Office of Personnel Management

Retirement and Insurance Group

1920 1954 1959 

 

1986 

Benefits Administration Letter

Number: 95-203 Date: January 12, 1995 

SUBJECT Federal Employees' Group Life Insurance:

The Incontestability Clause

The purpose of this Letter is to inform agencies of a clause in

the Federal Employees' Group Life Insurance (FEGLI) contract

concerning erroneous enrollments.

Employees insured under the FEGLI Program are entitled to the

protection of the Incontestability Clause of the FEGLI contract. 

This clause says that an enrollment made in error cannot be

challenged more than two years after the error occurred. (This

applies to life insurance enrollments only, not to enrollments in

the Federal Employees Health Benefits (FEHB) Program.)

In practical terms, this means that an agency error permitting

enrollment for Basic, Option A, Option B, or Option C coverage

(or permitting additional multiples of Option B coverage) should

be allowed to stand, if the coverage remained in force for two

years or more during the employee's lifetime and the error was

not detected and corrected within two years after the date the

election was made.

This clause may not be used to allow enrollments for employees

who are excluded from coverage by law or whose type of

appointment is excluded by regulation (e.g., intermittent

employees or temporary employees).

This clause applies only to errors that occur during employment. 

Retirement systems (e.g., CSRS or FERS) cannot use the

Incontestability Clause to correct errors that occur after

retirement. 

The existence of this clause does not permit agencies to become

less diligent in their administration of the FEGLI Program.

Erroneous enrollments must still be avoided whenever possible. 

Agency personnel are encouraged to perform desk audits of their

employees' personnel files to uncover FEGLI enrollment errors. 

Those that occurred more than two years ago should be examined to

see whether the Incontestability Clause applies. Those that

occurred less than two years ago must be corrected in the usual
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manner, giving the affected employees the right to

reconsideration.

Here are some examples of when the Incontestability Clause may be

used:

Example 1 An employee who had previously waived coverage

transfers from one agency to another without a

break in service and is allowed to elect

insurance at the new agency. This is an agency

error. However, if more than two years passes

before anyone discovers the error, the erroneous

election must be allowed to stand.

Example 2 An employee is allowed to elect Option B without

a qualifying event (e.g., marriage, divorce,

etc.) and without providing the results of a

physical (SF 2822). This is an agency error. 

However, if more than two years passes before

anyone discovers the error, the erroneous

election must be allowed to stand.

Example 3 An employee submits acceptable results of a

physical. He/she then submits an SF 2817

electing Basic, Option A, and Option C. If the

agency accepts the SF 2817, this is an agency

error. Acceptable results of a physical do not

permit election of Option C. However, if more

than two years passes before anyone discovers

the error, the erroneous election must be

allowed to stand.

Example 4 An employee transfers from one agency to another

without a break in service. He/she has Basic,

Option A, and Option C at his/her former agency. 

This is SF 50 equivalent code F. However, at

the new agency the SF 50 is coded with J. This

is Basic, Option A, Option B (one multiple), and

Option C. Therefore, through a coding error,

the employee was erroneously enrolled in Option

B. However, if more than two years passes

before anyone discovers the error, the erroneous

election must be allowed to stand.

Example 5 An employee elected Basic during the 1993 open

enrollment period. His/her enrollment was made

effective immediately (rather than waiting until
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he/she met the pay and duty status requirements

of the open enrollment period). This is an

agency error. However, if more than two years

passes before anyone discovers the error, the

erroneous election must be allowed to stand.
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Payment or nonpayment of premiums is not the final determining

factor in using this clause. Each case must be examined on its

own merits.

Applying the Clause

Once you discover an error, you must examine the

circumstances of the error to determine whether the

Incontestability Clause applies. You should ask yourself the

following questions concerning the error:

! Did the error occur more than two years ago?

! Did the error occur while the person was employed

(rather than after he/she retired)?

! Is the employee otherwise eligible to enroll in the

Program (i.e., not excluded by law or type of

appointment)?

! Does the error involve more than simply an erroneous

withholding?

Once you have determined that the clause does apply, you

should prepare a note to the file explaining the details of

the error, the date it occurred, the date it was discovered,

and the fact that the enrollment is now valid due to the

Incontestability Clause. If there is an applicable SF 2817

in the file, the note should be attached to the permanent

file copy of the SF 2817. Upon the employee's retirement,

the note should be forwarded along with the SF 2817 to the

retirement system. If there is no applicable SF 2817 (e.g.,

an SF 50 coding error occurred), you must still provide an

explanatory note to the file which must be forwarded to the

retirement system upon the employee's retirement.

You must also provide a note in the Remarks section of the SF

2821 prepared for retiring employees that explains that the

Incontestability Clause was used to ratify an erroneous

enrollment.

Premiums

Premiums are due for any erroneous coverage allowed to stand. 

If premium deductions have been made, they are not

refundable. If premium deductions have not been made, or if

you have already refunded premiums and it is subsequently
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determined that the coverage should be allowed to stand,

premium deductions should be made or recovered. As with any

underdeduction of premium, agencies may waive collection from 
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the employee but must submit the total amount due for the

coverage for deposit in the Fund.

Retiring Employees

Enrollments that are allowed to stand due to the

Incontestability Clause become valid enrollments. If a

retiring employee was enrolled in the FEGLI Program for at

least the five years immediately prior to retirement (or from

the first opportunity to enroll), even if the enrollment was

in error but then was allowed to stand, he/she is still

entitled to carry the enrollment into retirement. The fiveyear rule must still be met, however. The Incontestability

Clause cannot be used to waive the five-year rule.