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: 99-209 Date: April 26, 1999

Subject: Federal Employees= Group Life Insurance: Important Changes

GENERAL INFORMATION

________________________________________________

Background Benefits Administration Letter (BAL) 99-203, issued

February 9, 1999, provided information concerning the

election of unreduced Options B and C at retirement. This

provision becomes effective April 24, 1999.

BAL 99-204, issued February 10, 1999, provided the new

FEGLI premiums and age bands.

________________________________________________

Purpose The purpose of this BAL is to inform agencies of some

changes to the information given in the earlier BALs.

______________________________________________________________________________

ELECTION OF UNREDUCED OPTIONS B AND C

________________________________________________

Old Information BAL 99-203 stated that when employees retire (or when

they become insured as compensationers), they must elect

either Full Reduction for all of their multiples of Option B

or No Reduction for all of their multiples. The BAL stated

that retiring employees could not elect to have some

multiples reduce and others not reduce. (With Full

Reduction, each multiple reduces 2% a month beginning

with the 2nd month after the annuitant=s 65th birthday. The

reductions continue for 50 months, at which time the

insurance stops.)
-2-

The BAL also stated that an annuitant who chose Full

Reduction could not change to No Reduction more than 30

days after he/she receives the first regular annuity check.

The same information was given for Option C.

________________________________________________

New Information At the time of retirement or becoming insured as a

compensationer, employees will elect how many of their

Option B and C multiples they wish to continue into

retirement. (EXCEPTION: Employees who have assigned

their insurance cannot reduce the number of multiples of

their Option B coverage.) 

If an employee chooses to continue fewer multiples than

he/she is eligible to continue, those multiples that are not

continued are considered cancelled; there is no 31-day

extension of coverage or right to convert. Employees don=t

need to complete an SF 2817 to reduce the number of

multiples of Options B and C at retirement.

In addition to choosing the number of multiples they want

to continue, retiring employees and compensationers will

also choose whether to have all of those multiples reduce or

none of them reduce.

If an employee does not make an election, he/she will

automatically continue all multiples for which he/she is

eligible and will get Full Reduction for all multiples.

________________________________________________

How Will a Retiring Retiring employees and employees becoming insured as

Employee Make the compensationers will make their election on SF 2818,

Election? which is being revised to accommodate these changes.

Until the new SF 2818 is available, agencies should

continue to use the current SF 2818 for the election

regarding Basic insurance, and should use the attached

Option B and C Election Notice for elections regarding

Options B and C. Include the Option B and C Election

Notice with the retirement package when you submit it to

the Office of Personnel Management (OPM).

________________________________________________
-3-

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

Compensationer Change can change to Full Reduction at any time (unless the

the Election? insurance has been assigned). If the individual is over age 65,

the amount of insurance in force will be computed as if

he/she had elected Full Reduction originally. There will be

no refund of premiums.

An annuitant who elects Full Reduction can change to No

Reduction at any time up until the 2nd month following

his/her 65th birthday. Once an annuity check has been issued

for which no premiums are withheld for the Full Reduction

multiples, an annuitant cannot change his/her election from

Full Reduction to No Reduction.

As with the initial election, up until age 65 these changes

apply to all multiples, i.e. the person can change to No

Reduction or Full Reduction for all multiples.

________________________________________________

What Is the Difference Cancelling a multiple causes that coverage (and the

between Cancelling premiums) to stop right away. If the annuitant becomes

a Multiple and Changing reemployed, he/she cannot get that coverage back unless

to Full Reduction? there is a break in service of at least 180 days. If an

annuitant dies after cancelling a multiple, no benefits will be

paid for that multiple.

Changing to Full Reduction also causes the coverage to stop,

but the coverage goes away gradually - 2% each month -

instead of all at once. And the reductions don=t start (and the

premiums don=t stop) until the 2nd month after the

annuitant/compensationer reaches age 65. If an annuitant

dies after changing a multiple to Full Reduction, benefits will

be paid on whatever amount of that multiple is left at the

time of death.

________________________________________________

What If the Insurance If the insurance has been assigned, the retiring employee

Has Been Assigned? makes the initial election regarding Option B reductions, just

as he/she does for Basic.

Once the retiring employee who has assigned the insurance

has made an Option B election, he/she can change only from

Full Reduction to No Reduction (before reaching age 65);

the individual cannot change from No Reduction to Full

Reduction. Conversely, only the assignee can change from

No Reduction to Full Reduction; the assignee cannot change

from Full Reduction to No Reduction. (Only the insured

individual can go up; only the assignee can go down.)
-4-

Option C isn=t subject to assignment.

________________________________________________

Is There Anything Else Yes. Shortly before an annuitant/compensationer reaches

That=s New? age 65, OPM=s Office of Retirement Programs (ORP) will

send the person a letter reminding him/her of the election

made at retirement and advising the person of the premiums.

 The individual will be able to change the election and at that

time, he/she will be able to choose to have some multiples

reduce and some not reduce. For any multiples for which

the annuitant/compensationer elects Full Reduction,

premiums will stop at age 65; for those for which the

annuitant/compensationer elects No Reduction, premiums

will continue.

EXCEPTION: If the insurance has been assigned and the

annuitant elected No Reduction for all multiples, he/she

cannot change that election. In this instance, ORP will send

the annuitant a letter regarding Option C and will send the

assignee(s) a letter regarding Option B.

________________________________________________

What Happens If the If the individual is already age 65 or older at the time of

Employee Is Already retirement, ORP will send a different version of the

Age 65 or over When reminder letter as soon as they have processed the

He/She Retires? application.

________________________________________________

Will Those Who Are In the upcoming election opportunity, persons who are

Already Retired Be Given already retired or insured as compensationers on April 24,

the Same Election 1999, and who have Option B, will be allowed to choose

Opportunities? Full Reduction or No Reduction for their Option B coverage.

 ORP is preparing a letter to all annuitants and

compensationers about this.

Those who are under age 65 will choose either Full

Reduction or No Reduction for all their multiples. Shortly

before they turn 65, they will receive a reminder letter, as

discussed above. They will then be able to change their

election, including electing to have some multiples reduce

and some not reduce. If the insurance has been assigned, the

letter will go to the assignee(s).

Annuitants and compensationers over 65 whose Option B

has already started reducing will be electing whether to

freeze some or all of their multiples at the amount in force on

April 24, 1999.
-5-

There is no election opportunity for current annuitants and

compensationers regarding Option C.

______________________________________________________________________________

NEW PREMIUMS AND AGE BANDS

________________________________________________

What Has Not Changed? The following things have not changed and will still go into

effect the first pay period beginning on or after April 24,

1999, as previously announced:

$ New age bands for Option C

$ Change in the birthday rule

$ Premium changes for Basic insurance

$ Premium changes for Option A

$ Premium changes for Option B up through age 64

$ Premium changes for Option C up through age 64

________________________________________________

What Has Changed? The following things have been changed:

$ Option B premiums for those over age 64

$ Option C premiums for those over age 64 for 1999

________________________________________________

What Is Happening to the When the other premium changes go into effect on April

Option B Premiums for 24, the new (higher) premiums for those over age 64 will

Those over Age 64? not go into effect. The premiums for persons over age 64

will be the same as those for persons age 60-64.

We will notify you at a later date if there are premium

changes in future years.

________________________________________________

What Is Happening to the The premiums for the new age bands for Option C are

Option C Premiums for being delayed for a year. They will go into effect the first

Those over Age 64? pay period beginning on or after April 24, 2000.

________________________________________________

Payroll Office Payroll offices will be notified of these changes through a

Notification Payroll Office Letter.

________________________________________________

The Open Enrollment The FEGLI 99 Open Enrollment Period Pamphlet (FE 74

Pamphlet A (FE 74 B for the Postal Service) contains the 1999

premiums. It refers those over 64 to the FEGLI Booklet or

website or to their human resources office for information on

the Option B and C premiums after 1999.
-6-

The pamphlet was prepared at a time when we thought we

would have Option B premium information available. If you

receive inquiries about the Option B premium for future

years for those who are over age 64, tell people that OPM

will send out any new information on the premiums as soon

as it becomes available.

________________________________________________

CD-ROM The printed version of the FEGLI Booklet is being revised to

show the correct rates. However, page 18 of the PDF

version of the Booklet on the CD-ROM contains the

previously-announced higher rates for Options B and C for

those over age 64. There is a note on that page that says AIf

rates change, your human resources office will tell you.@ If

anyone asks, give him/her the revised premium amounts

discussed above.

________________________________________________

Premiums for Those Who The extra premiums for those who elect 50% Reduction

Elect 50% Reduction or or No Reduction at retirement (or when becoming insured

No Reduction for Basic as compensationers) are also changing as of April 24,

Insurance at Retirement 1999. While you don=t need to program these premiums into

your computer systems, you should be aware of them for

retirement counseling purposes. (The premiums shown on

the February 1996 version of the SF 2818 will no longer be

valid.)

The monthly amounts for these Basic insurance elections

have increased from $0.52 to $0.59 per $1,000 for 50%

Reduction and from $1.69 to $2.04 per $1,000 for No

Reduction. These are in addition to the Aregular@ premium

for Basic insurance. The regular premium for Basic

insurance stops when an annuitant or compensationer

reaches age 65; only these extra premiums continue.

______________________________________________________________________________

Abby L. Block, Chief

Insurance Policy

 and Information Division

Attachment
OPTION B AND C ELECTION NOTICE

PART A - To Be Completed by Employing Agency

1. _________________________ 2. _________________ 3. ___________________

 Name of Employee Date of Birth Social Security Number

4. ___________________________ 5. ___________________________

 Number of Multiples of Option B Number of Multiples of Option C

 the Employee Is Eligible to Continue the Employee Is Eligible to Continue

_____________________________________________________________________________________

PART B - To Be Completed by Employee and Returned to the Employing Agency

OPTION B ELECTION

Number of Multiples of Option B I Want to Continue ______ (This number cannot be more than the

number shown in #4 above. If you have assigned your insurance, this number must be the same as the

number shown in #4 above.)

FULL REDUCTION: I understand that if I elect Full Reduction, my Option B coverage will begin to

reduce the 2nd month after my 65th birthday (or the 2nd month after I retire, if I am already over 65). The

reduction will be 2% each month for 50 months, at which time the coverage will stop. I will not pay any

premiums for this coverage after I turn 65. I understand that if I choose Full Reduction, I can change to

No Reduction at any time until I reach age 65.

NO REDUCTION: I understand that if I elect No Reduction, my Option B coverage will not reduce

when I reach 65. I will continue to pay premiums for this coverage. I understand that if I choose No

Reduction, I can change to Full Reduction at any time (unless I have assigned my insurance). If I am over

age 65 when I change my election, the amount of Option B remaining will be computed as if I had elected

Full Reduction initially, and there will be no refund of my premiums.

CHECK ONLY ONE:

I want Full Reduction ______ I want No Reduction ______

____________________________________________ ________________________

Signature of Employee Date
OPTION C ELECTION

Number of Multiples of Option C I Want to Continue ______ (This number cannot be more than the

number shown in #5 on the previous page.)

FULL REDUCTION: I understand that if I elect Full Reduction, my Option C coverage will begin to

reduce the 2nd month after my 65th birthday (or the 2nd month after I retire, if I am already over 65). The

reduction will be 2% each month for 50 months, at which time the coverage will stop. I will not pay any

premiums for this coverage after I turn 65. I understand that if I choose Full Reduction, I can change to

No Reduction at any time until I reach age 65.

NO REDUCTION: I understand that if I elect No Reduction, my Option C coverage will not reduce

when I reach 65. I will continue to pay premiums for this coverage. I understand that if I choose No

Reduction, I can change to Full Reduction at any time. If I am over age 65 when I change my election, the

amount of Option C remaining will be computed as if I had elected Full Reduction initially, and there will

be no refund of my premiums.

CHECK ONLY ONE:

I want Full Reduction ______ I want No Reduction ______

____________________________________________ ________________________

Signature of Employee Date

_____________________________________________________________________________________

ADDITIONAL INFORMATION

Before you turn 65, you will receive a letter reminding you of the election you made and letting you know

what the premiums will be. At that time you will be allowed to change your election.

NOTE: If you have assigned your insurance and you elect No Reduction for Option B, you will not be

allowed to change that election for any multiples of Option B. Instead, the reminder letter will be sent to

your assignee(s).