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: 99-202 Date: February 9, 1999 

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

Payment of Premiums

GENERAL INFORMATION

________________________________________________

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.

One of those changes is to allow employees (and annuitants

and compensationers) to pay their life insurance premiums

directly if their pay (or annuity or compensation) is

insufficient to make the premium withholdings. 

The direct pay provisions became effective the first pay

period beginning on or after October 30, 1998.

________________________________________________

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

to provide instructions for implementing the direct pay

provisions of the new law.

______________________________________________________________________________

DIRECT PAYMENT OF PREMIUMS

________________________________________________

Who Is Eligible to Make Employees whose pay, on an ongoing basis, is insufficient

Direct Premium Payments? to make premium withholdings are eligible to continue their

life insurance by paying their premiums directly.
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________________________________________________

What Is Meant by an Insufficient pay on an ongoing basis means that the

“Ongoing Basis”? employing office expects that during the next 6 months or

more, an employee’s regular pay, after all other deductions,

will not be enough to cover the required withholdings.

IMPORTANT NOTE: The direct pay provision does not

apply to employees in a nonpay status. Employees in a

nonpay status are entitled to continue their FEGLI coverage

for free for up to 12 months (unless they are receiving

workers’ compensation benefits, in which case coverage is

not free). At the end of 12 months in nonpay status, FEGLI

terminates. (Effective April 24, 1999, employees in this

situation, whose coverage would otherwise terminate, may

be eligible to continue Option B by porting the coverage

and making direct premium payments. Information

concerning this portability provision will be given in a later

BAL.)

________________________________________________

What Do Agencies The procedures for dealing with insufficient pay under

Have to Do? FEGLI are similar to those in place for dealing with

insufficient pay under the Federal Employees Health

Benefits (FEHB) Program.

Agencies must have a system for identifying all employees

whose salary is too low for withholding the FEGLI

premiums.

Agencies must give employees written notice as soon as

they become aware of an ongoing insufficient pay situation. 

The notice will give employees information regarding the

choices they can make. A sample notice is attached to this

BAL.

If the employing office cannot give the notice directly to the

employee, it must send the notice by first class mail.

________________________________________________

What Are an Employee’s An employee can choose either to terminate his/her

Choices? FEGLI coverage or to continue the coverage and make

direct premium payments.
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The employee must make his/her choice, indicate it on the

notice, and return the notice to the employing office within

31 days of receiving the notice (45 days for employees

living overseas). (A notice that is mailed is considered to be

received by the employee 5 days after the date of the

notice.)

________________________________________________

What Happens If the If the employee chooses to terminate his/her FEGLI

Employee Chooses to coverage - or if the employee doesn’t return the notice

Terminate the Insurance? making a choice within the required time limit- coverage

will terminate retroactive to the end of the last pay period in

which premiums were withheld from the pay.

The employing office must prepare a memo indicating the

reason for the termination and attach it to the most recent

SF 2817 in the employee’s file. The employing office must

give the employee the information necessary for him/her to

convert the FEGLI coverage.

________________________________________________

What Are the Effects With a termination, the employee gets the 31-day

of a Termination? extension of coverage and the right to convert.

A termination is not considered a break in the continuous

coverage needed to continue FEGLI into retirement.

Following a termination, the FEGLI coverage is

automatically reinstated when the pay becomes sufficient to

make the withholdings.

________________________________________________

What Happens If the If the employee chooses to continue his/her FEGLI

Employee Chooses to coverage, he/she must agree to pay the premiums directly

Continue the Insurance? on a current basis.

The agency may set up a system to collect the premiums

itself, or it may contract with an entity such as the National

Finance Center (NFC).

________________________________________________

Can an Employee Have No. Either all of the premiums must be withheld from

Some of the Premiums pay, or all of the premiums must be paid directly. An

Withheld and Make employee can’t have both types of payments going on

Direct Payments for simultaneously.

the Rest?

________________________________________________
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Can an Employee Choose Yes. An employee with insufficient pay can terminate

to Terminate Some of the some of his/her coverage. If enough coverage is

Insurance Coverage? terminated so that the pay is sufficient for withholding the

rest, salary withholdings can continue. 

If some coverage is terminated, but the salary is still not

enough for the remaining withholdings, the employee must

make direct payments for the premiums for the remaining

coverage.

________________________________________________

What Happens If an If the employee fails to make the payment on time, the

Employee on Direct Pay employing office must notify him/her in writing that if

Doesn’t Make the payment isn’t received within 15 days after receiving the

Premium Payments? notice (45 days for those living overseas), coverage will be

cancelled. (A notice that is mailed is considered to be

received 5 days after the date of the notice.)

________________________________________________

What Are the Effects of With a cancellation, the employee does not get the 31-day

a Cancellation? extension of coverage or the right to convert.

A cancellation is considered a break in the continuous

coverage needed to continue FEGLI into retirement.

Following a cancellation, the FEGLI coverage is not

reinstated when the pay becomes sufficient to make the

withholdings.

________________________________________________

What Happens When the If the employee chose termination - or if the employee’s

Employee’s Pay Becomes life insurance terminated because he/she didn’t return the

Large Enough for the the required notice - the insurance coverage is

Premium Withholdings? automatically reinstated when the pay becomes sufficient to

cover the withholdings.

The employing office must prepare a memo noting the

reinstatement of the coverage and attach it to the most

recent SF 2817 in the employee’s file. If the employee

converted any of his/her coverage, the conversion policy

must be terminated.

If the employee chose direct pay and made the premium

payments, the premiums must start being withheld from the

employee’s pay as soon as the pay becomes sufficient. If

the agency has contracted with NFC, the employing office

must notify NFC that the premiums are again being withheld
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from the employee’s pay, so that NFC can close out their

“account” on the employee.

If the employee chose direct pay but did not make the

premium payments, the coverage remains cancelled.

______________________________________________________________________________

Abby L. Block, Chief

Insurance Policy

 and Information Division

Attachment
FEDERAL EMPLOYEES’ GROUP LIFE INSURANCE (FEGLI) OPTIONS WHEN PAY

IS INSUFFICIENT FOR WITHHOLDING PREMIUMS

Name of Employee: _____________________________ Date: _____________________

You must respond within 31 days of this notice (45 days for those living overseas) or your

FEGLI coverage will automatically terminate.

We have determined that your salary is not large enough for withholding FEGLI premiums and

will continue to be insufficient on an ongoing basis.

You have three choices: to terminate all of your FEGLI coverage, to terminate some of your

FEGLI coverage, or to continue your FEGLI coverage by paying the premiums directly on a

current basis.

TERMINATION: If you choose to terminate your coverage (or if you don’t return this notice

on time, and your coverage terminates automatically), the termination will take effect at the end of

the last pay period in which premiums were withheld. Your coverage will continue for an

additional 31 days at no cost to you. During those 31 days, you will be eligible to convert to a

nongroup policy. You have been given the information necessary for you to convert.

You may terminate all of your FEGLI coverage or just a part of it. If you terminate only a part of

your coverage, the premiums for the remaining coverage will be withheld from your salary, if it is

large enough to do so. If your pay is still insufficient for the withholdings for the remaining

insurance, you must make direct payments.

When your pay becomes sufficient for withholding: When your pay again becomes sufficient

for the premium withholdings, any terminated coverage will be reinstated automatically. If you

converted any of your coverage, you must contact the insurance company to terminate the

conversion policy.

CONTINUATION: If you choose to continue your FEGLI coverage, you must pay the

premiums directly. Your check (or money order) in the amount of __________ must be made

payable to __________________________. Include on the check your name, social security

number, a note that the payment is for “FEGLI premium,” and the pay period for which the

payment is being made. Mail to: _______________________________________________.

By choosing to continue your coverage and make direct premium payments, you are agreeing

that if you do not make the payments, your coverage will be cancelled. If your coverage is

cancelled for nonpayment, you will not have the right to convert, and your coverage will not be

reinstated if your salary eventually becomes large enough for the premium withholdings.
Please check the appropriate space(s) below, sign the notice, and return it to your employing

office at ______________________________________________.

I have read this notice, and I understand my choices. I choose the following:

1. I choose to terminate all my FEGLI coverage. I understand that the coverage will be

reinstated automatically when my pay becomes sufficient for withholding the premiums. 

________

2. I choose to terminate only the following FEGLI coverage(s):

________ Option C

________ Option A

________ Option B (Number of multiples [1-5] you want to terminate ________)

I understand that the premium for the coverage(s) that remain will be withheld from my

pay if it is sufficient for doing so; otherwise I must pay my premiums directly on a current

basis.

3. I choose to continue my FEGLI coverage. I understand that if I do not make the

payments on a current basis, my coverage will be cancelled and will not be reinstated when

my pay becomes sufficient for withholding the premiums. ________

______________________________________ ___________________

(Employee’s signature) (Date)

If you have any questions, contact _________________________ at ________________. [Insert

name and phone number of agency contact]