Office of Personnel Management

Retirement and Insurance Service

1920 1954 1959 

 

1986 

Benefits Administration Letter

Number: 95-216 Date: May 4, 1995 

SUBJECT: Federal Employees' Group Life Insurance:

Living Benefits

_________________________________________________________________

GENERAL INFORMATION

_____________________________________________

 What Are Living Living Benefits, also known as accelerated

 Benefits? benefits in the private sector, are life

insurance benefits paid to an individual

while he/she is still living, rather than

paid to a beneficiary or survivor upon the

insured individual's death. This benefit was

added to the Federal Employees' Group Life

Insurance (FEGLI) Program by Public Law 103-

409, the FEGLI Living Benefits Act.

_____________________________________________

 When Do Living Living Benefits under the FEGLI Program

 Benefits Go become effective on July 25, 1995.

 into Effect?

_____________________________________________

 How Is This Living Benefits payments come from the Life

 Different from Insurance Fund (part of the U.S. Treasury).

 Assigning FEGLI Viatical settlement companies are private

 Coverage to a sector businesses not connected with the

 Viatical Federal Government.

 Settlement

 Company? The amount of insurance available and the

requirements for receiving a Living Benefits

payment are set forth in Federal law. 

Viatical settlement companies set their own

requirements and payment amounts.

_________________________________________________________________

SPECIFIC INFORMATION

_____________________________________________
Benefits Administration Letter 95-216

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 Who Can Elect Any employee, annuitant, or compensationer

 Living Benefits? covered under the FEGLI Program, who has been

diagnosed as terminally ill with a life

expectancy of nine months or less, may elect

a Living Benefit.

_____________________________________________

 How Much Only Basic insurance is available for Living

 Insurance Can Benefits. Optional insurance cannot be paid

 an Employee as a Living Benefit.

 Elect?

An employee may elect either a full Living

Benefit, i.e., all of his/her Basic benefits,

or a partial Living Benefit (expressed as a

multiple of $1,000). (Annuitants and

compensationers can elect only a full Living

Benefit.)

_____________________________________________

 How Many Times An employee can elect Living Benefits only

 Can an Employee once.

 Elect Living

 Benefits? If an employee elects a full Living Benefit,

he/she has no more Basic insurance. A

subsequent increase in salary does not give

the employee entitlement to additional Basic

insurance.

If an employee elects a partial Living

Benefit, he/she cannot later elect another

Living Benefit from the remaining Basic

insurance. In addition, the amount of the

remaining Basic insurance will not change,

even if there is a subsequent change in

salary.

Also, a Living Benefit payment cannot be

retracted. If the certifying doctor's

medical prognosis is wrong, and the employee

lives longer than the expected nine months,

the employee would not have to repay the

Living Benefit.

_________________________________________________________________

PROCEDURES

_____________________________________________

 How Does an 1) An employee who wishes to apply for
Benefits Administration Letter 95-216

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 Employee Apply Living Benefits must contact the Office of

 for Living Federal Employees' Group Life Insurance

 Benefits? (OFEGLI) at 1-800-633-4542; OFEGLI will begin

accepting calls after July 10, 1995. OFEGLI

will send the individual an application form

(FE-8, Claim for Living Benefits).

Please note that agencies will not be sent a

supply of FE-8 forms and will not be able to

give them to employees.

2) OFEGLI will also send a calculation

sheet, so employees will be able to determine

the amount of Basic insurance available to

them. This will take into account the age

multiplication factor for employees under age

45. (It will also take into account the

post-65 reduction for annuitants age 65 and

over.) The benefits available will be

reduced by an amount representing interest

lost to the Life Insurance Fund because of

the early payment of benefits.

3) The employee completes Part A of the

form, and his/her doctor completes Part B. 

The employee then sends the form back to

OFEGLI.

4a) If OFEGLI approves the Living Benefit,

OFEGLI will send the employee a check, along

with an Explanation of Benefits (EOB). When

the employee cashes or deposits the check,

the Living Benefits election is complete. 

OFEGLI will then send an EOB to both the

agency personnel office and the agency

payroll office.

4b) If OFEGLI does not approve the Living

Benefit, OFEGLI will notify both the

individual and the employing office. There

are no appeal rights; however, the individual

may furnish additional medical evidence to

support the claim or may reapply if future

circumstances warrant.

_____________________________________________

 What Does the When OFEGLI receives an employee's

 Agency Have application for Living Benefits, it will send
Benefits Administration Letter 95-216

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 to Do? or fax the agency an FE-8A, Agency

Certification for FEGLI Living Benefits. The

agency must certify whether the employee is

enrolled in Basic insurance, whether the

employee has assigned his/her insurance, and

the amount of the employee's current annual

basic pay.

The FE-8A must have dual certification, i.e.,

it must be certified by both a personnel

official and a payroll official. Make sure

that the addresses of the personnel and

payroll offices are complete, since OFEGLI

will use these addresses to send the agency a

copy of the EOB.

It is critical that this certification be

completed and returned to OFEGLI promptly. 

You should fax the completed certification to

OFEGLI on 212-578-4491, and then mail the

original to OFEGLI.

_____________________________________________

 Post-election If an employee elects a partial Living

 BIA Benefit, OFEGLI will notify the agency of the

amount of the employee's remaining Basic

Insurance Amount (BIA) on the EOB. This

post-election BIA never changes, even if the

employee's salary changes. (Please note that

this is different from and supersedes the

information on page 5 of the attachment sent

with BAL 95-212.) The age factor used in

computing benefits payable upon the death of

an employee with a post-election BIA also

will not change.

The post-election BIA also does not change if

the employee subsequently retires and is

eligible to continue insurance as an

annuitant. He/she will not have a choice of

post-65 reductions. Unless he/she elects to

terminate coverage, the full post-election

BIA will remain in effect, and withholdings

will be at the no-reduction level. He/she

will not be eligible to change the noreduction to a 75% reduction at a later date.

An employee who elects a partial Living
Benefits Administration Letter 95-216

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Benefit retains Accidental Death and

Dismemberment (AD&D) benefits on Basic

insurance in the same amount as the postelection BIA.

(An employee who elects a full Living Benefit

loses AD&D on Basic insurance, since there is

no Basic insurance left.)

_____________________________________________

 Changes in If an employee elects a full Living Benefit,

 Withholdings and withholdings and contributions for Basic

 Contributions insurance stop. If an employee elects a

partial Living Benefit, withholdings and
Benefits Administration Letter 95-216

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contributions for Basic insurance are based

on the post-election BIA.

Changes in withholdings and contributions are

effective at the end of the pay period in

which the Living Benefit election is

effective, i.e., the end of the pay period in

which the payment is cashed or deposited. 

(OFEGLI will notify you of the date the

payment is cashed or deposited.)

_____________________________________________

 What Goes on When the agency receives notification of a

 the SF 50? Living Benefits election - i.e., the EOB -

the personnel office must produce an SF 50. 

There will be no changes to the codes used in

box 27 on this form. The code for FEGLI will

remain the same as it was before the Living

Benefits election.

In the "Remarks" section, you should state:

 Elected full Living Benefits on ______.

 Basic coverage now equals zero.

 Not eligible to assign insurance.

 or

 Elected partial Living Benefits on ______.

 Post-election BIA is ______.

 Must elect "No reduction" at retirement.

 Not eligible to assign insurance.

In addition, you should state in the

"Remarks" section what Optional insurance (if

any) the employee has, including the number

of multiples of Option B, if applicable.

_________________________________________________________________

MISCELLANEOUS

_____________________________________________

 Optional A Living Benefit election has no effect on an

 Insurance individual's Optional insurance. All

Optional insurance will remain in place, and

withholdings for Optional insurance will

continue unchanged.

_____________________________________________
Benefits Administration Letter 95-216

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 Designations A Living Benefit election has no effect on an

 of Beneficiary individual's designation of beneficiary. 

Option A benefits, Option B benefits, and any

remaining Basic benefit for employees who

have elected a partial Living Benefit will be

paid to an individual's designated

beneficiary or, in the absence of a

designation, according to the statutory order

of precedence.

If, however, an individual who has

specifically designated Basic insurance to a

beneficiary elects a full Living Benefit,

that beneficiary will not receive any money

as a Basic benefit upon the individual's

death. If this individual elects a partial

Living Benefit, the beneficiary will receive

only the remaining Basic benefit. We

therefore recommend that an insured

individual electing a Living Benefit review

his/her designation of beneficiary.

_____________________________________________

 Assignment If an individual has assigned his/her

insurance, he/she cannot elect a Living

Benefit; nor can the assignee elect a Living

Benefit. Likewise, if an individual elects a

Living Benefit, he/she cannot subsequently

assign any remaining insurance (Basic or

Optional).

_____________________________________________

 Notification Attached is a sample announcement notifying

 to Employees employees of Living Benefits. This or a

similar announcement must be given to all

employees, including those on leave without

pay, before May 22, 1995, the start of the

limited FEGLI open season.

_________________________________________________________________
Benefits Administration Letter 95-216

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Attachment
1

SAMPLE ANNOUNCEMENT

SUBJECT: Federal Employees' Group Life Insurance: Living

Benefits

Effective July 25, 1995, a new benefit, Living Benefits, is

available to eligible enrollees in the Federal Employees' Group

Life Insurance (FEGLI) Program.

What are Living Benefits?

Living Benefits, also known as accelerated benefits in the

private sector, are life insurance benefits paid to you while you

are still living, rather than paid to your beneficiary or

survivor after you die.

Who is eligible to get Living Benefits?

Any Federal employee, annuitant, or compensationer covered under

the FEGLI Program, who has been diagnosed as terminally ill with

a life expectancy of nine months or less, may elect a Living

Benefit.

How much can a person elect?

Only Basic insurance is available for Living Benefits. Optional

insurance cannot be paid as a Living Benefit.

An employee may elect either a full Living Benefit, i.e., all of

his/her Basic benefit, or a partial Living Benefit (expressed as

a multiple of $1,000).

Annuitants and compensationers can elect only a full Living

Benefit.

How many times can I elect a Living Benefit?

You may elect a Living Benefit only once.

If you elect a full Living Benefit, you won't have any Basic

benefits left. Even if your salary increases, you won't get any

more Basic benefits.

If you elect a partial Living Benefit (available only to

employees), you can't later elect any of the remaining Basic

benefit as a Living Benefit. In addition, the amount of the

remaining Basic insurance will not be affected by changes in

either your salary or your age. The remaining Basic insurance
2

will be paid to your beneficiary(ies) or survivor(s) under the

order of precedence after you die.
3

If I elect a Living Benefit, what happens to my Optional

insurance and my designation of beneficiary?

A Living Benefit election has no effect on your Optional

insurance (if any) or on your designation of beneficiary (if

any).

If you have Option A and/or Option B and/or Option C benefits,

they will remain in effect, and withholdings will continue

unchanged. When you die, your Option A and/or Option B benefits

(if any) - and any remaining Basic benefits, if you elected a

partial Living Benefit - will be paid to your beneficiary. If

you haven't designated a beneficiary, they will be paid to your

survivors according to the order of precedence stated in the

FEGLI law.

If you have specifically designated Basic insurance to a

beneficiary and you elect a full Living Benefit, that beneficiary

will not receive any money as a Basic benefit after you die. If

you have specifically designated Basic insurance to a beneficiary

and you elect a partial Living Benefit (available only to

employees), that beneficiary will receive only the remaining (not

a full) Basic benefit upon your death. Therefore, you may wish

to review your designation if you elect a Living Benefit.

What if I've assigned my life insurance?

If you've assigned your insurance, neither you nor the

assignee(s) may elect a Living Benefit. And if you elect a

Living Benefit (whether full or partial), you can't later assign

any remaining insurance (either Basic or Optional).

How do I apply for Living Benefits?

To apply for a Living Benefit, you must contact the Office of

Federal Employees' Group Life Insurance (OFEGLI) at 1-800-633-

4542 after July 10, 1995. OFEGLI will send you an application

form (FE-8, Claim for Living Benefits). Your personnel office

will not have a supply of these forms. You can get the

application only from OFEGLI.

When OFEGLI sends you the FE-8, it also will send you a

calculation sheet, so you will be able to determine the amount of

Basic insurance available to you. This will take into account

your salary and your age, if you are under age 45. (For

annuitants it will also take into account any reductions taken

after age 65.) The amount you elect as a Living Benefit will be

reduced by an amount representing interest lost to the Life
4

Insurance Fund because of the early payment of benefits. 

Depending on the tax laws in effect at the time a Living Benefit

is elected, Federal income tax may also be withheld from the

payment. You will be able to waive tax withholding, if you wish.

You must complete Part A of the election form, and your doctor

must complete Part B. Then you send the form back to OFEGLI. If

OFEGLI needs additional information, it will contact you or your

doctor. (Please note that if you receive and complete the

election form before July 25, 1995, neither you nor your doctor

may sign the form or return it to OFEGLI before July 25, 1995.

If you do, the election form will be invalid.)

If OFEGLI approves the Living Benefit, OFEGLI will send you a

check, along with an Explanation of Benefits (EOB). When you

cash or deposit the check, the Living Benefits election is

complete. You cannot then change your mind about the election.

Does my agency have to do anything?

OFEGLI will contact your agency to request verification of your

coverage and certification of your salary. When your election is

complete, i.e., when you have cashed or deposited the check,

OFEGLI will send your personnel and payroll offices a copy of the

EOB to notify them of your election. If you elect a partial

Living Benefit, OFEGLI will notify your agency of the Basic

Insurance Amount you have left.

What will happen to the withholdings from my pay check?

If you elect a full Living Benefit, withholdings for Basic

insurance will stop. If you elect a partial Living Benefit,

withholdings for Basic insurance will be reduced, depending on

how much Basic insurance you have left.

What if my application is turned down?

If OFEGLI does not approve your claim for a Living Benefit, it

will notify both you and your agency. There are no appeal

rights; however, you may furnish additional medical evidence to

support your claim or reapply if future circumstances warrant.

Are there any restrictions on how I can use the Living Benefits

payment?

No. You may use the Living Benefits payment any way you wish.

I know my condition is terminal, but I'm not sure I only have
5

nine months to live. Can I still elect a Living Benefit?

By law, in order to receive a Living Benefit, you must have a

medical prognosis that your life expectancy is nine months or

less. Your doctor must certify this on the FE-8 election form. 

You may wish to consult your doctor to determine whether he/she

will certify that your life expectancy is nine months or less.
6

What if my doctor is wrong, and I live longer than the expected

nine months? Do I have to pay back the Living Benefit?

No. A Living Benefit payment can't be retracted. You will never

have to repay that amount, even if your medical prognosis

changes.

I think I'm eligible to elect Living Benefits, but I'm not

enrolled in the FEGLI Program. Are the Benefits still available

to me?

You must be enrolled in at least the Basic insurance under the

FEGLI Program in order to elect Living Benefits. You may enroll

in Basic insurance (but not any Optional insurance) during the

May 22, 1995, through July 21, 1995, FEGLI open season. Your

coverage will become effective on the first day of the first pay

period starting after your employing office receives your SF 2817

(Life Insurance Election). Then you may follow the procedures

described in this announcement to elect Living Benefits.