Civil Service Federal Employees Federal Employees Federal Employees

Retirement Group Life Health Benefits Retirement

System Insurance Program System

United States

Office of 

Personnel Management

The Federal Government’s Human Resources Agency

Retirement and Insurance Service

 Benefits Administration Letter

 

Number: 99-207 Date: April 14,1999 

Subject: Federal Employees’ Group Life Insurance: Court Order Regulations

Regulations implementing Pub. L. 105-205 were published in the Federal Register on April 6,

1999.

Under this law, court orders preempt the statutory order of precedence for paying benefits

under the Federal Employees’ Group Life Insurance Program.

Attached is a copy of the regulations.

Abby L. Block, Chief

Insurance Policy

 and Information Division

Attachment
Publication date April 6, 1999

6325-01

OFFICE OF PERSONNEL MANAGEMENT

5 CFR Part 870

RIN: 3206-AI49

FEDERAL EMPLOYEES’ GROUP LIFE INSURANCE PROGRAM: 

COURT ORDERS

AGENCY: Office of Personnel Management.

ACTION: Interim rule with request for comments.

SUMMARY: The Office of Personnel Management (OPM) is issuing interim regulations to

implement a new law, which was enacted July 22, 1998. This law requires that provisions of a

court decree of divorce, annulment, or legal separation, or the terms of a court order or courtapproved property settlement agreement relating to such a court decree be followed instead of the

otherwise existing statutory order of precedence for payment of benefits under the Federal

Employees’ Group Life Insurance Program.

DATES: Interim rules are effective May 6, 1999. Comments must be received on or before June

7, 1999.

ADDRESS: 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, P.O. Box 57, Washington, DC 20044; 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: The Federal Employees’ Group Life Insurance (FEGLI)

law sets an order of precedence for payment of benefits following the death of an insured

employee, annuitant, or compensationer (5 U.S.C. § 8705). First in the order of precedence is a

designated beneficiary. There has been no statutory limitation on changing designations.

When a divorce decree requires an individual insured under FEGLI to name his/her

children or former spouse as the beneficiary, it is possible the individual may not comply or may

comply and then change the designation at a later date. This action, while potentially in violation

of the court order, did not violate the FEGLI law.

Pub. L. 105-205, 112 Stat. 683, enacted July 22, 1998, requires benefits to be paid in

accordance with the terms of a court decree of divorce, annulment, or legal separation, or the

terms of any court order or court-approved property settlement agreement relating to a court

decree of divorce, annulment, or legal separation, regardless of whether or not the insured
individual actually completes a designation complying with the court order, if the court order is

received in the appropriate office before the death of the insured individual. To the extent

provided in the court order, the court order supersedes any prior designation by the insured

individual. Pub. L. 105-205 also prohibits an insured individual from changing his/her

designation, unless the person(s) named in the court order agrees or unless the court order is

subsequently modified by the court that originally issued it.

These regulations define the types of court orders that the law applies to and state that the

statutory order of precedence will not be applicable if such a court order has been received in the

appropriate office on or after the date of enactment of the legislation and prior to the death of the

insured. The appropriate office for active employees is their employing agency; the appropriate

office for separated employees (annuitants) is OPM. For a compensationer, during the first 12

months of nonpay status the appropriate office is their employing agency; after separation or the

completion of 12 months in nonpay status, the appropriate office is OPM. To avoid the

possibility of a fraudulent submission, we are requiring that certified copies of the court orders be

submitted.

In the event of conflicting court orders, the Office of Federal Employees’ Group Life

Insurance (OFEGLI) will pay benefits based on whichever court order has the earliest date of

execution and meets the requirement of having been received by the appropriate office on or after

the date of enactment and before the death of the insured. (A domestic relations court order from

one court does not automatically have the effect of modifying an existing domestic relations

court order from another court.)

Pub. L. 105-205 also allows a court order to direct the insured to make an irrevocable

assignment to the person(s) named in the court order. However, until the insured individual

properly completes an assignment form, the assignment does not occur.

These regulations also correct an error to § 870.506(e)(2) to state that eligible employees

who return to Federal service after a break in service of 180 days or more receive whatever

Optional insurance coverage they had before separation, if they do not submit a Life Insurance

Election specifically electing or waiving Optional insurance.

Waiver of General Notice of Proposed Rulemaking

Under section 553(b)(3)(B) and (d)(3) of title 5, United States Code, I find that good

cause exists for waiving the general notice of proposed rulemaking. These regulations

implement Pub. L. 105-205, which became effective July 22, 1998.

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 will only affect life insurance benefits of Federal

employees and retirees.

Executive Order 12866, Regulatory Review

This rule has been reviewed by the Office of Management and Budget in accordance with

Executive Order 12866.
List of Subjects in 5 CFR Part 870

Administrative practice and procedure, Government employees, Hostages, Iraq, Kuwait,

Lebanon, Life insurance, Retirement.

U.S. OFFICE OF PERSONNEL MANAGEMENT

________________________________________

Janice R. Lachance

Director

Accordingly, OPM is amending 5 CFR part 870 as follows:

Part 870–FEDERAL EMPLOYEES’ GROUP LIFE INSURANCE PROGRAM

1. The authority citation for part 870 is revised to read as follows:

Authority: 5 U.S.C. 8716; subpart J also issued under sec 599C of Pub. L. 101-513, 104

Stat. 2064, as amended; § 870.302 also issued under sections 11202(f), 11232(e), and 11246(b)

and (c) of Pub. L. 105-33, 111 Stat. 251; §§ 870.101, 870.801, 870.802, and 870.901 also issued

under Pub. L. 105-205, 112 Stat. 683.

2. In § 870.101, the definition Court order is added in alphabetical order to read as

follows:

§ 870.101 Definitions.

* * * * *

Court order means any court decree of divorce, annulment, or legal separation, or the

terms of any court order or court-approved property settlement agreement relating to any court

decree of divorce, annulment, or legal separation, the terms of which require FEGLI benefits to

be paid to a specific person or persons.

* * * * *

3. In § 870.506, the third sentence of paragraph (e)(2) is revised to read as follows:

§ 870.506 Optional insurance: cancelling a waiver.

* * * * *

(e) * * *

(2) * * * If the employee doesn’t file a Life Insurance Election, in a manner

designated by OPM, within the 31-day period, the employee gets whatever Optional insurance

coverage he/she had immediately before separating from Federal service and is considered to
have waived any other Optional insurance. * * *

* * * * *

4. In § 870.801, paragraph (a) is revised, paragraphs (d) and (e) are redesignated as

paragraphs (e) and (f), and a new paragraph (d) is added to read as follows:

§ 870.801 Order of precedence and payment of benefits.

(a) Except as provided in paragraph (d) of this section, benefits are paid according to the

order of precedence stated in 5 U.S.C. 8705(a), as follows:

* * * * *

(d) (1) If there is a court order in effect naming a specific person or persons to receive life

insurance benefits upon the death of an insured individual, Basic insurance and Option A and

Option B insurance will be paid to the person or persons named in the court order, instead of

according to the order of precedence.

(2) To qualify a person for such payment, a certified copy of the court order must be

received by the appropriate office on or after July 22, 1998, and before the death of the insured.

(3)(i) For employees, the appropriate office is their employing agency.

(ii) For annuitants, the appropriate office is OPM.

(iii) For compensationers during the first 12 months of nonpay status, the appropriate

office is their employing agency.

(iv) For compensationers after separation or the completion of 12 months in nonpay

status, the appropriate office is OPM.

(4) If, within the applicable time frames, the appropriate office receives conflicting court

orders entitling different persons to the same insurance, benefits will be paid based on whichever

court order was issued first.

* * * * *

5. In § 870.802, the first sentence of paragraph (a) is revised, and a new paragraph (i) is

added to read as follows:

§ 870.802 Designation of beneficiary.

(a) Except as provided in paragraph (i) of this section, if an insured individual wants

benefits paid differently from the order of precedence, he/she must file a designation of

beneficiary. * * *

* * * * *

(i) (1) Except as provided in paragraph (i)(2) of this section, if a court order has been

received in accordance with § 870.801(d), an insured individual cannot designate a different

beneficiary, unless

(i) The person(s) named in the court order gives written consent for the change, or

(ii) The court order is modified.

(2) If a court order has been received in accordance with § 870.801(d), and the court order

applies to only part of the insurance benefits, an insured individual can designate a different
beneficiary to receive the insurance benefits that are not included under the court order. If the

insured individual does not make a designation for these benefits and there is no previous valid

designation on file, benefits will be paid according to the order of precedence shown in 

§ 870.801(a).

(3) If a court order received in accordance with § 870.801(d) is subsequently modified

without naming a new person to receive the benefits, and a certified copy of the modified court

order is received by the appropriate office before the death of the insured, the insured individual

can designate a beneficiary. Benefits will be paid according to the order of precedence shown in

§ 870.801(d) if the insured individual does not complete a new designation of beneficiary.

6. In § 870.901, paragraph (i) is added to read as follows:

§ 870.901 Assignments permitted

* * * * *

(i) A court order can direct that an insured individual make an irrevocable assignment to

the person(s) named in the court order. For an assignment to be effective, the insured individual

must follow the procedures in § 870.902.

Billing code: 6325-01