Civil Service Federal Employees Federal Employees Federal Employees

Retirement Group Life Health Benefits Retirement

System Insurance Program System

United States

Office of Personnel Management

Retirement and Insurance Service

Benefits Administration Letter

Number: 98-208 Date: November 9,1998 

Subject: Federal Employees’ Group Life Insurance: New FEGLI Legislation

Purpose The purpose of this letter is to inform you of changes in the

Federal Employees’ Group Life Insurance (FEGLI)

Program. These changes are the result of legislation (Pub.

L. 105-311 - Federal Employees Life Insurance

Improvement Act) enacted on October 30, 1998. 

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Background Congress, the Administration, and Federal employees have

all expressed interest in expanding the options available

under the FEGLI Program to offer a greater choice of

coverage and to provide ways to continue coverage that

would otherwise terminate. 

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What the New Law Does The new law makes a number of changes to the existing

FEGLI Program insurance options by: 1) eliminating the

maximums on Basic and Option B; 2) allowing for the

election of unreduced Option B at retirement; 3) allowing

for the portability of Option B upon separation or when

coverage while in nonpay status runs out; 4) increasing

available Option C coverage to up to 5 times the current

amounts for spouse and dependent children; 5) allowing for

the election of unreduced Option C at retirement; 6)

covering foster children under Option C; 7) providing a

remedy for the erroneous enrollment of an employee,

annuitant, or compensationer in the FEGLI Program; 8)

providing for direct payment of premiums for employees,

annuitants, and compensationers whose pay is insufficient to

cover withholdings for life insurance; 9) providing for an

open season; and 10) directing OPM to study other life

insurance alternatives for Federal employees and to report
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its findings to Congress. 

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SPECIFIC INFORMATION

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Elimination of maximums on Until now an employee’s Basic Insurance Amount (BIA)

Basic and Option B could not exceed the annual rate of basic pay payable for

positions at level II or the Executive Schedule, rounded to

the next higher multiple of $1,000, plus $2,000; the

maximum for 1998 has been $139,000. Each multiple of

Option B was also capped, based on the salary at level II of

the Executive Schedule; the maximum for 1998 has been

$134,000. The new law eliminates these maximums.

Since the maximum has been eliminated for Basic insurance,

there is no longer a need to increase the amount of Option

A for these employees. Therefore, Option A will be

$10,000 for all employees.

Effective Date: The effective date is the first pay period

beginning on or after October 30, 1998. 

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Election of unreduced This provision allows retiring employees or

Option B at retirement compensationers to elect to continue Option B coverage on

an unreduced basis by continuing to pay premiums after age

65. Annuitants and compensationers who elect unreduced

Option B may later cancel that election and have the full

reduction.

Annuitants and compensationers who have Option B

coverage on a reduction schedule on the effective date will

be offered the opportunity to elect an unreduced schedule on

a prospective basis. 

Effective Date: We intend to put this provision into effect as

soon as possible. We will notify you when the effective date

has been set.

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Portable Option B The new law provides that following separation from

upon separation employment or following a period of 12 months in 

or end of continued nonpay status, employees who meet the 5-year/first

coverage while in opportunity requirement may elect to continue their

nonpay status Option B coverage by making direct premium payments. 

Coverage during the first 12 months in nonpay status

continues to be at no charge.

Coverage reduces to 50% after the date the insured reaches

age 70 and will stop at the beginning of the second calendar

month after he/she reaches age 80, subject to a provision for

temporary extension of life insurance coverage and for

conversion to an individual life insurance policy under

conditions described by OPM. 

The portability provision election for separating employees

and employees after 12 months in nonpay status is effective

for a three-year demonstration period.

Effective Date: We intend to put this provision into effect as

soon as possible. We will notify you when the effective date

has been set.

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Increased Option C Currently, Option C coverage provides for $5,000 life

insurance for the spouse and $2,500 for each eligible child. 

The new law allows employees to elect coverage in multiples

up to 5 times the current amount. 

Effective Date: We intend to put this provision into effect as

soon as possible. We will notify you when the effective date

has been set.

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Election of unreduced Retiring employees may choose to elect unreduced

Option C at retirement Option C coverage by continuing to pay premiums after age

65. Annuitants and compensationers who elect unreduced

Option C may later cancel that election and have the full

reduction.

Effective Date: We intend to put this provision into effect as

soon as possible. We will notify you when the effective date

has been set.

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Coverage of foster children The addition of foster child coverage under Option C

under Option C mirrors coverage under the Federal Employees Health

Benefits Program and requires that dependency of the foster

child be established before they are approved for coverage

under this Option. Implementing regulations will be

published.

Effective Date: October 30, 1998. Until a Hotline number is

established, agencies seeking guidance on this issue should

call OPM’s Insurance Policy and Information Division at

(202) 606-0191.

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Direct Payment of Premiums This provision allows an employee, annuitant or

compensationer whose pay is subject to withholdings for life

insurance premiums, but whose pay is insufficient to cover

such withholdings, to arrange to make payment directly

either through the retirement system or employing office that

administers the pay.

NOTE: This does not apply to employees who are in

nonpay status. Life insurance continues to be free during

the first 12 months in nonpay status, and it still terminates

after 12 months in nonpay status. This new provision applies

to employees, annuitants, and compensationers whose “pay”

- after all other applicable deductions - isn’t enough to cover

the FEGLI withholdings on an ongoing basis. Currently,

employees, compensationers, and CSRS annuitants in this

situation have their life insurance terminated; FERS

annuitants are already allowed to make direct payments. 

This legislation extends the direct pay option to other

categories of insured individuals.

Effective Date: The first pay period beginning on or after

October 30, 1998.

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Incontestability The contractual provision regarding incontestability (see

BAL 95-203) has been added to the law. This provision now

also applies to annuitants and compensationers who were

erroneously allowed to continue their life insurance.

 

Effective Date: Any findings made on or after October 30,

1998. 

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Open Season There will be an open season from April 1, 1999, through
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May 31, 1999.

Effective Date: Open Season elections will become effective

the first period beginning on or after April 1, 2000, which

follows a pay period in which the employee was in a pay and

duty status.

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OPM study of alternative OPM will conduct a study of alternative life insurance

life insurance products products for Federal employees and the level of interest in

these products. The products are group universal life

insurance, group variable universal life insurance, and

additional voluntary accidental death and dismemberment

insurance. OPM will report its findings to Congress.

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What Do Agencies Have Agencies need to share the above changes with their

to Do? payroll offices and information technology offices so that

modifications can be made immediately to systems to

accommodate the changes. System changes will be required

to 1) eliminate the maximums on Basic and Option B; 2)

adjust Option A to $10,000 in instances where an employee

had a higher amount because of the maximum limitation on

Basic insurance; 3) modify Option C coverage to add

multiples, at the employee’s election, of 1, 2, 3, 4 or 5 times

the amount for spouse ($5,000) and dependent children

($2,500). 

For employees eligible to make direct payment of life

insurance premiums, there will need to be a system for

accepting payment.

OPM will be revising most of the FEGLI forms and will be

making necessary coding changes for SF 50 purposes.

Agencies should periodically check the FEGLI web site

(www.opm.gov/insure/life) for updated information on this

legislation.

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Additional Information This letter contains general information concerning changes

made by the new legislation. We will issue detailed

information concerning these changes, as well as information

on revised forms, changes in coding, and the upcoming Open

Season, as soon as it is available.

______________________________________________________________________________

Abby L. Block, Chief

Insurance Policy

 and Information Division