) When you return to service in a covered position after a break 
of less than 180 days, you get back whatever Optional insurance you had 
immediately before you separated from service. You cannot elect more 
coverage, except as described in Sec. 870.507.


Sec. 870.522  What happens if I go into a nonpay status?

    If you go into a nonpay status, your life insurance continues for 
up to 12 months. You do not have to pay any premiums. Exceptions:
    (a) If you are receiving compensation, OWCP withholds the FEGLI 
premiums from your compensation.
    (b) If, while you are in nonpay status, you accept an appointment 
to another position, the agency where you are receiving a salary 
withholds the premiums from your salary.


Sec. 870.523  Special nonpay situations.

    (a) Employee organizations:
    (1) If you go on leave without pay (LWOP) to serve as a full-time 
officer or employee, you may elect to continue your life insurance. You 
must make the election within 60 days of the start of the LWOP.
    (2) Your coverage continues for the length of the appointment, even 
if your LWOP lasts longer than 12 months.
    (3) You must pay to your employing office the full cost of Basic 
and Optional insurance. There is no Government contribution.
    (b) State government, local government, and institutions of higher 
education:
    (1) If you go on LWOP while assigned to one of these, your life 
insurance continues for the length of the assignment, even if your LWOP 
lasts longer than 12 months.
    (2) You must pay your premiums to your Federal agency on a current 
basis. The agency must continue to pay its contribution for Basic 
insurance as long as you make your payment.
    (c) International organizations:
    (1) If you go on LWOP when transferred to an international 
organization, you must state in writing whether you want to continue 
your FEGLI coverage. You may continue FEGLI whether or not you choose 
to continue your Federal retirement or health benefits.
    (2) If you choose to continue your coverage, you must pay your 
premiums to your Federal agency on a current basis. The agency must 
continue to pay its contribution for Basic insurance as long as you 
make your payments.
    (3) If you separate from service, instead of going on LWOP, for 
FEGLI purposes we treat you as being in a nonpay status.
    (4) The regulations on transfers to international organizations are 
in part 352, subpart C, of this chapter.

Subpart F--Termination and Conversion


Sec. 870.601  When does my Basic insurance stop?

    (a) Unless you are eligible to continue your insurance as an 
annuitant or compensationer (see subpart G of this part), your Basic 
insurance stops on the date you separate from service. (See paragraph 
(f) of this section.)
    (b) If you separate from service after meeting the requirement for 
an immediate annuity under Sec. 842.204(a)(1) of this chapter, and you 
postpone receiving the annuity as provided by Sec. 842.204(c) of this 
chapter, your Basic insurance stops on the date you separate from 
service. (See paragraph (f) of this section)
    (c) If you move to a position in which you are excluded from FEGLI, 
your Basic insurance stops on the last day in your former position. 
(See paragraph (f) of this section.) Exception: If the position is 
excluded by regulation (not by law), and you do not have a break in 
service of more than 3 days, your FEGLI continues.
    (d)(1) Unless you are eligible to continue your insurance as a 
compensationer, your Basic insurance stops on the date you complete 12 
months in nonpay status. (See paragraph (f) of this section.)
    (2) Your 12-month nonpay period does not have to be continuous. If 
you return to pay status for less than 4 consecutive months, your 12-
month period continues when you go back into a nonpay status. If you've 
already used up your 12-month period, and you return to service for 
less than 4 consecutive months, your Basic insurance stops on the last 
day of the last pay period in pay status.
    (3) If you return to pay status for at least 4 consecutive months, 
you start a new 12-month period if you go back into a nonpay status.
    (4) To meet the ``4 consecutive months'' requirement, you must be 
in pay status for at least part of each pay period during 4 consecutive 
months.
    (5) If you are entitled to benefits under part 353 of this chapter 
(USERRA--Uniformed Services Employment and Reemployment Rights Act of 
1994), we consider you to be an employee in nonpay status.
    (e) Unless you choose to make direct premium payments under 
Sec. 870.409, your Basic insurance stops at the end of the pay period 
in which your employing office determines that your pay, annuity, or 
compensation is not enough to cover the full cost of Basic insurance. 
(See paragraph (f) of this section.)

[[Page 64544]]

    (f)(1) When your Basic insurance stops as described in paragraphs 
(a), (b), (c), (d), and (e) of this section, we consider it a 
termination. When your insurance terminates, you are entitled to a 31-
day extension of coverage from the date of the termination.
    (2) You do not have to pay any premiums for the 31-day extension, 
and your employing office does not have to pay any Government 
contribution for the 31-day extension.
    (3) Your coverage during this 31-day extension does not include 
AD&D benefits.
    (g) Your Basic insurance also stops if you file a waiver as 
described in Sec. 870.505. We consider this a voluntary cancellation. 
You do not get a 31-day extension of coverage if you cancel your 
insurance.


Sec. 870.602  When does my Optional insurance stop?

    (a)(1) Your Optional insurance stops at the same time your Basic 
insurance stops. (See paragraph (d) of this section.)
    (2) If your Optional insurance stops because of separation or 
completing 12 months in a nonpay status, and you meet the requirements 
for portability (see subpart L of this part), you may choose to port 
your Option B coverage, instead of having it terminate.
    (b)(1) If you are eligible to continue your Basic insurance as an 
annuitant or compensationer, but you are not eligible to continue your 
Optional insurance (see Secs. 870.701 and 870.702 of this part), your 
Optional insurance stops on the date that your Basic insurance is 
continued or reinstated. (See paragraph (d) of this section.)
    (2) If you are a compensationer who meets the requirements for 
portability (see subpart L of this part), you may choose to port your 
Option B coverage, instead of having it terminate.
    (c)(1) Unless you choose to make direct premium payments under 
Sec. 870.409, your Optional insurance stops at the end of the pay 
period in which your employing office determines that your pay, 
annuity, or compensation is not enough to cover the full cost of your 
Optional insurance. (See paragraph (d) of this section.)
    (2) If your pay, annuity, or compensation is enough to cover the 
cost of some of your Optional insurance, but not all of it, and you 
choose not to make direct premium payments, your Optional insurance 
stops in the following order:
    (i) Option C;
    (ii) Option A; then
    (iii) Option B.
    (d)(1) When your Optional insurance stops as described in 
paragraphs (a), (b), and (c) of this section, we consider it a 
termination. When your insurance terminates, you are entitled to a 31-
day extension of coverage from the date of the termination. You do not 
have to pay any premiums for the 31-day extension.
    (2) Your Option A coverage during the 31-day extension does not 
include AD&D benefits.
    (e) Your Optional insurance also stops if you file a waiver as 
described in Sec. 870.505. We consider this a voluntary cancellation. 
You do not get a 31-day extension of coverage if you cancel your 
insurance.


Sec. 870.603  Can I convert my insurance to a private policy?

    (a) Whenever your group coverage stops (except for a voluntary 
cancellation), you may convert any or all of your Basic and Optional 
insurance to an individual policy. You do not have to have a medical 
examination. The premiums for your individual policy depend on your age 
and class of risk. Exception: You cannot convert if you return to 
service in a covered position within 3 days after the terminating 
event.
    (b) If you have assigned your insurance, the assignee(s) has (have) 
the right to convert, instead of you. In this case, the word ``you'' in 
this section and in Secs. 870.604, 870.605, and 870.606 refers to your 
assignee(s). Your assignee(s) must pay the premiums for the converted 
coverage.
    (c) Your employing office must notify you (or your assignee(s)) of 
your right to convert when your insurance stops. It must give you this 
notification either before or immediately after the event that causes 
your insurance to stop.
    (d) Unless you have assigned your insurance, only you have the 
right to convert. No one may convert on your behalf.


Sec. 870.604  How long do I have to convert my insurance?

    (a) You must submit your request for conversion information to 
OFEGLI. OFEGLI must receive your request within 65 days after the date 
of the terminating event (79 days, if you live overseas).
    (b) If you do not use your conversion right within that time 
period, we consider that you have refused coverage.


Sec. 870.605  Are there any extensions to the time limit for 
conversion?

    (a) The time limit may be extended up to 6 months after the date of 
the terminating event. To qualify, you must demonstrate to OFEGLI that:
    (1) Your employing office did not give you the required 
notification and you were not aware of the time limit for conversion; 
or
    (2) You were not able to convert on time for reasons beyond your 
control.
    (b) If OFEGLI approves your request to convert, you must convert 
within 31 days of that approval.


Sec. 870.606  When is my conversion policy effective?

    Your individual conversion policy is effective at the end of your 
31-day extension of coverage.


Sec. 870.607  Can my family members convert my Option C coverage?

    (a) Your family members may convert Option C coverage (and name 
beneficiaries of their choice) if:
    (1) You die; or
    (2) Your insurance stops under circumstances that allow you to 
convert your coverage, but you do not convert your Option C coverage.
    (b) Family members may convert an amount up to the full value of 
your Option C insurance. (For your spouse, the maximum amount possible 
is $25,000; for an eligible child the maximum amount possible is 
$12,500.) Family members may also convert a lesser amount of coverage.
    (c)(1) If you have Option C coverage and you die, your employing 
office must send a conversion notice to your family members at your 
last address on file.
    (2) If your coverage stops and you do not convert, your family 
members must contact your agency or retirement system to request a 
conversion notice if they want to convert.
    (d) Your family members must submit the request for conversion to 
OFEGLI within 31 days of the later of:
    (1) The date of your death or the terminating event; or
    (2) The date they receive the notice of the right to convert.
    (e) Your family members' conversion policy is effective at the end 
of your 31-day extension of coverage.
    (f)(1) Your spouse does not have the right to convert when he/she 
loses eligibility due to divorce or annulment of your marriage.
    (2) Your children do not have the right to convert when they marry, 
reach age 22, or otherwise no longer meet the definition of ``child'' 
given in Sec. 870.101.

Subpart G--Annuitants and Compensationers


Sec. 870.701  Can I keep my life insurance when I retire?

    (a) When you retire, you may keep your FEGLI if you meet the 
following requirements:
    (1) You retire on an immediate annuity under a retirement system 
for

[[Page 64545]]

civilian employees. This includes the retirement system of a 
nonappropriated fund instrumentality of the Department of Defense or 
the Coast Guard;
    (2) You meet the ``5-year/all-opportunity'' requirement. This means 
you had FEGLI for either:
    (i) The 5 years of service immediately before the date your annuity 
starts, or
    (ii) The entire time you were eligible for FEGLI, if that's less 
than 5 years; and
    (3) You do not convert your insurance, as described in subpart F of 
this part. (If we do not determine that you are eligible to continue 
FEGLI as an annuitant until after you have converted your coverage, 
your group coverage may be reinstated. To qualify, you must void your 
conversion policy. We will reinstate your group coverage retroactively, 
and the company issuing your conversion policy must refund your 
premiums.)
    (b) Your Basic and Option A insurance as an annuitant does not 
include AD&D benefits.


Sec. 870.702  Can I keep my life insurance if I become a 
compensationer?

    (a) During your first 12 months in nonpay status while you are a 
compensationer, you keep your FEGLI coverage as an employee.
    (b) When you separate or complete 12 months in nonpay status, you 
may continue your FEGLI if you meet the following requirements:
    (1) You had FEGLI for either:
    (i) The 5 years of service immediately before the date you became 
entitled to receive compensation, or
    (ii) The entire time you were eligible for FEGLI, if that's less 
than 5 years; and
    (2) You do not convert your insurance, as described in subpart F of 
this part. (If we do not determine that you are eligible to continue 
FEGLI as a compensationer until after you have converted your coverage, 
your group coverage may be reinstated. To qualify, you must void your 
conversion policy. We will reinstate your group coverage retroactively, 
and the company issuing your conversion policy must refund your 
premiums.)
    (c) Your Basic and Option A insurance as a compensationer does not 
include AD&D benefits.


Sec. 870.703  Do I have to meet the 5-year/all-opportunity requirement 
for all my insurance?

    (a)(1) To continue a particular type of insurance as an annuitant 
or compensationer, you must meet the 5-year/all-opportunity requirement 
for that type of insurance. For Option B and Option C, the requirement 
applies to each multiple.
    (2) If you do not meet the requirement for a particular type or 
multiple of insurance, that coverage or multiple will terminate. You 
will get the 31-day extension of coverage and right to convert for any 
insurance that terminates.
    (b) There are no waivers of the 5-year/all-opportunity requirement.
    (c) For the purpose of meeting the 5-year/all-opportunity 
requirement, we do not consider you to have been eligible for Option C 
during any period when you had no eligible family members.


Sec. 870.704  How much insurance can I continue as an annuitant or 
compensationer?

    (a) Basic insurance: The amount you may continue as an annuitant or 
compensationer is your BIA on the date your insurance would otherwise 
stop because of your separation or completion of 12 months in nonpay 
status. If you elected a partial living benefit, this amount is your 
post-election BIA.
    (b) Option A: You may continue $10,000.
    (c) Option B and Option C: You may continue the number of multiples 
that meet the 5-year/all-opportunity requirement. You may also choose 
to continue fewer multiples.


Sec. 870.705  Are these the amounts that will be paid when I die or if 
a family member dies?

    (a)(1) Basic insurance: Your BIA is the starting point for 
determining the amount that OFEGLI will pay when you die.
    (2) If you are under age 45, you still have the extra benefit 
described in Sec. 870.204. Exception: If you retired or started 
receiving compensation before October 10, 1980, you do not have an 
extra benefit.
    (3) If you are age 65 or older, the amount of benefits may be 
reduced, depending on the election you made. See Sec. 870.706.
    (4) You do not have AD&D benefits when you are insured as an 
annuitant or compensationer.
    (b)(1) Option A: If you are under age 65, the benefit payable is 
$10,000.
    (2) If you are age 65 or older, the Option A benefit payable is 
reduced. See Sec. 870.708(a).
    (3) You do not have AD&D benefits when you are insured as an 
annuitant or compensationer.
    (c)(1) Option B and Option C: If you are under age 65, the benefit 
payable is the full amount you continued (unless you later cancelled 
some of the coverage).
    (2) If you are age 65 or older, the benefit payable may be reduced, 
depending on the election you made. See Sec. 870.708.


Sec. 870.706  What kind of election can I make about reductions in my 
Basic insurance?

    (a)(1) At the time you retire or become insured as a 
compensationer, you must choose the level of post-65 reduction you want 
for your Basic insurance. There are 3 choices: 75% Reduction, 50% 
Reduction, and No Reduction.
    (2) You must make your election in a way that OPM designates. We 
must receive your election before we make a final decision on your 
application for annuity (or supplemental annuity) or your request to 
continue FEGLI as a compensationer. If you do not make an election, you 
get 75% Reduction automatically.
    (3) If you elected a partial living benefit under subpart K of this 
part, you must elect No Reduction.
    (4) Only you may make this initial election. No one may make the 
election on your behalf.
    (b) The amount of Basic insurance payable reduces by 2 percent of 
your BIA each month. The reduction continues until 75 percent of your 
BIA is gone, and 25 percent remains.
    (1) This reduction starts at the beginning of the 2nd month after 
the date you turn 65.
    (2) If you are already age 65 or older when you retire or become 
insured as a compensationer, the reduction starts at the beginning of 
the 2nd month after the date you separate or complete 12 months in 
nonpay status.
    (c) The amount of Basic insurance payable reduces by 1 percent of 
your BIA each month. The reduction continues until 50 percent of your 
BIA is gone, and 50 percent remains.
    (1) This reduction starts at the beginning of the 2nd month after 
the date you turn 65.
    (2) If you are already age 65 or older when you retire or become 
insured as a compensationer, the reduction starts at the beginning of 
the 2nd month after the date you separate or complete 12 months in 
nonpay status.
    (d) The amount of Basic insurance payable does not reduce. The full 
amount of your BIA remains payable when you die.
    (e) See Sec. 870.403 for how your election affects your premiums.


Sec. 870.707  Can I change my post-65 reduction election for Basic 
insurance?

    (a) You may make certain changes. They are shown in the following 
table and discussed in more detail after the table:

[[Page 64546]]



----------------------------------------------------------------------------------------------------------------
 You (or your assignee) can change
        basic insurance from            To 75% reduction        To 50% reduction           To no reduction
----------------------------------------------------------------------------------------------------------------
75% Reduction......................  Not applicable........  No....................  No.
50% Reduction......................  Yes...................  Not applicable........  No.
No Reduction.......................  Yes (unless you         No....................  Not applicable.
                                      elected a partial
                                      living benefit).
----------------------------------------------------------------------------------------------------------------

    (b)(1) If you elect 50% Reduction or No Reduction, you may cancel 
this election at any time. You will then get 75% Reduction. Exceptions:
    (i) If you have assigned your insurance, you cannot cancel your 
election of 50% Reduction or No Reduction. Only your assignee(s) can 
cancel your election.
    (ii) If you elected a partial living benefit, you must elect No 
Reduction for your Basic insurance. You cannot later cancel that 
election. If you assigned your remaining coverage after electing a 
partial living benefit, your assignee(s) cannot cancel your election of 
No Reduction.
    (2) The amount of your Basic insurance remaining switches 
automatically to the amount that would be in effect if you had elected 
75% Reduction originally. You do not get a refund of the extra premiums 
you paid for the higher level of coverage.
    (c)(1) If you elect 75% Reduction, you cannot cancel the election.
    (2) If you elect 50% Reduction, you cannot change the election to 
No Reduction.
    (3) If you elect No Reduction, you cannot change the election to 
50% Reduction.


Sec. 870.708  What kind of election can I make about reductions in my 
Optional insurance?

    (a)(1) For Option A, there is no election for the post-65 
reduction.
    (2) The amount of Option A insurance payable reduces 2 percent of 
the original amount each month. The reduction continues until 75 
percent ($7,500) of your coverage is gone, and 25 percent ($2,500) 
remains.
    (b)(1) You must make a post-65 reduction election for Option B and 
Option C. There are 2 choices: Full Reduction and No Reduction.
    (2) If you do not make an election, you get Full Reduction 
automatically.
    (3) If you elected a living benefit, it has no effect on your 
Optional insurance. You may elect whatever you want for Option B and 
Option C.
    (4) You do not have to make the same election for both Option B and 
Option C. If you want, you may make different elections for each one.
    (5) This initial election applies to all multiples of a particular 
type of insurance. You cannot elect initially to have some multiples of 
an option reduce and others not reduce.
    (6) Only you may make this initial election. No one may make the 
election on your behalf.
    (c) The amount of Option B and/or Option C insurance payable 
reduces by 2 percent of the original amount each month. The reduction 
continues until your insurance is completely gone. This happens at the 
end of the last day before the 50th reduction. You do not get a 31-day 
extension of coverage or right to convert.
    (d) The amount of Option B and/or Option C insurance payable does 
not reduce. The full amount of your Option B coverage remains payable 
when you die. The full amount of your Option C coverage remains payable 
when an eligible family member dies.
    (e)(1) The reductions described in paragraphs (a) and (c) of this 
section start at the beginning of the 2nd month after the date you turn 
65.
    (2) If you are already age 65 or older when you retire or become 
insured as a compensationer, the reductions start at the beginning of 
the 2nd month after the date you separate or complete 12 months in 
nonpay status.
    (f)(1) Your Option A coverage is free, starting the month after the 
month in which you turn 65.
    (2) If you elect Full Reduction for Option B or Option C, that 
coverage is free, starting the month after the month in which you turn 
65.
    (3) If you elect No Reduction for Option B or Option C, you 
continue to pay the premiums for your age group for that coverage, as 
long as you remain insured.


Sec. 870.709  When do I have to make the post-65 reduction election for 
Option B and Option C?

    (a) At the time you retire or become insured as a compensationer, 
you must elect the number of multiples you want to continue during 
retirement or while receiving compensation.
    (b)(1) If you separate for retirement or become insured as a 
compensationer on or after April 24, 1999, you must elect either Full 
Reduction or No Reduction for all the multiples you continue.
    (2) If you do not make an election, you get Full Reduction 
automatically.


Sec. 870.710  What if I was already retired or insured as a 
compensationer on April 24, 1999?

    (a) If you were already retired or insured as a compensationer on 
April 24, 1999, and you had Option B, you were given an opportunity to 
make a reduction election for Option B.
    (1) If you were under age 65, you were notified of the right to 
elect No Reduction. Your retirement system will send you an actual 
election notice before your 65th birthday, as provided in 
Sec. 870.711(d).
    (2) If you were age 65 or older, and you still had some Option B 
coverage remaining, you were given the opportunity to stop further 
reductions. You had until October 24, 1999, to make an election. If you 
elected No Reduction, the amount of your Option B coverage in effect on 
April 24, 1999, was frozen. You had to pay premiums retroactive to 
April 24, 1999.
    (b) If you were already retired or insured as an annuitant or 
compensationer on April 24, 1999, you could not make a reduction 
election for Option C.


Sec. 870.711  Can I change my post-65 reduction election for Option B 
or Option C?

    (a) You may make certain changes. They are shown in the following 
tables and discussed in more detail after the tables:

------------------------------------------------------------------------
    Can change Option B from               You            Your  assignee
------------------------------------------------------------------------
Full Reduction to No Reduction-- Yes...................  No.
 if you are under age 65.
Full Reduction to No Reduction-- No, except as stated    No.
 if you are age 65 or older.      in Sec.
                                  870.711(d)(2).
No Reduction to Full Reduction-- Yes, unless you         Yes.
 if you are under age 65.         assigned your
                                  insurance.
No Reduction to Full Reduction-- Yes, unless you         Yes.
 if you are age 65 or older.      assigned your
                                  insurance.


[[Page 64547]]


------------------------------------------------------------------------
    Can change Option C from               You            Your  assignee
------------------------------------------------------------------------
Full Reduction to No Reduction-- Yes...................  No.
 if you are under age 65.
Full Reduction to No Reduction-- No, except as stated    No.
 if you are age 65 or older.      in Sec.
                                  870.711(d)(2).
No Reduction to Full Reduction-- Yes...................  No.
 if you are under age 65.
No Reduction to Full Reduction-- Yes...................  No.
 if you are age 65 or older.
------------------------------------------------------------------------

    (b)(1) Before you reach age 65, you may change from No Reduction to 
Full Reduction at any time. Exception: If you have assigned your 
insurance, only your assignee(s) may change from No Reduction to Full 
Reduction for your Option B coverage.
    (2) Before you reach age 65, you may change from Full Reduction to 
No Reduction at any time.
    (c)(1) After you reach age 65, you may change from No Reduction to 
Full Reduction at any time. Exception: If you have assigned your 
insurance, only your assignee(s) may change from No Reduction to Full 
Reduction for your Option B coverage. If you change to Full Reduction 
after you reach age 65, the amount of insurance remaining switches 
automatically to the amount that would be in effect if you had elected 
Full Reduction originally. You do not get a refund of the premiums you 
paid after age 65.
    (2) After you reach age 65, you cannot change from Full Reduction 
to No Reduction, except as provided in paragraph (d)(2) of this 
section.
    (d)(1) Shortly before you reach age 65, your retirement system will 
send a reminder about the election you made and will offer you a chance 
to change the election. At that time, you may choose to have some 
multiples of Option B and Option C reduce and some not reduce.
    (2) If you are already age 65 or older at the time you retire or 
become insured as a compensationer, your retirement system will send 
the reminder and give you the opportunity to change your election as 
soon as the retirement processing or compensation transfer is complete.
    (3) If you have assigned your insurance, and if you elected No 
Reduction for Option B coverage, your retirement system will send the 
reminder notice for Option B to your assignee(s).
    (4) If you want to change your reduction election, you must return 
the notice by the end of the month following the month in which you 
turn 65. If you are already over age 65, you must return the notice by 
the end of the 4th month after the date of the letter. If you do not 
return the election notice, you will keep your initial election.


Sec. 870.712  Do the post-65 reductions apply to all annuitants and 
compensationers?

    (a) There is an exception if you are a judge, and you retire under 
one of the following provisions:
    (1) 28 U.S.C. 371(a) or (b);
    (2) 28 U.S.C. 372(a); or
    (3) 26 U.S.C. 7447.
    (b) If this exception applies to you, you do not have any post-65 
reductions. For FEGLI purposes, we consider you an employee. Your Basic 
and Optional insurance continues without interruption or reduction. 
Exception: If you are a judge eligible for compensation, and you choose 
to receive that instead of your annuity, the post-65 reductions and 
elections do apply to you.


Sec. 870.713  What if I'm an MRA+10 annuitant?

    (a) An MRA+10 annuity counts as an immediate annuity. (See 
Sec. 870.101 for the definition of an immediate annuity.) You must meet 
the 5-year/all-opportunity requirement described in Sec. 870.701(a). If 
you do, OPM sends you a notice of insurance eligibility and an election 
form.
    (b) Your FEGLI will be reinstated on the later of:
    (1) The date your annuity starts; or
    (2) The date we receive your application for annuity.
    (c) You may reinstate only the coverage you had immediately before 
your insurance stopped--or a lesser amount of coverage. You cannot 
elect any new coverage.
    (d) You must make a post-65 reduction election for Basic insurance 
and for Option B and Option C, if you have that coverage. OPM must 
receive your election within 60 days after the date we send it to you.


Sec. 870.714  What if I don't want to continue my insurance as an 
annuitant or compensationer?

    (a) You don't have to continue your insurance if you don't want to. 
At the time you retire or would become insured as a compensationer, you 
may choose not to continue some or all of your FEGLI. However, if you 
do not continue your Basic insurance, you cannot continue any of your 
Optional insurance.
    (b) Any coverage that you choose not to continue terminates, with 
the 31-day extension of coverage and right to convert. (See subpart F.)


Sec. 870.715  When does my insurance as an annuitant or compensationer 
stop?

    (a) If you are retired on disability, and your annuity stops 
because you recover or return to earning capacity, your FEGLI stops. 
Your FEGLI stops on the date your annuity stops, with the 31-day 
extension of coverage and right to convert. Exception: If you apply for 
and receive an immediate annuity under other provisions of retirement 
law, your FEGLI continues.
    (b) If you are a compensationer, and the Department of Labor finds 
that you are able to return to work, your FEGLI stops. Your coverage 
stops on the date your compensation stops, with the 31-day extension of 
coverage and right to convert. Exceptions: Your FEGLI continues if:
    (1) You become an annuitant and are eligible to continue your 
coverage as an annuitant; or
    (2) You return to work in a covered position.
    (c) Unless you have assigned your insurance, you may cancel your 
insurance at any time, as described in Sec. 870.505.


Sec. 870.716  Can my insurance be reinstated?

    (a)(1) If you are an annuitant whose insurance stopped as described 
in Sec. 870.710(a), and your disability annuity is restored (after 
December 31, 1983), you may reinstate your FEGLI.
    (2) If your annuity is restored as described in paragraph (a)(1) of 
this section, OPM will mail you a notice of insurance eligibility and 
an election form. If you want to reinstate your FEGLI, you must 
complete the election form and return it to OPM. We must receive your 
election within 60 days after the date we send it to you.
    (3) If you are reinstating your insurance, you may reinstate only 
the types of coverage you had immediately before your insurance 
stopped. You may also choose to reinstate only some types of Optional 
insurance or to reinstate fewer multiples of Option B or Option C. If 
you reinstate less coverage than you are eligible for, we consider that 
you are cancelling any coverage that do not reinstate. You cannot elect 
any new coverage.

[[Page 64548]]

    (4) Your reinstated coverage becomes effective on the first day of 
the month after the date we receive your election. Your annuity 
withholdings are reinstated at the same time.
    (5) If you are age 65 or older, and you elected 75% Reduction or 
50% Reduction for Basic insurance or Full Reduction for Option B and/or 
Option C, the amount of your reinstated insurance is the same amount 
you would have if your insurance had not stopped. We determine the 
amount by computing the reductions during the period after your 
insurance stopped.
    (b) If you are a compensationer whose insurance stopped as 
described in Sec. 870.710(b), your FEGLI cannot be reinstated unless 
you successfully appeal the termination of your compensation.
    (c) If your insurance stops for any other reason, it cannot be 
reinstated.


Sec. 870.717  What happens if I retire and then come back to work for 
the Federal Government?

    (a) If your annuity stops when you are reemployed, the life 
insurance you have as an annuitant also stops.
    (1) If you are reemployed in an excluded position, you get the 31-
day extension and right to convert. You cannot get FEGLI as an 
employee.
    (2) If you are reemployed in a covered position, you get FEGLI as 
an employee.
    (b) If your annuity continues when you are reemployed, and you are 
reemployed in an excluded position, you keep your insurance as an 
annuitant.
    (c)(1) If your annuity continues when you are reemployed, and you 
are reemployed in a covered position, any Basic, Option A, and Option C 
insurance you have as an annuitant is suspended. Your annuitant 
withholdings for this insurance are also suspended. The suspension is 
effective the day before your first day in pay status in your 
reemployment.
    (2) Your Basic, Option A, and Option C insurance transfers to your 
employment. The amount of your Basic insurance and the withholdings for 
your Basic insurance are based on your salary in reemployment. Your 
agency employing office makes the Government contribution for Basic 
insurance, instead of OPM.
    (3)(i) If you have Option B as an annuitant, you keep that coverage 
as an annuitant unless you elect to have it as an employee.
    (ii) If you want to have Option B as an employee, you must make the 
election within 31 days after the date of your reemployment. If you 
make this election, the Option B you have as an annuitant is suspended 
the day before your Option B as an employee becomes effective. The 
amount of your Option B coverage and your withholdings are based on 
your salary in reemployment.
    (d) If you are reemployed in a covered position, in addition to 
your annuitant coverage transferring to your employment, you will get 
back any coverage that terminated at the time you separated for 
retirement. Exception: If you have Option B coverage as an annuitant, 
and there were some multiples of Option B that terminated when you 
retired, you will not get those multiples back unless you elect to 
transfer your Option B coverage to your employment.
    (e) If you are reemployed and then go into a nonpay status, the 
insurance you have through your reemployment terminates after 12 
months. If this happens, you will get back your suspended annuitant 
coverage. If you later return to a pay status, your annuitant coverage 
will again be suspended, and you will get back the coverage you had 
through your reemployment.


Sec. 870.718  Can I elect more life insurance if I return to service?

    (a) If you have a break in service of at least 180 days before you 
are reemployed, you may elect any coverage that you previously waived.
    (b) If your break in service is less than 180 days, you may elect 
coverage only as described in Sec. 870.507.


Sec. 870.719  What happens if I die or a family member dies after I 
return to service?

    (a) If you die while you are reemployed, for each type of insurance 
you have, the amount payable is:
    (1) Basic insurance: the higher of:
    (i) The amount you have through your reemployment; or
    (ii) The amount of your suspended annuitant coverage.
    (2) Option A: the amount you have through your reemployment.
    (3) Option B: the amount based on your election (either keeping 
Option B as an annuitant or having it as an employee).
    (b) If you have Option C and an eligible family member dies while 
you are reemployed, the amount payable is the amount you have through 
your reemployment.


Sec. 870.720  What happens when I separate from service again?

    (a) When you separate from service, you may keep the insurance you 
got through your reemployment if:
    (1) You meet the 5-year/all-opportunity requirement described in 
Sec. 870.701; and
    (2) You qualify for a supplemental annuity or receive a new 
retirement right. If your retirement system does not allow its 
annuitants to receive a supplemental annuity or new retirement right, 
but you otherwise meet the requirements for one, we consider that you 
meet the requirements of this paragraph.
    (b) If you meet the requirements in paragraph (a) of this section, 
this is what happens to each type of insurance you have:
    (1) Basic insurance: You must choose between the insurance you got 
through your reemployment and your suspended annuitant coverage. (If 
you are age 65 or older and elected 75% Reduction or 50% Reduction, the 
reductions continued while your insurance was suspended.)
    (2) Option A and Option C: You automatically continue the coverage 
you got through your reemployment.
    (3) Option B:
    (i) If you kept your Option B as an annuitant, you continue that 
coverage.
    (ii) If you elected Option B as an employee, you must choose 
between the Option B you got through your reemployment and your 
suspended annuitant coverage. (If you are age 65 or older and elected 
Full Reduction, the reductions continued while your insurance was 
suspended.)
    (c) If you are making an election under both paragraph (b)(1) and 
paragraph (b)(3)(ii) of this section, you do not have to make the same 
choice for Basic and Option B. You may choose to continue one type of 
coverage from your reemployment and the other type from your suspended 
annuitant insurance.
    (d)(1) If you are eligible and choose to continue the Basic 
insurance and/or the Option B you got through your reemployment, you 
must make a new post-65 reduction election.
    (2) If you are eligible to continue the Option C you got through 
your reemployment, you must make a new post-65 reduction election.


Sec. 870.721  What happens if I come back to work part-time, but I'm 
still receiving compensation?

    (a) When you return to active Federal service, your insurance as a 
compensationer stops.
    (1) If you are employed in an excluded position, you get the 31-day 
extension of coverage and right to convert. You cannot get FEGLI as an 
employee.
    (2) If you are employed in a covered position, your FEGLI transfers 
to your employment. The amount of your Basic insurance and Option B, if 
you have that coverage, is based on your salary in reemployment.

[[Page 64549]]

    (b) If you:
    (1) Applied for retirement, and your application was approved, but
    (2) You suspended receipt of your annuity while receiving 
compensation, we consider you to be a reemployed annuitant. The 
provisions of Secs. 870.717, 870.718, 870.719, and 870.720 apply to 
you.

Subpart H--Order of Precedence and Designation of Beneficiary


Sec. 870.801  Who gets the life insurance benefits when I die?

    (a) If you have assigned your insurance, OFEGLI will pay benefits 
to your assignee or your assignee's designated beneficiary. See 
Sec. 870.915.
    (b) If you have not assigned your insurance, and there is a valid 
court order in effect naming a specific person or persons to receive 
the life insurance benefits when you die, OFEGLI will pay the benefits 
to the person(s) named in the court order.
    (c) If you have not assigned your insurance and there is no valid 
court order in effect, OFEGLI pays benefits according to an order of 
precedence, which is stated in 5 U.S.C. 8705(a). The same order of 
precedence applies to Basic insurance, Option A, and Option B. The 
order of precedence is:
    (1) To your designated beneficiary or beneficiaries;
    (2) If none, to your widow(er);
    (3) If none, to your child, or children in equal shares. If any 
child dies before you, that child's share goes to his/her children or 
grandchildren;
    (4) If none, to your parents in equal shares. If one of your 
parents dies before you, your surviving parent gets the entire amount;
    (5) If none, to the executor or administrator of your estate;
    (6) If none, to your next of kin, according to the laws of the 
State where you had your legal residence at the time of your death.
    (d) Assignments and court orders preempt the order of precedence 
and are the only exceptions to the order of precedence.


Sec. 870.802  What are the requirements for a court order to be valid?

    (a) For a court order to be valid, the appropriate office must 
receive a certified copy on or after July 22, 1998, and before you die. 
The appropriate office is:
    (1) If you are an employee, or a compensationer within the first 12 
months of nonpay status, your employing agency;
    (2) If you are insured as an annuitant or compensationer, OPM; and
    (3) If you have ported Option B coverage, the Portability Office.
    (b) If, within the stated time frames, the appropriate office 
receives conflicting court orders, entitling different persons to the 
same insurance, OFEGLI will pay benefits based on whichever court order 
was issued first.


Sec. 870.803  Can I designate a beneficiary?

    (a) If you want benefits paid differently from the order of 
precedence, you must file a designation of beneficiary. Exception: If 
you have assigned your insurance, you cannot designate a beneficiary. 
Only your assignee(s) may designate beneficiaries.
    (b) If there is a valid court order on file as described in 
Sec. 870.802, you cannot designate a beneficiary (other than the 
person(s) named in the court order) unless:
    (1) The person(s) named in the court order agrees in writing;
    (2) The court order is modified so that the person previously named 
is no longer named, without naming a new person to receive the 
benefits. The appropriate office must receive a certified copy of the 
modified court order before you die. (If the court order is modified, 
but you do not designate a beneficiary, OFEGLI will pay benefits 
according to the order of precedence.); or
    (3) The court order applies to only part of your insurance 
benefits. In this case, you may designate a beneficiary to receive the 
benefits that are not included under the court order. If you do not 
designate a beneficiary for these benefits, OFEGLI will pay according 
to the order of precedence.


Sec. 870.804  How do I make a designation?

    (a) Unless you have assigned your insurance, no one except you may 
designate a beneficiary. No one may make a designation on your behalf. 
If you have assigned your insurance, no one except your assignee(s) may 
designate a beneficiary.
    (b)(1) Your designation must be in writing. You must sign the 
designation, and 2 people must witness your signature and also sign the 
designation.
    (2) You cannot name one (or both) of your witnesses as a 
beneficiary.
    (3) If your employing office erroneously accepts a designation 
listing a beneficiary who is also a witness, that person is 
disqualified from receiving benefits under the designation.
    (i) If that person is the only beneficiary listed, the designation 
is invalid. OFEGLI will pay benefits under your last valid designation. 
If you do not have a valid designation on file, OFEGLI will pay 
benefits to the next person(s) under the order of precedence.
    (ii) If you have listed other beneficiaries, the designation may 
still be valid. In this case, the remaining beneficiaries will receive 
equal shares of the disqualified person's share of the benefits when 
you die.
    (c) If you make a designation or a change of beneficiary in your 
will or any other document, and it does not meet the requirements of 
this section, it is not valid. OFEGLI will pay benefits as if you did 
not make a designation.
    (d)(1) You (or your assignee(s)) may name any individual, firm, 
corporation, or legal entity as a beneficiary. Exception: You cannot 
designate an agency of the Federal or District of Columbia Government.
    (2) You must designate percentages or fractions. You cannot 
designate dollar amounts. If you designate 2 or more beneficiaries, you 
may also designate a type of insurance to go to each beneficiary.
    (e) Your designation may state that a beneficiary is entitled to 
the insurance benefits only if he/she survives you by a specified 
period of time (not more than 30 days). If that beneficiary does not 
survive for the specified period of time, OFEGLI will pay benefits as 
if that beneficiary had died before you.


Sec. 870.805  Where do I have to file my designation form?

    (a)(1) If you are an employee, or a compensationer within the first 
12 months of nonpay status, your agency employing office must receive 
your designation before you die.
    (2) If you are insured as an annuitant or compensationer, OPM must 
receive your designation before you die.
    (3) If you have ported Option B coverage, the Portability Office 
must receive your designation before you die.
    (b) A faxed designation is valid if:
    (1) The appropriate office, as stated in paragraph (a) of this 
section, receives the faxed designation before you die;
    (2) The appropriate office receives the original designation within 
30 days after receiving the faxed designation; and
    (3) The original designation is identical to the faxed designation.


Sec. 870.806  Can I change my designation?

    Yes. Unless you have assigned your insurance, or unless you are 
subject to the court order provisions stated in Sec. 870.804, you may 
change your designation at any time. You cannot waive your right to 
change designated beneficiaries, and the right cannot be restricted in 
any way. You do not have to notify the previous beneficiary, and you do 
not have to have the previous beneficiary's approval.

[[Page 64550]]

Sec. 870.807  How long does my designation last?

    (a) Your designation of beneficiary cancels automatically 31 days 
after your insurance stops, unless within those 31 days you are 
reemployed in a position that entitles you to FEGLI. Exception: If you 
port Option B, your designation remains in effect. In this case, if you 
return to Federal service, Basic and any Option A insurance acquired 
through returning to service is included in the existing designation.
    (b) If you assign your insurance, your designation cancels 
automatically on the effective date of the assignment.


Sec. 870.808  How does OFEGLI pay Option C benefits if an eligible 
family member dies?

    (a) If you have Option C and an eligible family member dies, OFEGLI 
pays benefits to you.
    (b) If you are entitled to receive Option C benefits, but you die 
before OFEGLI makes the payment, OFEGLI will pay whoever is entitled to 
receive your Basic insurance benefits under the statutory order of 
precedence. If you assigned your insurance, OFEGLI will still follow 
the order of precedence for payment of Option C benefits in this 
situation, but will start with the second on the list (widow(er)).

Subpart I--Assignment


Sec. 870.901  Who is allowed to make an assignment?

    (a) Effective July 10, 1984, section 208 of the Bankruptcy 
Amendments and Federal Judgeship Act of 1984, Pub. L. 98-353 (98 Stat. 
355), allows Federal judges to assign their FEGLI coverage.
    (b) Effective October 3, 1994, section 4 of Pub. L. 103-336 (108 
Stat. 2661) allows all Federal employees, annuitants, and 
compensationers to assign their FEGLI coverage.


Sec. 870.902  What insurance can I assign?

    (a) If you make an assignment, you assign your Basic, Option A, and 
Option B insurance. An assignment applies to all of this coverage; you 
cannot assign only part of your insurance.
    (b) You cannot assign Option C.
    (c) If you elected a living benefit under subpart K of this part, 
you may assign your remaining coverage.


Sec. 870.903  Who can I assign my insurance to?

    (a) You may assign your insurance to one or more individuals, 
corporations, trusts, or other entities.
    (b) You cannot name contingent assignees, in case your primary 
assignee dies before you do.
    (c) If you assign your insurance to 2 or more assignees, you must 
state the percentage or fraction to go to each assignee. You cannot 
assign dollar amounts, and you cannot assign types of insurance.
    (d) Once assigned, the value of your insurance increases or 
decreases automatically, as provided by this part. Exception: If you 
elected a partial living benefit before assigning the remainder of your 
insurance, the amount of your Basic insurance does not increase or 
decrease.


Sec. 870.904  Can I change or cancel my assignment?

    No. An assignment is irrevocable. Once you have assigned your 
insurance, you cannot undo the assignment or change it in any way.


Sec. 870.905  How do I make an assignment?

    (a) Only you may assign your insurance. No one may make an 
assignment on your behalf.
    (b)(1) To assign your insurance, you must complete an approved 
assignment form. (Assignments submitted before November 28, 1986, were 
acceptable without an approved assignment form.) You must sign the 
form, and 2 people must witness your signature and also sign the form.
    (2) You cannot assign your insurance to one of your witnesses.
    (c) A court order may direct you to make an assignment to the 
person(s) named in the court order. For an assignment to be effective, 
you must follow the procedures in this section.


Sec. 870.906  Where do I have to file my assignment form?

    (a) If you are an employee, or a compensationer within the first 12 
months of nonpay status, you must submit the assignment form to your 
agency employing office.
    (b) If you are insured as an annuitant or compensationer, you must 
submit the assignment form to OPM.
    (c) If you have ported Option B coverage, you must submit the 
assignment form to the Portability Office.


Sec. 870.907  When is my assignment effective?

    Your assignment is effective on the date the employing office 
receives your properly completed, signed, and witnessed assignment 
form.


Sec. 870.908  Can I elect more insurance after I make an assignment?

    Yes. You have the right to elect insurance as described in subpart 
E of this part. Any Option A or Option B coverage that you elect is 
included automatically in your existing assignment.


Sec. 870.909  Can I cancel or reduce my insurance after I make an 
assignment?

    (a) No. You cannot cancel or reduce your insurance after you make 
an assignment. The right to cancel or reduce your insurance transfers 
to the assignee(s).
    (b) If there is more than 1 assignee, all assignees must agree to 
the cancellation or reduction.


Sec. 870.910  Who pays the premiums after I make an assignment?

    You, the insured individual, still pay the premiums after you 
assign your insurance. The premiums are withheld from your pay, 
annuity, or compensation, the same as they were before you made the 
assignment.


Sec. 870.911  What happens when I retire or become insured as a 
compensationer?

    (a)(1) If you are eligible to continue your insurance as an 
annuitant or compensationer, the assignment will continue.
    (2) You will make the initial post-65 reduction election for Basic 
insurance and Option B.
    (b)(1) Once you've made your initial post-65 reduction election for 
Basic, you cannot change it. However, unless you've elected a partial 
living benefit, your assignee(s) may change your post-65 reduction 
election as stated in subpart G of this part.
    (2) Once you've made your initial post-65 reduction election for 
Option B:
    (i) If you elected Full Reduction, only you may change to No 
Reduction, as stated in Sec. 870.711.
    (ii) If you elected No Reduction, only your assignee may change to 
Full Reduction, as stated in Sec. 870.711.
    (c)(1) Your assignee may choose to convert your insurance instead 
of continuing it when you become insured as an annuitant or 
compensationer.
    (2) If there is more than one assignee, some assignees may choose 
to convert their part of your insurance instead of continuing it when 
you become insured as an annuitant or compensationer, and other 
assignees may choose to continue their part of your insurance.
    (3) 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.
    (d)(1) If you become reemployed in a position that entitles you to 
FEGLI, the insurance you get through your employment is included 
automatically in your existing assignment.
    (2) The right to elect Option B as an employee rather than keeping 
it as an annuitant (see Sec. 870.717(c)(3)) stays with you; it does not 
transfer to the

[[Page 64551]]

assignee(s). Any Option B coverage you elect as an employee is included 
in your existing assignment.


Sec. 870.912  What happens if my insurance terminates after I make an 
assignment?

    (a)(1) If your insurance stops, each assignee has the right to 
convert all or a part of his/her share of your insurance. The 
conditions stated in subpart F of this part apply to your assignee(s).
    (2) Any assignee who does not convert his/her share of your 
insurance loses all ownership of the insurance.
    (b) When there is more than 1 assignee, the maximum amount of 
insurance each assignee may convert is determined by the dollar amount 
corresponding to the assignee's share of your total insurance. This 
amount will be rounded up to the next higher thousand.
    (c)(1) Premiums for the converted insurance are based on your age 
and class of risk at the time your assignee converts.
    (2) If an assignee converts your insurance, the assignee is 
responsible for paying the premiums on the converted coverage.
    (d) If you have assigned your insurance, your employing office must 
notify your assignee(s) of the right to convert when your insurance 
terminates.


Sec. 870.913  How long does my assignment last?

    (a) Your assignment cancels automatically 31 days after your 
insurance stops, unless within those 31 days you are reemployed in a 
position that entitles you to FEGLI. Exception: If you port Option B, 
your assignment remains in effect. In this case, if you return to 
Federal service, Basic insurance and any Option A or additional Option 
B insurance acquired through returning to service is included in the 
existing assignment.
    (b) Your assignee has the right to assign your insurance to someone 
else, including assigning it back to you. If this happens, all the 
rights of the assignee revert to you.


Sec. 870.914  Can I designate a beneficiary after I've assigned my 
insurance?

    No. When you assign your insurance, any designation of beneficiary 
you have on file cancels automatically. You cannot file a new 
designation. Only your assignee has the right to designate a 
beneficiary. The provisions of Sec. 870.804 apply to your assignee(s).


Sec. 870.915  If I've assigned my insurance, who gets the life 
insurance benefits when I die?

    (a) Each assignee may designate a beneficiary (or beneficiaries). 
An assignee may designate himself/herself as the primary beneficiary 
and name another contingent beneficiary(ies) in case the assignee dies 
before you.
    (b) If your assignee does not designate a beneficiary, OFEGLI will 
pay benefits to your assignee when you die.
    (c) If your assignee dies before you and did not designate a 
beneficiary, OFEGLI will pay benefits to your assignee's estate when 
you die.


Sec. 870.916  Current addresses.

    Each assignee and each beneficiary of an assignee must keep the 
office where your 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


Sec. 870.1001  Purpose.

    This subpart gives the conditions for life insurance coverage for 
certain hostages. The provisions for this coverage are in section 599C 
of Pub. L. 101-513 (104 Stat. 2035).


Sec. 870.1002  Special definitions for this subpart.

    Hostage and hostage status have the meaning given in section 599C 
of Pub. L. 101-513 (104 Stat. 2035).
    Pay period for individuals insured under this subpart means the pay 
period that the U.S. Department of State sets up.


Sec. 870.1003  Who is eligible for FEGLI under this subpart?

    (a)(1) The U.S. State Department determines who is eligible for 
coverage.
    (2) Those who are eligible for hostage coverage are not considered 
employees for the purpose of this part.
    (b) Eligibility for insurance under this subpart depends on the 
availability of funds under section 599C(e) of Pub. L. 101-513 (104 
Stat. 2035).


Sec. 870.1004  What is the amount of insurance for those eligible as 
hostages?

    (a)(1) Section 599C(b)(2) of Pub. L. 101-513 (104 Stat. 2035) 
specifies a payment for these individuals. The BIA is the amount of 
this payment, rounded to the next higher $1,000, plus $2,000.
    (2) Basic insurance includes AD&D coverage.
    (b) These hostages are not eligible for Optional insurance.


Sec. 870.1005  What is the effective date of this coverage?

    (a)(1) For hostages in Iraq and Kuwait coverage was effective 
August 2, 1990.
    (2) For hostages captured in Lebanon coverage was effective June 1, 
1982.
    (b) The U.S. Department of State may set a later effective date.


Sec. 870.1006  How are the premiums paid?

    (a) Section 599C of Pub. L. 101-513 provides funds for the FEGLI 
premiums.
    (b) If the person is not 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 premium payments in advance from a State 
Department appropriation, if it is necessary to fund the 12-month 
period beginning the earlier of:
    (1) The day after hostilities or sanctions end; or
    (2) The day after the person'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.


Sec. 870.1007  Can a person insured as a hostage cancel the insurance?

    (a) A person insured under this subpart may cancel the insurance at 
any time by written request. The insured individual must request the 
cancellation. No one can make the request on the person's behalf.
    (b) The cancellation is effective on the first day of the pay 
period after the pay period in which the U.S. Department of State 
receives the request.
    (c) A person who cancels insurance under this section cannot get 
the insurance again, unless the State Department determines that it 
would be against equity and good conscience not to allow the person to 
be insured.


Sec. 870.1008  How are benefits paid when a person insured as a hostage 
dies?

    When a person insured as a hostage dies, OFEGLI pays benefits 
according to the same statutory order of precedence that applies to 
other FEGLI coverage. A person insured under this subpart has the right 
to designate a beneficiary(ies); the provisions of subpart H of this 
part apply.


Sec. 870.1009  How long does the insurance continue?

    (a) Unless the person cancels coverage earlier, insurance under 
this subpart stops:

[[Page 64552]]

    (1) For hostages in Iraq and Kuwait, 12 months after hostage status 
ends; and
    (2) For hostages captured in Lebanon, 60 months after hostage 
status ends.
    (b) When his/her insurance terminates, the person gets the 31-day 
extension of coverage and the right to convert. (See subpart F of this 
part.)


Sec. 870.1010  State Department responsibilities.

    (a) The U.S. Department of State serves as the ``employing office'' 
for persons insured under this subpart.
    (b) The State Department must determine the eligibility of persons 
under this subpart. This includes determining whether a person is 
barred from FEGLI because of other life insurance, as provided in 
section 599C of Pub. L. 101-513 (104 Stat. 2035).

Subpart K--Living Benefits


Sec. 870.1101  Who is eligible for a living benefit?

    Effective July 25, 1995, you may receive a living benefit if you 
are terminally ill, as defined in Sec. 870.101. Exception: If you have 
assigned your insurance, you cannot elect a living benefit.


Sec. 870.1102  How much can I elect as a living benefit?

    (a) Only Basic insurance is available for a living benefit. You 
cannot get Optional insurance as a living benefit.
    (b)(1) If you are an employee, you may elect to receive either:
    (i) A full living benefit, which is all of your Basic insurance; or
    (ii) A partial living benefit, which is a portion of your Basic 
insurance, in a multiple of $1,000.
    (2) If you are insured as an annuitant or compensationer, you may 
elect only a full living benefit. You cannot elect a partial living 
benefit.
    (c) The amount of Basic insurance available for payment is based on 
your age 9 months from the date OFEGLI receives your application.
    (d) The amount of Basic insurance you elect 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.


Sec. 870.1103  How do I apply for a living benefit?

    (a)(1) You must request an application form directly from OFEGLI. 
Neither your employing office nor OPM has the form.
    (2) You must complete the first part of the application and have 
your doctor complete the second part. You or your doctor must send the 
completed application directly to OFEGLI.
    (b) Another person may apply for a living benefit on your behalf if 
all of the following conditions are met:
    (1) You must be physically or mentally incapable of making an 
election;
    (2) The applicant must have a power of attorney or court order 
authorizing him/her to elect a living benefit on your behalf; and
    (3) The applicant must either be your sole beneficiary or have each 
beneficiary's written and signed consent.
    (c) OFEGLI reviews the application, obtains certification from your 
employing office regarding the amount of your insurance, and verifies 
that you have not assigned your insurance. OFEGLI then determines 
whether you meet the requirements to elect a living benefit.
    (d)(1) If OFEGLI needs additional information, it will contact you 
or your doctor.
    (2) Under certain circumstances, OFEGLI may require a medical 
examination before making a decision. In this case, OFEGLI must pay for 
the medical exam.


Sec. 870.1104  What happens after OFEGLI approves my application?

    (a) If OFEGLI approves your application, it sends you a check and 
an explanation of benefits.
    (b) You can change your mind about electing a living benefit until 
you cash or deposit the check. If this happens, you must mark the check 
``void'' and return it to OFEGLI.
    (c) Your living benefit election is effective on the date you cash 
or deposit the check. After that date you cannot change your mind and 
revoke the election.
    (d) Once you have cashed or deposited the check, OFEGLI sends an 
explanation of benefits to your employing office, so it can make the 
necessary changes in your premium withholdings.
    (e) If you die before cashing or depositing the check, the payment 
must be returned to OFEGLI.


Sec. 870.1105  What if OFEGLI doesn't approve my application?

    If OFEGLI does not approve your application, it will notify you and 
your employing office. OFEGLI's decision is not subject to 
administrative review or appeal, but you may submit additional medical 
information. You may also reapply at a later date if your situation 
changes.


Sec. 870.1106  What happens to the rest of my coverage after I elect a 
living benefit?

    (a)(1) If you elect a full living benefit, your post-election BIA 
is $0. Withholdings for Basic insurance stop at the end of the pay 
period in which your living benefit election is effective. Your Basic 
AD&D coverage reduces to $0 on the effective date of your living 
benefit election.
    (2) If you elect a partial living benefit, your post-election BIA 
is a reduced amount (see Sec. 870.205). Your withholdings and the 
Government contribution for Basic insurance are based on the amount of 
your post-election BIA and are reduced at the end of the pay period in 
which your living benefit election is effective. Your Basic AD&D 
coverage reduces to equal your post-election BIA.
    (b)(1) Your post-election BIA cannot change. Subsequent changes in 
pay will have no effect on the amount of your Basic insurance.
    (2) If you retire or become insured as a compensationer after 
electing a partial living benefit, you must elect No Reduction for your 
Basic insurance.
    (c) Electing a living benefit has no effect on your Optional 
insurance.
    (d) After electing a living benefit, you may assign the remainder 
of your insurance.
    (e) You may elect a living benefit only once. If you elect a 
partial living benefit, you cannot later elect a living benefit for 
some or all of your remaining Basic insurance.


Sec. 870.1107  What happens if I live longer than 9 months?

    If you live longer than 9 months, you do not have to return the 
living benefit payment.

Subpart L--Portability


Sec. 870.1201  Portability permitted.

    (a) Effective April 24, 1999, until April 24, 2002, you may port 
(keep) Option B coverage that would otherwise terminate.
    (b) You cannot port Basic insurance, Option A, or Option C.


Sec. 870.1202  What are the eligibility requirements for portability?

    (a) You are eligible to port your Option B if:
    (1) Your coverage is terminating because you are separating or 
completing 12 months in nonpay status; and
    (2) You meet the 5-year/all-opportunity requirement stated in 
Sec. 870.701.
    (b) If you have assigned your insurance, it is your assignee(s) who 
has(have) the right to port. Your

[[Page 64553]]

assignee(s) must pay the premiums for the ported coverage.


Sec. 870.1203  How much Option B can I port?

    (a)(1) You may port the number of Option B multiples that meet the 
5-year/all-opportunity requirement.
    (2) You may also choose to port fewer multiples. If you do, any 
multiples that you do not port terminate, with the 31-day extension of 
coverage and right to convert.
    (b)(1) If you port your coverage, you may reduce the number of 
multiples at any time. Exception: If you have assigned your insurance, 
only your assignee has the right to reduce the number of multiples.
    (2) You cannot increase the number of multiples.
    (c) If you port Option B, future salary changes have no effect on 
the amount of your coverage.
    (d) The amount of your ported coverage reduces by 50% at the 
beginning of the 2nd month after you reach age 70. If you are already 
age 70 or older at the time you port your Option B, the reduction takes 
place the 2nd month after the effective date of your ported coverage.


Sec. 870.1204  What is the cost of the ported coverage?

    (a)(1) Ported Option B costs the same as ``regular'' Option B. (See 
Sec. 870.405(d).)
    (2) In addition to the premium payments for Option B, you must pay 
a monthly administrative fee for ported coverage. OPM negotiates the 
amount of this administrative fee with the Portability Office.
    (b) When your coverage reduces, as stated in Sec. 870.1203(d), your 
premiums also reduce, based on the new amount of your coverage.


Sec. 870.1205  How do I port my coverage?

    (a) If you are eligible to port your Option B, your employing 
office must notify you (or your assignee) in writing of the loss of 
coverage and your right to port. The employing office must do this 
either before or immediately after the event that causes your coverage 
to stop.
    (b)(1) If you want to port your Option B, you must submit your 
request to the Portability Office. The Portability office must receive 
your request within 65 days after the date of the terminating event (79 
days, if you live overseas).
    (2) If you do not request portability within the required time 
frame, we consider that you have refused coverage.


Sec. 870.1206  Are there any extensions to the time limit for porting?

    (a) The time limit may be extended up to 6 months after the date of 
the terminating event. To qualify, you must demonstrate to the 
Portability Office that:
    (1) Your employing office did not give you the required 
notification and you were not aware of the time limit for porting your 
Option B; or
    (2) You were not able to port on time for reasons beyond your 
control.
    (b) If the Portability Office approves your request to port, you 
must port within 31 days of that approval.


Sec. 870.1207  When is my ported coverage effective?

    Your ported coverage is effective the day after your coverage as an 
employee stops.


Sec. 870.1208  What about designations, assignments, and court orders?

    (a)(1) If you have a valid designation of beneficiary on file at 
the time you port your Option B, that designation remains in effect for 
the ported coverage.
    (2) If you want to designate a beneficiary after you have ported 
your coverage, you must submit the designation form to the Portability 
Office.
    (3) If you return to Federal service, any valid designation of 
beneficiary remains in effect.
    (b)(1) If you have assigned your coverage, and your assignee ports 
your Option B, that assignment remains in effect.
    (2) If you want to make an assignment after you have ported your 
coverage, you must submit the assignment form to the Portability 
Office.
    (3) If you return to Federal service, any valid assignment remains 
in effect. Basic insurance and any Option A and additional Option B 
coverage you get through your employment is included automatically in 
your existing assignment.
    (c)(1) If your employing office received a valid court order on or 
after July 22, 1998, that court order remains valid for your ported 
coverage.
    (2) Anyone wanting to submit a court order relating to your ported 
coverage must submit it to the Portability Office.
    (3) If you return to Federal service, any valid court order on file 
remains in effect.
    (d) When you submit a request to port your Option B, your employing 
office must send the originals of all designations, assignments, and 
court orders on file to the Portability Office.


Sec. 870.1209  Can I cancel my ported coverage?

    (a) You may cancel your ported coverage or reduce the number of 
multiples at any time. Exception: If you have assigned your insurance, 
only your assignee may cancel or reduce your coverage.
    (b) If you do not make a premium payment on time, the Portability 
Office will send you a notice stating that your coverage will continue 
only if you make the payment within 15 days after receiving the notice 
(45 days, if you live overseas). We consider that you received the 
notice 5 days after the date on the notice (19 days, if you live 
overseas). If you do not make the payment within this time frame, your 
Option B coverage cancels.
    (c) If your ported coverage cancels, whether voluntarily or for 
nonpayment, you do not get the 31-day extension of coverage or the 
right to convert.


Sec. 870.1210  How long does my ported coverage last?

    Your ported coverage stops at the earlier of:
    (a) April 24, 2002. You get the 31-day extension of coverage and 
the right to convert, as stated in subpart F of this part.
    (b) The beginning of the 2nd calendar month after you reach 80. If 
you are already age 80 or older at the time you port your Option B, 
your coverage stops at the beginning of the 2nd month after the 
effective date of the ported coverage. You get the 31-day extension of 
coverage and the right to convert, as stated in subpart F of this part.


Sec. 870.1211  What happens if I come back to work?

    (a)(1) When you return to active Federal service, your agency must 
notify the Portability Office.
    (2) The Portability Office must terminate your ported coverage and 
send the originals of all designations, assignments, and court orders 
to your new employing office.
    (b) You will get back the number of multiples of Option B that you 
had before the terminating event. Exceptions:
    (1) If you cancel a multiple or multiples of Option B at the time 
you port or after you port, you will get back only the number of 
multiples remaining.
    (2) If you cancel your Option B coverage, or if your coverage 
cancels for nonpayment of premiums, you will not get back any Option B 
coverage.

[FR Doc. 00-27513 Filed 10-26-00; 8:45 am]
BILLING CODE 6325-01-U