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: 99-203 Date: February 9, 1999 

Subject: Federal Employees’ Group Life Insurance: Public Law 105-311 - Increased

Amount of Option C and Election of Unreduced Options B and C at

Retirement

GENERAL INFORMATION

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Background Pub. L. 105-311, Federal Employees Life Insurance

Improvement Act, enacted October 30, 1998, made

numerous changes to the Federal Employees’ Group Life

Insurance (FEGLI) Program.

Those changes include increasing the amount of Option C

coverage available and allowing retiring employees and

employees becoming insured as compensationers to elect

unreduced Options B and C.

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Purpose The purpose of this Benefits Administration Letter (BAL) is

to provide detailed information relating to these two new

provisions of the law.

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INCREASED AMOUNT OF OPTION C

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Current Amount of Currently, Option C coverage is $5,000 for a spouse and

Option C $2,500 for each eligible child.

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What Is the New Amount? The new law allows Federal employees to elect up to 5

multiples of the current amounts. The maximum amount 
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of Option C available therefore will be $25,000 for a spouse and $12,500 for each eligible child.

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When Does this Change This change becomes effective April 24, 1999.

Go into Effect?

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Can Employees Elect a No. The number of multiples an employee elects applies

Different Number of to all eligible family members. For instance, an employee

Multiples for Different cannot elect 4 multiples on a spouse and 2 on a child.

Family Members?

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Can Employees Elect the Yes and no. It depends on the situation.

New Amounts Right Away?

New employees who enter on duty on or after April 24,

1999, and employees who are newly eligible for FEGLI

coverage on or after April 24, 1999, can elect the increased

amounts at the time they become eligible.

Current employees who have a life event on or after April

24, 1999, can elect or increase Option C within 60 days of

the event.

Current employees who already have Option C and who

have (or had) a life event between October 30, 1998, and

April 23, 1999, can elect additional multiples of Option C

within 60 days after April 24, 1999.

Current employees who do not fit into any of the above

categories can elect additional multiples of Option C during

the April 24-June 30, 1999, open enrollment period.

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How Many Multiples of For marriage, an employee can elect a number equal to

Option C Can an Employee the number of eligible family members acquired with the

Elect Due to a Life Event? marriage.

For acquisition of children, an employee can elect a number

equal to the number of eligible children acquired. Foster

children “count” as eligible children for electing or

increasing Option C coverage; however, they do not

“count” for electing or increasing Option B coverage.

For divorce or death of a spouse, an employee can elect a

number equal to the total number of his/her eligible children.
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In no case can the total number of multiples exceed 5.

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What Is the Effective For those who elect Option C coverage as new or newly

Date of Employees’ eligible employees on or after April 24, 1999, the 

Elections of Increased coverage becomes effective the first day the employee 

Option C Coverage? enters on duty in pay status on or after the day the

employing office receives the SF 2817.

For those who elect or increase Option C coverage because

of a life event that occurs on or after April 24, 1999, the

coverage becomes effective the day the employing office

receives the SF 2817 or the date of the event, whichever is

later.

For those who increase Option C coverage because of a life

event occurring between October 30, 1998, and April 23,

1999, the increased coverage becomes effective retroactive

to the pay period that includes April 24, 1999.

For those who elect or increase Option C coverage during

the upcoming open enrollment period, the coverage

becomes effective the first pay period beginning on or after

April 23, 2000, which follows a pay period during which the

employee was in pay and duty status.

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Open Enrollment We will issue a separate BAL with detailed information

Information concerning the upcoming open enrollment period.

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Can Employees Carry The increased amount of Option C coverage is subject to

the Increased Option C the 5-year/first opportunity requirement the same as any

Coverage into other FEGLI coverage.

Retirement?

For employees who elect the increased coverage due to a

life event, that event constitutes their first opportunity. For

employees who do not experience a life event, the April 24-

June 30, 1999, open enrollment period is their first

opportunity.
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Employees who elect the increased coverage at their first

opportunity and retire within 5 years of the effective date of

their coverage will be able to continue the coverage into

retirement.

NOTE: Employees who elect additional multiples of Option

C during the upcoming open enrollment period, and who

retire before the coverage becomes effective, will not be

able to continue the increased coverage into retirement.

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ELECTION OF UNREDUCED OPTIONS B AND C AT RETIREMENT

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The Way It Is Currently, when an employee retires and is eligible to

Currently continue FEGLI coverage, he/she can choose the amount by

which his/her Basic insurance will reduce after age 65: 75%

Reduction, 50% Reduction, or No Reduction.

There is no such choice for Optional insurance. Options A,

B, and C all reduce automatically. Option A reduces until

only 25% of the amount is left, and Options B and C reduce

until they are gone entirely. Optional insurance is free for

annuitants after the age of 65.

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What Does the New Pub. L. 105-311 allows retiring employees and employees

Law Do? who are becoming insured as compensationers to elect

unreduced Options B and C. Premiums will continue to be

withheld from the annuity or compensation after age 65.

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When Does This This provision of the new law becomes effective April 24,

Become Effective? 1999.

This will apply to employees separating for retirement (or

compensationers completing 12 months in nonpay status) on

or after April 24, 1999.

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What Are a Retiring A retiring employee must choose either Full Reduction or

Employee’s Choices No Reduction. There are no partial reductions.

Regarding Reduction?

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What Happens If an If a retiring employee chooses Full Reduction, his/her

Employee Chooses coverage will reduce just as it does now, beginning at age
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Full Reduction? 65 (or at retirement, if the person is over age 65 at the time

of retirement). The reduction is 2% per month until there is

no coverage left. The annuitant/compensationer pays no

premiums after age 65.

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What Happens If an If a retiring employee chooses No Reduction, his/her

Employee Chooses coverage will not reduce at all. After age 65, he/she will

No Reduction? continue to pay premiums appropriate to his/her age.

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When Must a Retiring Employees must make their election at the time of

Employee Make the retirement (or for compensationers, at the time of

Election? separation or the completion of 12 months in nonpay

status). The election is made on the SF 2818, which is

being revised.

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What If the Employee If a retiring employee or an employee becoming insured

Doesn’t Make an as a compensationer doesn’t make an election on the SF

Election? 2818, he/she will automatically get Full Reduction.

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Does an Employee Have to No. A retiring employee may elect Full Reduction for

Make the Same Election one Option and No Reduction for the other.

for Both Options B and C?

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Can an Employee Choose No. An employee with more than one multiple of Option

Full Reduction for Some B must elect either Full Reduction or No Reduction for all

Multiples and No Reduction the multiples. The same is true for Option C.

for Other Multiples?

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Can an Annuitant or An annuitant or compensationer who elects No Reduction

Compensationer Change can change to Full Reduction at any time. However, a

the Election? person who elects Full Reduction cannot change to No

Reduction more than 30 days after he/she receives the first

regular annuity check.

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What about Employees Employees who are already retired or insured as

Who Retire before compensationers when this new provision goes into effect,

April 24, 1999? and who have Option B, will be given a one-time

opportunity to elect unreduced Option B coverage.

Those whose Option B has already started reducing can
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elect to have their coverage “frozen” at whatever amount is

left as of April 24, 1999, and to have no further reductions.

Annuitants and compensationers who make this election will

start paying the premiums appropriate to their age.

These annuitants and compensationers will not be able to

elect unreduced Option C.

______________________________________________________________________________

Abby L. Block, Chief

Insurance Policy

 and Information Division