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: 97-211 Date: October 30, 1997 

Subject: Federal Employees' Group Life Insurance: New FEGLI Regulations

GENERAL INFORMATION

_____________________________________________________

Regulations Rewritten The Federal Employees' Group Life Insurance (FEGLI)

regulations have been completely rewritten.

The final regulations were published in the Federal Register on

September 17, 1997, and they became effective October 17,

1997. A copy is attached.

_____________________________________________________

Merger of 5 Parts The new regulations eliminate parts 871, 872, 873, and 874 of

title 5. All material previously contained in those parts has been

merged with the material in part 870, so that everything is now

contained in the one part (870).

_____________________________________________________

Other Information The order of the regulatory material has been somewhat changed,

and the language has been simplified to make the regulations

easier to understand.

These regulations also finalize the Living Benefits and

assignment regulations, which were previously published as

interim regulations.

______________________________________________________________________________

CHANGE TO ASSIGNMENT REGULATIONS

_____________________________________________________

Previous Regulations When the assignment regulations were originally published, they
stated that if an employee or annuitant elected a Living Benefit,

he/she could not then assign any remaining insurance.

_____________________________________________________

New Regulations Effective October 17, 1997, employees and annuitants who have

elected a Living Benefit may assign the remainder of their

insurance (Option A, Option B, and any remaining Basic

insurance).

(We have not changed the reverse, however. A person who

assigns his/her insurance cannot elect a Living Benefit; nor can

the assignee elect a Living Benefit on the person's behalf.)

_____________________________________________________

Timing Is Critical A Living Benefit election is not effective until the insured

individual has cashed or deposited the Living Benefit check.

An assignment, however, is effective the day the employing

office receives a properly completed assignment form (RI 76-10).

Therefore, if an employee or annuitant submits an assignment

form before the Living Benefit election is complete (i.e., before

cashing or depositing the Living Benefit check), he/she is no

longer eligible to receive a Living Benefit.

To make sure employees and annuitants are aware of the

possibility of assigning their remaining insurance - and the need

to be careful in timing the assignment - the Office of Federal

Employees' Group Life Insurance (OFEGLI) has started mailing

a notice to all persons who request a Living Benefit application.

_____________________________________________________

Advising Employees If the employing office has received an FE-8A (Agency

Certification for FEGLI Living Benefits, indicating that an

employee has applied for Living Benefits) but has not received an

FE-8C (Explanation of Benefits, indicating that the person has

cashed or deposited the check), the Living Benefits election may

not yet be complete.

If an employee in these circumstances requests an assignment

form, the employing office should ask whether he/she intends to

continue with the Living Benefit application. If the employee

wants to continue with the Living Benefits application, the

employing office should remind him/her not to turn in the 

assignment form until after cashing or depositing the Living
Benefit check.

Premature Assignments If an employee does submit a properly completed assignment

form before the employing office has received an FE-8C, the

employing office should contact OFEGLI immediately, by calling

Ms. Laurie Buckley on 212-578-7505.

If OFEGLI says that the Living Benefit check has been cashed or

deposited - and the agency just hasn't received the FE-8C yet -

everything is OK.

If OFEGLI says that the Living Benefit check hasn't been issued

yet, notify them that the employee has assigned his/her

insurance; also notify the employee that he/she is no longer

eligible to elect a Living Benefit because of the assignment. 

OFEGLI will void the Living Benefit application and will send a

notice to that effect to the individual.

If OFEGLI says that the Living Benefit check has been issued but

not yet cashed, OFEGLI will put a stop payment on the check

and will notify the individual that the assignment makes him/her

ineligible to receive a Living Benefit and that he/she must return

the Living Benefit check to OFEGLI.

_____________________________________________________

Information for When an employing office is contacted by a viatical

Viatical Settlement settlement firm regarding an employee who has elected a

Companies Living Benefit, the employing office should notify the viatical

settlement firm of the Living Benefit and the amount of Basic

insurance left, if any.

______________________________________________________________________________

Abby L. Block, Chief

Insurance Policy 

 and Information Division

Attachment
 Publication date September 17, 1997

6325-01

OFFICE OF PERSONNEL MANAGEMENT

5 CFR Parts 870, 871, 872, 873, and 874

RIN: 3206-AF32, 3206-AG79, 3206-AG68

Federal Employees' Group Life Insurance Program:

Merger of Life Insurance Regulations;

Living Benefits; Assignment of Life Insurance

AGENCY: Office of Personnel Management.

ACTION: Final rule.

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

final regulations to combine the five parts of title 5 of the

Code of Federal Regulations relating to the Federal Employees'

Group Life Insurance (FEGLI) Program and to simplify the language

of the regulations. This will ease administration and aid in

understanding the Program. We also are issuing final regulations

to implement the FEGLI Living Benefits Act and assignment of life

insurance.

EFFECTIVE DATE: October 17, 1997

FOR FURTHER INFORMATION CONTACT: Karen Leibach, 202-606-0004.

SUPPLEMENTARY INFORMATION: On May 3, 1995, OPM published

proposed regulations (60 FR 21759), merging the five parts of

title 5 of the Code of Federal Regulations relating to the

Federal Employees' Group Life Insurance Program. 

The merger deletes parts 871, 872, 873, and 874 and combines

the information now contained in those parts into an expanded

part 870. This results in a complete presentation of material in

one place.

In addition to merging the regulations, we reorganized the

material; incorporated some material formerly found in Federal

Personnel Manual (FPM) Supplement 870-1, which was abolished as

of December 31, 1994; and simplified the language to make the

regulations easier to understand.

We received one comment from a retiree organization, which

expressed approval of the consolidation and the simplified

language.

We made changes to reflect statutory changes since the

proposed regulations were prepared and made other minor language

modifications and clarifications.

On June 15, 1995, OPM published interim regulations (60 FR
-2-

31371), implementing Public Law 103-409, the FEGLI Living

Benefits Act, which permits terminally ill individuals covered by

FEGLI to elect a lump sum payment of their Basic insurance as a

living benefit.

We received one comment from an individual who suggested

allowing covered individuals to make such an election prior to

their becoming terminally ill and allowing someone other than the

insured to make the election. The Living Benefits Act states

that a terminally ill individual may elect a Living Benefit. 

Terminally ill is defined as having a life expectancy of 9 months

or less. Therefore, OPM does not have the statutory authority to

permit such elections prior to an individual's being diagnosed as

terminally ill. We reviewed the requirement that only the

insured may elect a Living Benefit. At the present time we are

not experiencing a problem in this area. However, we will

continue to monitor the situation to determine whether any

changes should be made in the future.

We made one significant change to the Living Benefits

regulations. The interim regulations state that if an individual

elects a Living Benefit, he/she cannot then assign any remaining

insurance. We reevaluated that position and have revised the

regulations to state that an individual can assign his/her

remaining insurance (if any) following a Living Benefit election. 

We also made changes in numbering and language to conform the

Living Benefits regulations to the order and style of the merged

regulations.

On October 4, 1995, OPM published interim regulations (60 FR

51881), implementing Section 4 of Public Law 103-336, which

permits all insured Federal employees and former employees to

irrevocably assign ownership of their FEGLI insurance. 

Previously, only judges could assign ownership of their

insurance.

We received one comment from a Federal agency asking whether

the reference to "other person(s)" was intended to prevent the

assignee from designating a corporation as a contingent

beneficiary and also suggesting that the regulations include

instructions concerning procedures for reassigning the insurance. 

The regulations in place at the time included a "corporation" in

the definition of "person." The definition of "assignment" also

specifically includes transfer of ownership to a corporation. We

do not believe that regulations are the appropriate forum for

detailed instructions. Instructions more properly belong in

handbooks, operating manuals, and other guidance to agencies.

The commentor also suggested some perfecting language

changes. We accepted some of these suggestions. We also made

changes in numbering and language to conform the assignment

regulations to the order and style of the merged regulations.

Regulatory Flexibility Act
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I certify that these regulations will not have a significant

economic impact on a substantial number of small entities,

because the regulations will affect only Federal employees,

annuitants, and compensationers.

List of Subjects in 5 CFR Parts 870, 871, 872, 873 and 874

Administrative practice and procedure, Government employees,

Hostages, Iraq, Kuwait, Lebanon, Life insurance, Retirement.

U.S. OFFICE OF PERSONNEL MANAGEMENT

_____________________________________

Janice R. Lachance

Acting Director

Accordingly, OPM is amending title 5, Code of Federal

Regulations, as follows:

1. Part 870 is revised to read as follows:

PART 870 - FEDERAL EMPLOYEES' GROUP LIFE INSURANCE PROGRAM

Subpart A - Administration and General Provisions

Sec.

870.101 Definitions.

870.102 The policy.

870.103 Correction of errors.

870.104 Initial decision and reconsideration.

Subpart B - Types and Amount of Insurance

870.201 Types of insurance.

870.202 Basic insurance amount (BIA).

870.203 Post-election BIA.

870.204 Annual rates of pay.

870.205 Amount of Optional insurance.

870.206 Accidental death and dismemberment.

Subpart C - Eligibility

870.301 Eligibility for life insurance.

870.302 Exclusions.

Subpart D - Cost of Insurance

870.401 Withholdings and contributions for Basic insurance.

870.402 Withholdings for Optional insurance.

870.403 Withholdings and contributions following a Living 

 Benefit election.

870.404 Withholdings and contributions provisions that apply to 

 both Basic and Optional insurance.

870.405 Direct premium payments under 5 U.S.C. chapter 84 
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 (Federal Employees' Retirement System - FERS).

Subpart E - Coverage

870.501 Basic insurance: effective dates of automatic coverage.

870.502 Basic insurance: waiver/cancellation of insurance.

870.503 Basic insurance: cancelling a waiver.

870.504 Optional insurance: election.

870.505 Optional insurance: waiver/cancellation of insurance.

870.506 Optional insurance: cancelling a waiver.

870.507 Open enrollment periods.

870.508 Nonpay status.

870.509 Transfers to international organizations.

Subpart F - Termination and Conversion

870.601 Termination of Basic insurance.

870.602 Termination of Optional insurance.

870.603 Conversion of Basic and Optional insurance.

Subpart G - Annuitants and Compensationers

870.701 Eligibility for life insurance.

870.702 Election of Basic insurance.

870.703 Amount of life insurance.

870.704 Reinstatement of life insurance.

870.705 Reemployed annuitants.

870.706 MRA-plus-10 annuitants.

Subpart H - Order of Precedence and Designation of Beneficiary

870.801 Order of precedence and payment of benefits.

870.802 Designation of beneficiary.

870.803 Child incapable of self-support.

Subpart I - Assignments of Life Insurance

870.901 Assignments permitted.

870.902 Making an assignment.

870.903 Effective date of assignment.

870.904 Amount of insurance.

870.905 Withholdings.

870.906 Cancellation of insurance.

870.907 Termination and conversion.

870.908 Annuitants and compensationers.

870.909 Designations and changes of beneficiary.

870.910 Notification of current addresses.

Subpart J - Benefits for United States Hostages in Iraq and

Kuwait and United States Hostages Captured in Lebanon

870.1001 Purpose.

870.1002 Definitions.

870.1003 Coverage and amount of insurance.
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870.1004 Effective date of insurance.

870.1005 Premiums.

870.1006 Cancellation of insurance.

870.1007 Termination and conversion.

870.1008 Order of precedence and designation of beneficiary.

870.1009 Responsibilities of the U.S. Department of State.

Subpart K - Living Benefits

870.1101 Eligibility for a Living Benefit.

870.1102 Amount of a Living Benefit.

870.1103 Election procedures.

Authority: 5 U.S.C. 8716.

Subpart A - Administration and General Provisions

§ 870.101 Definitions.

Annuitant means a former employee entitled to an annuity

under a retirement system established for employees. This

includes the retirement system of a nonappropriated fund

instrumentality of the Department of Defense or the Coast Guard.

Assign and assignment refer to an individual's irrevocable

transfer to another individual, corporation, or trustee all

ownership of FEGLI coverage (except Option C).

Assignee means the individual, corporation, or trustee to

which an individual irrevocably transfers ownership of FEGLI

coverage (except Option C).

Child , as used in the definition of family member for Option

C coverage , means a legitimate child, an adopted child, a

stepchild who lives with the employee or former employee in a

regular parent-child relationship, or a recognized natural child. 

It does not include a stillborn child, a grandchild, or a foster

child. The child must be under age 22 or, if age 22 or over,

must be incapable of self-support because of a mental or physical

disability which existed before the child reached age 22.

Child , as used in the order of precedence for payment of

benefits , means a legitimate child, an adopted child, or a

recognized natural child, of any age. It does not include a

stepchild, a stillborn child, a grandchild, or a foster child. 

An individual who has reached age 18 is considered an adult and

can receive a benefit payment in his/her name. However, if the

age of adulthood where the individual has his/her legal residence

is set at a lower age, the individual is considered an adult upon

reaching that lower age. Adopted children do not inherit from

their birth parents under the order of precedence stated in 5

U.S.C. 8705, other than as designated beneficiaries, but inherit

from their adoptive parents. However, a child who is adopted by

the spouse of a birth parent inherits from that birth parent.
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Compensation means compensation under subchapter I of

chapter 81 of title 5, United States Code, which is payable

because of an on-the-job injury or disease.

Compensationer means an employee or former employee who is

entitled to compensation and whom the Department of Labor

determines is unable to return to duty.

Date of retirement , as used in 5 U.S.C. 8706(b)(1)(A), means

the starting date of annuity.

Dependent means living with or receiving regular and

substantial support from the insured individual.

Duly appointed representative of the insured's estate means

an individual named in a court order granting the individual the

authority to receive, or the right to possess, the insured's

property; the order must be issued by a court having jurisdiction

over the insured's estate. Where the law of the insured's legal

residence provides for the administration of estates through

alternative procedures which do away with the need for a court

order, this term also means an individual who shows that he/she

is entitled to receive, or possess, the insured's property under

the terms of those alternative procedures.

Employee means an individual defined by section 8701(a) of

title 5 United States Code.

Employing office means the agency office or retirement

system office that has responsibility for life insurance actions.

(1) The Administrative Office of the United States Courts is

the employing office for judges of the following courts:

(i) All United States Courts of Appeals;

(ii) All United States District Courts;

(iii) The Court of International Trade;

(iv) The Court of Federal Claims; and

(v) The District Courts of Guam, the Northern Mariana

Islands, and the Virgin Islands.

(2) The Washington Headquarters Services is the employing

office for judges of the United States Court of Appeals for the

Armed Forces.

(3) The United States Tax Court is the employing office for

judges of the United States Tax Court.

(4) The United States Court of Veterans Appeals is the

employing office for judges of the United States Court of

Veterans Appeals.

Family member means a spouse (including a valid common law

marriage) and unmarried dependent child(ren).

Immediate annuity means

(1) An annuity that begins no later than 1 month after the

date the insurance would otherwise stop (the date of separation

from service), and 

(2) An annuity under § 842.204(a)(1) of this title for which

the starting date has been postponed under § 842.204(c) of this

title.
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Judge means an individual appointed as a Federal justice or

judge under Article I or Article III of the Constitution.

OFEGLI means the Office of Federal Employees' Group Life

Insurance, which pays benefits under the policy.

OPM means the Office of Personnel Management.

OWCP means the Office of Workers' Compensation Programs,

U.S. Department of Labor, which administers subchapter I of

chapter 81 of title 5, United States Code.

Parent means the mother or father of a legitimate child or

an adopted child. The term parent includes the mother of a

recognized natural child; it also includes the father of a

recognized natural child if the recognized natural child meets

the definition provided below.

Recognized natural child , with respect to paternity, is one

for whom the father meets one of the following:

(1)(i) Has acknowledged paternity in writing;

(ii) Was ordered by a court to provide support;

(iii) Before his death, was pronounced by a court to be the

father;

(iv) Was established as the father by a certified copy of

the public record of birth or church record of baptism, if the

insured was the informant and named himself as the father of the

child; or

(v) Established paternity on public records, such as records

of schools or social welfare agencies, which show that with his

knowledge the insured was named as the father of the child.

(2) If paternity is not established by paragraph (1) of this

definition, such evidence as the child's eligibility as a

recognized natural child under other State or Federal programs or

proof that the insured included the child as a dependent child on

his income tax returns may be considered when attempting to

establish paternity.

Reconsideration means the final level of administrative

review of an employing office's initial decision to determine if

the employing office followed the law and regulations correctly

in making the initial decision concerning FEGLI eligibility and

coverage.

Service means civilian service which is creditable under

subchapter III of chapter 83 or chapter 84 of title 5, United

States Code. This includes service under a nonappropriated fund

instrumentality of the Department of Defense or the Coast Guard

for an individual who elected to remain under a retirement system

established for employees described in section 2105(c) of title

5.

Terminally ill means having a medical prognosis of a life

expectancy of 9 months or less.

Underdeduction means a failure to withhold the required

amount of life insurance deductions from an individual's pay,

annuity, or compensation. This includes nondeductions (when none
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of the required amount was withheld) and partial deductions (when

only part of the required amount was withheld).

§ 870.102 The policy.

Basic, Option A, Option B, and Option C benefits are payable

according to a contract with the company or companies that issue

a policy under § 8709 of title 5, United States Code. Any court

action to obtain money due from this insurance policy must be

taken against the company that issues the policy.

§ 870.103 Correction of errors.

(a) The employing office may make corrections of

administrative errors regarding coverage or changes in coverage. 

Retroactive corrections are subject to the provisions of

§ 870.401(f).

(b) OPM may order correction of an error after reviewing

evidence that it would be against equity and good conscience not

to do so.

§ 870.104 Initial decision and reconsideration.

(a) An individual may ask his/her agency or retirement

system to reconsider its initial decision denying life insurance

coverage, the opportunity to change coverage, or the opportunity

to assign insurance.

(b) An employing office's decision is an initial decision

when the employing office gives it in writing and informs the

individual of the right to an independent level of review

(reconsideration) by the appropriate agency or retirement system.

(c) A request for reconsideration must be made in writing

and must include the employee's (or annuitant's) name, address,

date of birth, Social Security number, reason(s) for the request,

and, if applicable, retirement claim number.

(d) A request for reconsideration must be made within 30

calendar days from the date of the initial decision. This time

limit may be extended when the individual shows that he/she was

not notified of the time limit and was not otherwise aware of it

or that he/she was unable, due to reasons beyond his/her control,

to make the request within the time limit.

(e) The reconsideration must take place at or above the

level at which the initial decision was made.

(f) After reconsideration, the agency or retirement system

must issue a final decision to the insured individual. This

decision must be in writing and must fully state the findings.

Subpart B - Types and Amount of Insurance

§ 870.201 Types of insurance.

(a) There are two types of life insurance under the FEGLI
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Program: Basic and Optional.

(b) There are three types of Optional insurance: Option A

(standard optional insurance), Option B (additional optional

insurance), and Option C (family optional insurance).

§ 870.202 Basic insurance amount (BIA).

(a)(1) An employee's Basic insurance amount (BIA) is either

(i) his/her annual rate of basic pay, rounded to the next higher

thousand, plus $2,000; or (ii) $10,000; whichever is higher,

unless an employee has elected a Living Benefit under subpart K

of this part. However, the BIA can never be more than the annual

rate of pay for Level II Executive Schedule positions under §

5313 of title 5, U.S.C., rounded to the next higher thousand,

plus $2,000.

(2) The BIA of an individual who is eligible to continue

Basic life insurance coverage as an annuitant or compensationer

is the BIA in effect at the time his/her insurance as an employee

would stop under § 870.601.

(b) An employee's BIA automatically changes whenever annual

pay is increased or decreased by an amount sufficient to raise or

lower pay to a different $1,000 bracket, unless the employee has

elected a Living Benefit under subpart K of this part.

(c) The amount of an employee's Basic life insurance

coverage is equal to his/her BIA multiplied by the appropriate

factor based on the employee's age, as follows:

Age Factor

 35 or under 2.0

 36 1.9

 37 1.8

 38 1.7

 39 1.6

 40 1.5

 41 1.4

 42 1.3

 43 1.2

 44 1.1

 45 or over 1.0

§ 870.203 Post-election BIA.

(a) The BIA of an individual who elects a Living Benefit

under subpart K of this part is the amount of insurance left

after the effective date of the Living Benefit election. This

amount is the individual's post-election BIA.

(1) The post-election BIA of an individual who elects a full

Living Benefit is 0.

(2) The post-election BIA of an employee who elects a
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partial Living Benefit is the BIA as of the date OFEGLI receives

the completed Living Benefit application (the "pre-election"

BIA), reduced by the percentage which the partial lump-sum

payment represents of the full Living Benefit payment the

employee could have received if he/she elected a full Living

Benefit; this amount is rounded up or down to the nearest

multiple of $1,000 or, if midway between multiples, to the next

higher multiple.

(b) The post-election BIA cannot change after the effective

date of the Living Benefit election.

(c) For purposes of computing the payment of benefits upon

the death of an insured individual who elected a partial Living

Benefit, the post-election BIA will be multiplied by the age

factor in effect on the date OFEGLI received the completed Living

Benefit application.

§ 870.204 Annual rates of pay.

(a)(1) An insured employee's annual pay is his/her annual

rate of basic pay as fixed by law or regulation.

(2) Annual pay for this purpose includes the following:

(i) Interim geographic adjustments and locality-based

comparability payments as provided by Pub. L. 101-509 (104 Stat.

1479);

(ii) Premium pay for standby duty for Federal civilian

firefighters under 5 U.S.C. 5545(c)(1);

(iii) Premium pay for overtime inspectional service for

customs officers as provided by Pub. L. 103-66 (107 Stat. 453);

(iv) For a law enforcement officer as defined under 5 U.S.C.

8331(20) and §§ 831.902 and 842.802 of this title, premium pay

for administratively uncontrollable overtime under 5 U.S.C. 5545

(c)(2);

(v) Night differential pay for wage employees;

(vi) Environmental differential pay for employees exposed to

danger or physical hardship;

(vii) Tropical differential pay for citizen employees in

Panama;

(viii) Special pay adjustments for law enforcement officers;

(ix) Availability pay for criminal investigators under 5

U.S.C. 5545a; and

(x) Bonuses for physicians and dentists of the Department of

Veterans Affairs under Pub. L. 96-330 (94 Stat. 1030).

(b) To convert a pay rate of other than annual salary to an

annual rate, multiply the pay rate by the number of pay units in

a 52-week work year.

(c) The annual pay for a part-time employee is his/her basic

pay applied to his/her tour of duty in a 52-week work year.

(d) The annual pay for an employee on piecework rates is the

total basic earnings for the previous calendar year, not counting
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premium pay for overtime or holidays.

(e) The annual pay for an employee with a regular schedule

who works at different pay rates is the weighted average of the

rates at which the employee is paid, projected to an annual

basis.

(f) The annual pay for a non-Postal intermittent employee or

an employee who works at different pay rates without a regular

schedule is the annual rate which he/she is receiving at the end

of the pay period.

(g) If an employee legally serves in more than 1 position at

the same time, and at least 1 of those positions entitles him/her

to life insurance coverage, the annual pay is the sum of the

annual basic pay fixed by law or regulation for each position. 

Exception: this doesn't apply to part-time flexible schedule

employees in the Postal Service.

§ 870.205 Amount of Optional insurance.

(a) Option A coverage is $10,000. However, if an employee's

annual rate of pay is more than the sum of the annual rate of

basic pay for Level II Executive Schedule positions under 5

U.S.C. 5313 plus $10,000, Option A coverage automatically

increases. The amount of Option A coverage in this case is the

difference between the employee's annual rate of pay, (rounded to

the next higher thousand if not already an even thousand), and

the maximum allowable BIA.

(b)(1) Option B coverage comes in 1, 2, 3, 4, or 5 multiples

of an employee's annual pay (after the pay has been rounded to

the next higher thousand, if not already an even thousand). A

multiple cannot be more than the annual rate of basic pay for

Level II Executive Schedule positions under 5 U.S.C. 5313,

rounded to the next higher thousand.

(2) The amount of Option B coverage automatically changes

whenever annual pay is increased or decreased by an amount

sufficient to raise or lower pay to a different $1,000 bracket.

(c) Option C coverage is $5,000 payable upon the death of a

spouse and $2,500 payable upon the death of an eligible child. 

Payments are made to the insured individual.

§ 870.206 Accidental death and dismemberment.

(a)(1) Accidental death and dismemberment coverage is an

automatic part of Basic and Option A insurance for employees.

(2) There is no accidental death and dismemberment coverage

with Options B and C.

(3) Individuals who are insured as annuitants or

compensationers do not have accidental death and dismemberment

coverage.

(b)(1) Under Basic insurance, accidental death benefits are

equal to the BIA, but without the age factor described in
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§ 870.202(c).

(2) Under Option A, accidental death benefits are equal to

the amount of Option A.

(c)(1) Under Basic insurance, accidental dismemberment

benefits for the loss of a hand, foot, or eye are equal to onehalf the BIA. For loss of 2 or more of these in a single

accident, benefits are equal to the BIA.

(2) Under Option A, accidental dismemberment benefits for

the loss of a hand, foot, or eye are equal to one-half the amount

of Option A. For loss of 2 or more of these in a single

accident, benefits are equal to the amount of Option A.

(3) Accidental dismemberment benefits are paid to the

employee.

Subpart C - Eligibility

§ 870.301 Eligibility for life insurance.

(a) Each nonexcluded employee is automatically insured for

Basic insurance unless he/she waives it.

(b)(1) Optional insurance must be specifically elected; it

is not automatic.

(2) An employee may elect one or more types of Optional

insurance if:

(i) He/she has Basic insurance;

(ii) He/she doesn't have a waiver of that type (or types) of

Optional insurance still in effect; and

(iii) His/her periodic pay, after all other deductions, is

enough to cover the full cost.

§ 870.302 Exclusions.

(a) The following employees are excluded from life insurance

coverage by law:

(1) An employee of a corporation supervised by the Farm

Credit Administration, if private interests elect or appoint a

member of the board of directors.

(2) An individual who is not a citizen or national of the

United States and whose permanent duty station is outside the

United States. Exception: an individual who met the definition

of employee on September 30, 1979, by service in an Executive

agency, the United States Postal Service, or the Smithsonian

Institution in the area which was then known as the Canal Zone.

(3) An individual first employed by the Government of the

District of Columbia on or after October 1, 1987. Exceptions:

(i) An employee of St. Elizabeths Hospital, who accepts

employment with the District of Columbia Government following

Federal employment without a break in service, as provided in

section 6 of Pub. L. 98-621 (98 Stat. 3379);

(ii) An employee of the District of Columbia Financial
-13-

Responsibility and Management Assistance Authority (Authority),

who makes an election under the Technical Corrections to

Financial Responsibility and Management Assistance Act (section

153 of Pub. L. 104-134 (110 Stat. 1321)) to be considered a

Federal employee for life insurance and other benefits purposes;

employees of the Authority who are former Federal employees are

subject to the provisions of §§ 870.503(d) and 870.705 of this

part;

(iii) The Corrections Trustee and the Pretrial Services,

Defense Services, Parole, Adult Probation and Offender

Supervision Trustee and employees of these Trustees who accept

employment with the District of Columbia government within 3 days

after separating from the Federal Government; and

(iv) Effective October 1, 1997, judicial and nonjudicial

employees of the District of Columbia Courts, as provided by Pub.

L. 105-33 (111 Stat. 251).

(4) Teachers in Department of Defense dependents schools

overseas, if employed by the Federal Government in a nonteaching

position during the recess period between school years.

(b) The following employees are also excluded from life

insurance coverage:

(1) An employee serving under an appointment limited to 1

year or less. Exceptions:

(i) An employee whose full-time or part-time temporary

appointment has a regular tour of duty and follows a position in

which he/she was insured, with no break in service or with a

break in service of no more than 3 days;

(ii) An acting postmaster;

(iii) A Presidential appointee appointed to fill an

unexpired term; and

(iv) Certain employees who receive provisional appointments

as defined in § 316.403 of this title.

(2) An employee who is employed for an uncertain or purely

temporary period, who is employed for brief periods at intervals,

or who is expected to work less than 6 months in each year. 

Exception: an employee who is employed under an OPM-approved

career-related work-study program under Schedule B lasting at

least 1 year and who is expected to be in pay status for at least

one-third of the total period of time from the date of the first

appointment to the completion of the work-study program.

(3) An intermittent employee (a non-full-time employee

without a regularly scheduled tour of duty). Exception: an

employee whose intermittent appointment follows, with no break in

service or with a break in service of no more than 3 days, a

position in which he/she was insured and to which he/she is

expected to return.

(4) An employee whose pay, on an annual basis, is $12 a year

or less.

(5) A beneficiary or patient employee in a Government
-14-

hospital or home.

(6) An employee paid on a contract or fee basis. Exception: 

an employee who is a United States citizen, who is appointed by a

contract between the employee and the Federal employing authority

which requires his/her personal service, and who is paid on the

basis of units of time.

(7) An employee paid on a piecework basis. Exception: an

employee whose work schedule provides for full-time or part-time

service with a regularly scheduled tour of duty.

(c) OPM makes the final determination about whether the

above categories apply to a specific employee or group of

employees.

Subpart D - Cost of Insurance

§ 870.401 Withholdings and contributions for Basic insurance.

(a) The cost of Basic insurance is shared between the

insured individual and the Government. The employee pays two

thirds of the cost, and the Government pays one-third.

(b)(1) During each pay period in which an insured employee

is in pay status for any part of the period, $0.165 must be

withheld from the employee's biweekly pay for each $1,000 of the

employee's BIA. The amount withheld from the pay of an employee

who is paid on other than a biweekly basis must be prorated and

adjusted to the nearest one-tenth of 1 cent.

(2) The amount withheld from the pay of an insured employee

whose annual pay is paid during a period shorter than 52 work

weeks is the amount obtained by converting the biweekly rate to

an annual rate and prorating the annual rate over the number of

installments of pay regularly paid during the year.

(3) The amount withheld from the pay of an insured employee

whose BIA changes during a pay period is based on the BIA in

force at the end of the pay period.

(c) For each pay period in which an employee is insured, the

employing agency must contribute an amount equal to one-half the

amount withheld from the employee's pay. This agency

contribution must come from the appropriation or fund that is

used for the payment of the employee's pay. For an elected

official, the contribution must come from the appropriation or

fund that is available for payment of other salaries in the same

office.

(d)(1) For an annuitant who elects to continue Basic

insurance and chooses the maximum reduction of 75 percent after

age 65 under § 870.702(a)(2), the amount withheld monthly is

$0.3575 for each $1,000 of the BIA. For a compensationer who

makes this election, the amount withheld weekly is $0.0825 for

each $1,000. These withholdings stop the month after the month

in which the annuitant reaches age 65. There are no withholdings
-15-

from individuals who retired or began receiving compensation

before January 1, 1990, and who elected the 75 percent reduction. 

For the purpose of this paragraph, an individual who separates

from service after meeting the requirements for an immediate

annuity under 5 U.S.C. 8412(g) is considered to retire on the day

before the annuity begins.

(2) For an annuitant who elects to continue Basic insurance

and chooses the maximum reduction of 50 percent after age 65

under § 870.702(a)(3), the amount withheld monthly is $0.8775 for

each $1,000 of the BIA until the month after the month in which

the annuitant reaches age 65; the amount is then reduced to $0.52

for each $1,000. For a compensationer who makes this election,

the amount withheld weekly is $0.2025 for each $1,000 of the BIA

until age 65; the amount is then reduced to $0.12 for each

$1,000.

(3) For an annuitant who elects to continue Basic insurance

and chooses no reduction after age 65 under § 870.702(a)(4), the

amount withheld monthly is $2.0475 for each $1,000 of the BIA

until the month after the month in which the annuitant reaches

age 65; the amount is then reduced to $1.69 for each $1,000. For

a compensationer who makes this election, the amount withheld

weekly is $0.4725 for each $1,000 of the BIA until age 65; the

amount is then reduced to $0.39 for each $1,000.

(e)(1) For each period in which an annuitant or

compensationer is insured, OPM must contribute an amount equal to

one-half the amount that would be withheld under paragraph (d)(1)

of this section. Exception: for USPS employees who become

annuitants or compensationers after December 31, 1989, the Postal

Service pays the Government contributions.

(2) The Government contribution is the same amount whether

the individual elects a maximum 75 percent reduction, a maximum

50 percent reduction, or no reduction.

(3) The Government contribution stops the month after the

month in which the individual reaches age 65.

(f) When an agency withholds less than or none of the proper

amount of Basic life insurance deductions from an individual's

pay, annuity, or compensation, the agency must submit an amount

equal to the sum of the uncollected deductions and any applicable

agency contributions required under 5 U.S.C. 8708 to OPM for

deposit in the Employees' Life Insurance Fund.

§ 870.402 Withholdings for Optional insurance.

(a) The insured individual pays the full cost of all

Optional insurance. There is no Government contribution toward

the cost of any Optional insurance.

(b) During each pay period in any part of which an insured

employee is in pay status, the employing agency must withhold the

full cost of Optional insurance from his/her pay.
-16-

(c) Subject to the provisions for reemployed annuitants in

§ 870.705, the full cost of Optional insurance must be withheld

from the annuity of an annuitant and from the compensation of a

compensationer. These withholdings stop the month after the

month in which an annuitant or compensationer reaches age 65.

(d)(l) The biweekly cost per $10,000 of Option A coverage

is:

For persons under age 35 $0.40

For persons ages 35 through 39 .50

For persons ages 40 through 44 .70

For persons ages 45 through 49 1.10

For persons ages 50 through 54 1.80

For persons ages 55 through 59 3.00

For persons ages 60 and over 7.00

(2) The amount withheld from pay, annuity, or compensation

paid on other than a biweekly basis must be prorated and adjusted

to the nearest cent.

(e)(1) The biweekly cost per $1,000 of Option B coverage is:

For persons under age 35 $0.04

For persons ages 35 through 39 .05

For persons ages 40 through 44 .07

For persons ages 45 through 49 .11

For persons ages 50 through 54 .18

For persons ages 55 through 59 .30

For persons ages 60 and over .70

(2) The amount withheld from pay, annuity, or compensation

paid on other than a biweekly basis must be prorated and adjusted

to the nearest one-tenth of 1 cent.

(f)(1) The biweekly cost of Option C coverage is based on

the age of the employee, annuitant, or compensationer. The cost

is:

For persons under age 35 $0.30

For persons ages 35 through 39 .31

For persons ages 40 through 44 .52

For persons ages 45 through 49 .70

For persons ages 50 through 54 1.00

For persons ages 55 through 59 1.50

For persons ages 60 and over 2.60

(2) The amount withheld from pay, annuity, or compensation

paid on other than a biweekly basis must be prorated and adjusted

to the nearest cent.

(g) For the purpose of this subpart, an individual is

considered to reach age 35, 40, 45, 50, 55, or 60 on the first
-17-

day of the first pay period beginning on or after the January 1

following his/her corresponding birthday.

(h) The amount withheld from the pay of an insured employee

whose annual pay is paid during a period shorter than 52 work

weeks is the amount obtained by converting the biweekly rate for

his/her age group to an annual rate and prorating the annual rate

over the number of installments of pay regularly paid during the

year.

(i) When an agency withholds less than or none of the proper

amount of Optional life insurance deductions from an individual's

pay, annuity, or compensation, the agency must submit an amount

equal to the uncollected deductions required under 5 U.S.C.

8714a, 8714b, and 8714c to OPM for deposit in the Employees' Life

Insurance Fund.

§ 870.403 Withholdings and contributions following a Living

Benefit election.

(a) Withholdings and contributions for Basic insurance for

an individual who elects a full Living Benefit under subpart K of

this part stop at the end of the pay period in which the Living

Benefit election is effective.

(b) Withholdings and contributions for Basic insurance for

an employee who elects a partial Living Benefit under subpart K

of this part are based on the post-election BIA. This reduction

in withholdings and contributions starts at the end of the pay

period in which the Living Benefit election is effective.

(c) Withholdings and contributions for Basic insurance for

an annuitant or compensationer who elected a partial Living

Benefit as an employee are based on the post-election BIA.

(d) There is no change in withholdings for Optional

insurance for individuals who elect a Living Benefit.

§ 870.404 Withholdings and contributions provisions that apply

to both Basic and Optional insurance.

(a) Withholdings (and Government contributions, when

applicable) are based on the amount of insurance in force at the

end of the pay period.

(b) Withholdings are not required for the period between the

end of the pay period in which an employee separates from service

and the date his/her annuity or compensation begins.

(c) No payment is required while an insured employee is in

nonpay status for up to 12 months. Exception: an employee who

is in nonpay status while receiving compensation.

(d) The deposit described in §§ 870.401(f) and 870.402(i)

must be made no later than 60 calendar days after the date the

employing office determines the amount of the underdeduction that

has occurred, regardless of whether or when the underdeduction is

recovered by the agency. The agency must determine whether to
-18-

waive collection of the overpayment of pay, in accordance with 5

U.S.C. 5584, as implemented by 4 CFR chapter I, subchapter G. 

However, if the agency involved is excluded from the provisions

of 5 U.S.C. 5584, it may use any applicable authority to waive

the collection.

(e) Effective October 21, 1972, when there is an official

finding that an employee was suspended or fired erroneously, no

withholdings are made from the back pay. Exception: if death or

accidental dismemberment occurs during the period between the

employee's removal and the finding that the agency action was

erroneous, premiums are withheld from the back pay awarded.

(f) If an individual's periodic pay, compensation, or

annuity isn't sufficient to cover the full withholdings, any

amount available for life insurance withholding must be applied

first to Basic insurance, with any remainder applied to Optional

insurance (first to Option B, then Option A, then Option C).

§ 870.405 Direct premium payments under 5 U.S.C. chapter 84

(Federal Employees' Retirement System - FERS).

(a) If the FERS annuity, excluding subchapter III of 5

U.S.C. chapter 84 (Thrift Savings Plan), is too low to cover

premiums for Basic insurance, the retirement system must notify

the annuitant (or the assignee, if the insurance has been

assigned under subpart I of this part) of the opportunity to pay

his/her share of the Basic insurance premium directly to the

retirement system.

(b) The retirement system must establish a method for

accepting these direct premium payments. The retirement system

must provide the annuitant with a premium payment schedule and

the requirements for continued enrollment.

(c) The annuitant must send the retirement system the

required premium for every pay period during which the coverage

continues, excluding the 31-day temporary extension of coverage

provided in § 870.601. The annuitant must make payment after the

pay period in which he/she is covered, according to the schedule

established by the retirement system. If it does not receive

payment by the due date, the retirement system must notify the

annuitant that coverage will be continued only if he/she makes

payment within 15 days after receiving the notice. The Basic

insurance of an annuitant who doesn't pay within the specified

time limit terminates. An individual whose coverage terminates

because of nonpayment of premium cannot re-elect or reinstate

coverage, except as provided in paragraph (d) of this section.

(d) If, for reasons beyond his/her control, an annuitant is

unable to pay within 15 days after receiving the notice, he/she

may request reinstatement of coverage by writing to the

retirement system. Such a request must be made within 30

calendar days from the date of termination and must be
-19-

accompanied by proof that the annuitant was prevented from paying

within the time limit for reasons beyond his/her control. The

retirement system will decide if the individual is eligible for

reinstatement of coverage. If eligibility is approved, the

coverage is reinstated back to the date of termination.

(e) Termination of coverage for failure to pay premiums

within the time limit established according to paragraph (c) of

this section is effective at the end of the last pay period for

which payment has been received on time.

(f) The retirement system must submit all direct premium

payments, along with its regular life insurance premiums, to OPM

according to procedures set by OPM.

Subpart E - Coverage

§ 870.501 Basic insurance: effective dates of automatic

coverage.

(a)(1) When an employee is appointed or transferred to a

position in which he/she is eligible for insurance, the employee

is automatically insured for Basic insurance on the day he/she

enters on duty in pay status, unless, before the end of the first

pay period, the employee files a waiver of Basic insurance with

the employing office or had previously filed a waiver which

remains in effect.

(2) An insured employee who moves to another covered

position is automatically insured on the effective date of the

move, unless the employee files a waiver of Basic insurance with

the new employing office before the end of the first pay period

in the new position.

(3) When an employee of the District of Columbia Financial

Responsibility and Management Assistance Authority elects to be

considered a Federal employee under section 153 of Pub. L. 104-

134 (110 Stat. 1321), he/she is automatically insured on (i) the

date the employee enters on duty in pay status with the

Authority, or (ii) the date the Authority receives the employee's

election to be considered a Federal employee, whichever is later.

(b) An employee who returns to pay and duty status after a

period of more than 12 months of nonpay status is automatically

insured at the time he/she actually enters on duty in pay status,

unless, before the end of the first pay period, the employee

files a waiver of Basic insurance coverage with the employing

office or had previously filed a waiver which remains in effect.

(c) For an employee who serves in cooperation with a nonFederal agency and who is paid in whole or in part from nonFederal funds, OPM sets the effective date. This date must be

part of an agreement between OPM and the non-Federal agency. The

agreement must provide either:

(1) That the required withholdings and contributions be made
-20-

from Federally controlled funds and deposited into the Employees'

Life Insurance Fund on a timely basis, or

(2) That the cooperating non-Federal agency, by written

agreement with the Federal agency, make the required withholdings

and contributions from non-Federal funds and transmit that amount

to the Federal agency for deposit into the Employees' Life

Insurance Fund on a timely basis.

(d) If an employee waived Basic insurance on or before

February 28, 1981, the waiver was automatically cancelled

effective on the 1st day the employee entered on duty in pay

status on or after April 1, 1981. Basic insurance coverage was

automatically effective on the date of the waiver's cancellation,

unless the employee filed a new waiver of Basic insurance with

the employing office before the end of the pay period during

which the coverage became effective.

§ 870.502 Basic insurance: waiver/cancellation of insurance.

(a) An insured individual may cancel his/her Basic insurance

at any time by filing a waiver of Basic insurance coverage. An

employee files with the employing office. An annuitant files

with OPM or other office that administers his/her retirement

system. If still employed, a compensationer files with the

employing office, and if not still employed, with OPM. The

waiver is effective, and the insurance stops, at the end of the

pay period in which the waiver is properly filed. Exception: an

individual who has assigned his/her insurance under subpart I of

this part cannot cancel the insurance.

(b) An individual who cancels his/her Basic insurance

automatically cancels all forms of Optional insurance.

§ 870.503 Basic insurance: cancelling a waiver.

(a) An annuitant or compensationer who has filed a waiver of

Basic insurance cannot cancel the waiver.

(b) An employee who has filed a waiver of Basic insurance

may cancel the waiver and become insured if:

(1) At least 1 year has passed since the effective date of

the waiver, and

(2) He/she provides satisfactory medical evidence of

insurability.

(c) OFEGLI reviews the Request for Insurance filed by an

employee who has complied with paragraph (b) of this section and

decides whether to approve it. The insurance is effective when,

after OFEGLI's approval, the employee actually enters on duty in

pay status in a position in which he/she is eligible for

insurance. If the employee doesn't enter on duty in pay status

within 31 days following the date of OFEGLI's approval, the

approval is automatically revoked and the employee is not

insured.
-21-

(d) When an employee who has been separated from service for

at least 180 days is reinstated on or after April 1, 1981, a

previous waiver of Basic insurance is automatically cancelled. 

Unless the employee files a new waiver, Basic insurance becomes

effective on the 1st day he/she actually enters on duty in pay

status in a position in which he/she is eligible for coverage. 

Exception: for employees who waived Basic insurance after

February 28, 1981, separated, and returned to Federal service

before December 9, 1983, the waiver remained in effect; these

employees were permitted to elect Basic insurance by applying to

their employing office before March 7, 1984.

§ 870.504 Optional insurance: election.

(a)(1) Each employee must elect or waive Option A, Option B,

and Option C coverage, in a manner designated by OPM, within 31

days after becoming eligible unless during earlier employment

he/she filed an election or waiver which remains in effect. The

31-day time limit for Option B or Option C begins on the 1st day

after February 28, 1981, on which an individual meets the

definition of an employee.

(2) An employee of the District of Columbia Financial

Responsibility and Management Assistance Authority who elects to

be considered a Federal employee under section 153 of Pub. L.

104-134 (110 Stat. 1321) must elect or waive Option A, Option B,

and Option C coverage within 31 days after the later of:

(i) The date his/her employment with the Authority begins,

or

(ii) The date the Authority receives his/her election to be

considered a Federal employee.

(3) Within 6 months after an employee becomes eligible, an

employing office may determine that the employee was unable, for

reasons beyond his/her control, to elect any type of Optional

insurance within the time limit. In this case, the employee must

elect or waive that type of Optional insurance within 31 days

after he/she is notified of the determination. The insurance is

retroactive to the 1st day of the first pay period beginning

after the date the individual became eligible or after April 1,

1981, whichever is later. The individual must pay the full cost

of the insurance from that date for the time that he/she is in

pay status, retired, or receiving compensation and under age 65.

(b) An employee who doesn't file a Life Insurance Election

with his/her employing office, in a manner designated by OPM,

specifically electing any type of Optional insurance is

considered to have waived it and does not have that type of

Optional insurance.

(c) For the purpose of having Option A as an employee, an

election of this insurance filed on or before February 28, 1981,

is considered to have been cancelled effective at the end of the
-22-

pay period which included March 31, 1981, unless the employee

didn't actually enter on duty in pay status during the 1st pay

period which began on or after April 1, 1981. In that case the

election is considered to have been cancelled on the first day

after the end of the next pay period in which the employee

actually entered on duty in pay status. In order to have Option

A as an employee after the date of this cancellation, an employee

must specifically elect the coverage by filing the Life Insurance

Election with his/her employing office subject to the provisions

of § 870.504(a) or § 870.506(b).

(d) Optional insurance is effective the 1st day an employee

actually enters on duty in pay status on or after the day the

employing office receives the election.

(e) For an employee whose Optional insurance stopped for a

reason other than a waiver, the insurance is reinstated on the

1st day he/she actually enters on duty in pay status in a

position in which he/she again becomes eligible.

§ 870.505 Optional insurance: waiver/cancellation of insurance.

(a) An insured individual may cancel entirely any type of

Optional insurance, or reduce the number of multiples of his/her

Option B insurance, at any time by filing a waiver of Optional

insurance coverage. An employee files with the employing office. 

An annuitant files with OPM or other office that administers

his/her retirement system. If still employed, a compensationer

files with the employing office, and if not still employed, with

OPM. Exception: an individual who has assigned his/her

insurance under subpart I of this part cannot cancel Option A or

Option B coverage.

(b) A cancellation of Optional insurance becomes effective,

and Optional insurance stops, at the end of the pay period in

which the waiver is properly filed. Exception: if Option C is

cancelled because there are no eligible family members, the

effective date is retroactive to the end of the pay period in

which there stopped being any eligible family members.

(c) A waiver of Optional insurance remains in effect until

it is cancelled as provided in § 870.506.

§ 870.506 Optional insurance: cancelling a waiver.

(a) When there is a change in family circumstances. (1) A

waiver of Option A cannot be cancelled due to a change in family

circumstances.

(2) An employee who has waived Option B coverage may elect

it, and an employee who has Option B of fewer than five multiples

of annual pay may increase the number of multiples, upon his/her

marriage or divorce, upon a spouse's death, or upon acquiring an

eligible child.

(3) The number of multiples of Option B coverage that an
-23-

employee can obtain or add (which can't exceed a total of five)

is limited to the following:

(i) For marriage, the number of additional family members

(spouse and eligible children) acquired with the marriage;

(ii) For acquisition of children, the number of eligible

children acquired; and

(iii) For divorce or death of a spouse, the total number of

eligible children of the employee.

(4) An employee who has waived Option C coverage may elect

it upon his/her marriage or upon acquiring an eligible child. An

employee may also elect Option C coverage upon divorce or death

of a spouse if the employee has any eligible children.

(5)(i) The employee must file an election under paragraph

(a)(2) or (a)(4) of this section with the employing office, in a

manner designated by OPM, along with proof of the event, no later

than 60 days following the date of the event that permits the

election; the employee may instead file the election before the

event and provide proof no later than 60 days following the

event.

(ii) This 60-day time limit may be extended if the

individual isn't serving in a covered position on the date of the

event or if the individual separates from covered service prior

to the end of the 60-day time limit. This extension cannot

exceed the 31-day time limit for electing insurance following

employment in a covered position or, for an election under

paragraph (a)(4) of this section, the 31-day period following the

1st day on which the individual becomes eligible to cancel a

waiver of Basic insurance.

(6)(i) The effective date of Option B insurance elected

under paragraph (a)(1) of this section is the 1st day the

employee actually enters on duty in pay status on or after the

day the employing office receives the election.

(ii) The effective date of Option C insurance elected under

this paragraph is the day the employing office receives the

election, or the date of the event, whichever is later.

(b) When there is no change in family circumstances. (1) An

employee who has waived Option A or Option B coverage may elect

it if:

(i) At least 1 year has passed since the effective date of

the waiver, and

(ii) He/she provides satisfactory medical evidence of

insurability.

(2) An employee who has Option B coverage of fewer than five

multiples of annual pay may increase the number of multiples if:

(i) At least 1 year has passed since the effective date of

his/her last election of fewer than five multiples (including a

reduction in the number of multiples), and

(ii) He/she provides satisfactory medical evidence of
-24-

insurability.

(iii) The requirement for at least 1 year to have passed

since the effective date of the last election doesn't apply when

an employee elected fewer than five multiples because of the

limitation under paragraph (a)(3) of this section.

(3) A waiver of Option C cannot be cancelled without a

change in family circumstances, unless authorized during an open

enrollment period.

(c) OFEGLI reviews the request filed by an employee who has

complied with paragraph (b) of this section and decides whether

to approve it. The Optional insurance is effective when, after

OFEGLI's approval, the employee actually enters on duty in pay

status in a position in which he/she is eligible for insurance

and files a Life Insurance Election. If the employee doesn't

enter on duty in pay status within 31 days following the date of

OFEGLI's approval, the approval is automatically revoked and the

employee does not have the Optional insurance requested.

(d) If an employee waived Option A insurance on or before

February 28, 1981, the waiver was automatically cancelled

effective on the 1st day the employee entered on duty in pay

status on or after April 1, 1981. Option A was effective on the

date of the waiver's cancellation, if the employee filed an

election of Option A during the March 1, 1981, through March 31

1981, open enrollment period. If the employee didn't file the

election with his/her employing office during the March 1981 open

enrollment period, the employee is considered to have waived

Option A on March 31, 1981.

(e) When an employee who has been separated from service for

at least 180 days is reinstated on or after April 1, 1981, a

previous waiver of Optional insurance is automatically cancelled,

as follows:

(1) An employee who returned to service between April 1,

1981, and December 8, 1983, after a 180-day break in service was

permitted to elect any form of Optional insurance by applying to

his/her employing office before March 7, 1984.

(2) An employee who returns to service after December 8,

1983, following a 180-day break in service may elect any form of

Optional insurance by applying to his/her employing office within

31 days after reinstatement. Coverage is effective on the 1st

day the employee actually enters on duty in pay status in a

position in which he/she is eligible for insurance on or after

the date the employing office receives the election. If the

employee doesn't file a Life Insurance Election, in a manner

designated by OPM, within the 31-day period, the employee is

considered to have waived Optional insurance. However, an

employee who fails to file during the 31-day period due to

reasons beyond his/her control may enroll belatedly under the

conditions stated in § 870.504(a)(3).

(f) An annuitant or compensationer is not eligible to cancel
-25-

a waiver of any type of Optional insurance or to increase

multiples of Option B under this section.

§ 870.507 Open enrollment periods.

(a) There are no regularly scheduled open enrollment periods

for life insurance. Open enrollment periods are held only when

specifically scheduled by OPM.

(b) During an open enrollment period, unless OPM announces

otherwise, eligible employees may cancel their existing waivers

of Basic and/or Optional insurance by electing the insurance in a

manner designated by OPM.

(c)(1) OPM sets the effective date for all insurance elected

during an open enrollment period. The newly elected insurance is

effective on the 1st day of the first pay period which begins on

or after the OPM-established date and which follows a pay period

during which the employee was in pay and duty status for at least

32 hours, unless OPM announces otherwise.

(2) A part-time employee must be in pay and duty status for

one-half the regularly scheduled tour of duty shown on his/her

current Standard Form 50 for newly elected coverage to become

effective, unless OPM announces otherwise.

(3) An employee who has no regularly scheduled tour of duty

or who is employed on an intermittent basis must be in pay and

duty status for one-half the hours customarily worked before

newly elected coverage can become effective, unless OPM announces

otherwise. For the purpose of this paragraph, employing offices

can determine the number of hours customarily worked by averaging

the number of hours worked in the most recent calendar year

quarter prior to the start of the open enrollment period.

(d) Within 6 months after an open enrollment period ends, an

employing office may determine that an employee was unable, for

reasons beyond his/her control, to cancel an existing waiver by

electing to be insured during the open enrollment period. In

this case, if the employee wants coverage, he/she must submit an

election within 31 days after being notified of the

determination. Coverage is retroactive to the first pay period

which begins on or after the effective date set by OPM and which

follows a pay period during which the employee was in pay and

duty status for at least 32 hours, unless OPM announces

otherwise. If the employee doesn't file an election within this

31-day time limit, he/she will be considered to have waived

coverage.

§ 870.508 Nonpay status.

(a) An employee who is in nonpay status is entitled to

continue life insurance for up to 12 months. No premium payments

are required, unless the employee is receiving compensation.

(b) If an insured employee who is entitled to free insurance
-26-

while in nonpay status accepts a temporary appointment to a

position in which he/she would normally be excluded from

insurance, the insurance continues. The amount of Basic

insurance is based on whichever position's salary is higher. 

Withholdings are made from the employee's pay in the temporary

position.

(c) If an insured employee goes on leave without pay (LWOP)

to serve as a full-time officer or employee of an employee

organization, within 60 days of the start of the LWOP he/she may

elect to continue life insurance. The insurance continues for

the length of the appointment, even if the LWOP lasts longer than

12 months. The employee must pay to the employing office the

full cost of Basic and Optional insurance. There is no

Government contribution for these employees.

(d) If an insured employee goes on LWOP while assigned to a

State government, local government, or institution of higher

education, life insurance continues for the length of the

assignment, even if the LWOP lasts longer than 12 months. The

employee must pay his/her premiums to the Federal agency on a

current basis. The agency must continue to pay its contribution

as long as the employee makes his/her payments.

§ 870.509 Transfers to international organizations.

An employee transferred to an international organization may

continue life insurance coverage as provided in 5 U.S.C. 3582. 

Regulations governing these transfers are in part 352 of this

title.

Subpart F - Termination and Conversion

§ 870.601 Termination of Basic insurance.

(a) Except as provided in § 870.701, the Basic insurance of

an insured employee stops on the date he/she separates from

service, subject to a 31-day extension of coverage.

(b) The Basic insurance of an employee who separates from

service after meeting the requirement for an immediate annuity

under § 842.204(a)(1) of this title and who postpones receiving

the annuity, as provided by § 842.204(c) of this title, stops on

the date he/she separates from service, subject to a 31-day

extension of coverage.

(c) The Basic insurance of an insured employee who moves

without a break in service to a position in which he/she is

excluded from life insurance stops on his/her last day in the

former position, subject to a 31-day extension of coverage.

(d)(1) Except as provided in § 870.701, the Basic insurance

of an insured employee who is in nonpay status stops on the date

the employee completes 12 months in nonpay status, subject to a

31-day extension of coverage. The 12 months' nonpay status may
-27-

be broken by periods of less than 4 consecutive months in pay

status. If an employee has at least 4 consecutive months in pay

status after a period of nonpay status, he/she is entitled to

begin the 12 months' continuation of Basic insurance again. If

an employee has used up his/her 12 months' continuation in nonpay

status and returns to duty for less than 4 consecutive months,

his/her Basic insurance stops on the 32nd day after the last day

of the last pay period in pay status.

(2) For the purpose of paragraph (d)(1) of this section, 4

consecutive months in pay status means any 4-month period during

which the employee is in pay status for at least part of each pay

period.

(3) For the purpose of paragraph (d)(1) of this section, an

individual who is entitled to benefits under part 353 of this

chapter is considered to be an employee in nonpay status.

§ 870.602 Termination of Optional insurance.

(a) The Optional insurance of an insured employee stops when

his/her Basic insurance stops, subject to the same 31-day

extension of coverage.

(b) The Optional insurance of an employee who separates from

service after meeting the requirement for an immediate annuity

under § 842.204(a)(1) of this title and who postpones receiving

the annuity, as provided by § 842.204(c) of this title, stops on

the date he/she separates from service, subject to a 31-day

extension of coverage.

(c) If an insured employee isn't eligible to continue

Optional coverage as an annuitant or compensationer as provided

by § 870.701, the Optional insurance stops on the date that

his/her Basic insurance is continued or reinstated under the

provisions of § 870.701, subject to a 31-day extension of

coverage.

(d) If, at the time of an individual's election of Basic

insurance during receipt of annuity or compensation, he/she

elects no Basic life insurance as provided by § 870.702(a)(1),

the Optional insurance stops at the end of the month in which the

election is received in OPM, subject to a 31-day extension of

coverage.

(e) Except as provided in § 870.405, Optional insurance

stops, subject to a 31-day extension of coverage, at the end of

the pay period in which it's determined that an individual's

periodic pay, compensation, or annuity, after all other

deductions, isn't enough to cover the full cost of the Optional

insurance. If an individual has more than one type of Optional

insurance and his/her pay, compensation, or annuity is sufficient

to cover some but not all of the insurance, Option C terminates

first, followed by Option A, and then the multiples of Option B.
-28-

§ 870.603 Conversion of Basic and Optional insurance.

(a)(1) When group coverage terminates for any reason other

than voluntary cancellation, an employee may apply to convert all

or any part of his/her Basic and Optional insurance to an

individual policy; no medical examination is required. The

premiums for the individual policy are based on the employee's

age and class of risk. An employee is eligible to convert the

policy only if he/she doesn't return, within 3 calendar days from

the terminating event, to a position covered under the group

plan. If insurance has been assigned under subpart I of this

part, it is the assignee(s), not the employee, who has(have) the

right to convert.

(2) The employing agency must notify the

employee/assignee(s) of the loss of coverage and the right to

convert to an individual policy either before or immediately

after the event causing the loss of coverage.

(3) The employee/assignee(s) must submit the request for

conversion information to OFEGLI. It must be postmarked within

31 days following the date of the terminating event or within 31

days of the date the employee/assignee received the notice of

loss of group coverage and right to convert, whichever is later.

(4) An employee/assignee who fails to use his/her conversion

right within 31 days after receiving notice of the right to

convert or within 31 days of the terminating event, whichever is

later, is considered to have refused coverage, unless OFEGLI

determines the failure was for reasons beyond the employee's

control, as described in paragraph (a)(5) of this section.

(5) When an agency fails to provide the notification

required in paragraph (a)(2) of this section, or the

employee/assignee fails to request conversion information within

the time limit set in paragraph (a)(3) of this section for

reasons beyond his/her control, the employee may make a belated

request by writing to OFEGLI. The employee/assignee must make

the request within 6 months after becoming eligible to convert

the insurance. The employee/assignee must show that he/she

wasn't notified of the loss of coverage and the right to convert

and was not otherwise aware of it or that he/she was unable to

convert to an individual policy for reasons beyond his/her

control. OFEGLI will determine if the employee/assignee is

eligible to convert. If the request is approved, the employee

must convert within 31 days of that determination.

(b) The individual conversion policy is effective the day

after the group coverage ends. The employee/assignee must pay

the premiums for any period retroactive to that date.

(c) The 31-day extension of coverage provided under this

subpart does not depend upon timely notification of the right to

convert to an individual policy. The extension cannot be

continued beyond 31 days.
-29-

Subpart G - Annuitants and Compensationers

§ 870.701 Eligibility for life insurance.

(a) When an insured employee retires, Basic life insurance

(but not accidental death and dismemberment) continues or is

reinstated if he/she:

(1) Is entitled to retire on an immediate annuity under a

retirement system for civilian employees, including the

retirement system of a nonappropriated fund instrumentality of

the Department of Defense or the Coast Guard;

(2) Was insured for the 5 years of service immediately

before the date the annuity starts, or for the full period(s) of

service during which he/she was eligible to be insured if less

than 5 years; and

(3) Has not converted to an individual policy as described

in § 870.603. If it is determined that an individual is eligible

to continue the group coverage as an annuitant after he/she has

already converted to an individual policy, the group enrollment

may be reinstated. If the individual wants the group coverage

reinstated, the conversion policy must be voided, the group

policy must be reinstated retroactively, and the premiums already

paid on the conversion policy must be refunded to the individual.

(b) Following separation or the completion of 12 months'

nonpay status, a compensationer's Basic life insurance (but not

accidental death and dismemberment) continues or is reinstated if

he/she:

(1) Has been insured for the 5 years of service immediately

before the date of entitlement to compensation, or for the full

period(s) of service during which he/she was eligible to be

insured if less than 5 years; and

(2) Has not converted to an individual policy as described

in § 870.603. If it is not determined that an individual is

eligible to continue the group coverage as a compensationer until

after he/she has converted, the group enrollment may be

reinstated. If the individual wants the group coverage

reinstated, the conversion policy must be voided, the group

policy must be reinstated retroactively, and the premiums already

paid on the conversion policy must be refunded to the individual.

(c) An individual who meets the requirements under

paragraphs (a) or (b) of this section or § 870.706 for

continuation or reinstatement of life insurance must complete an

election, in a manner designated by OPM, at the time entitlement

is established. For the election to be valid, OPM must receive

the election before OPM has made a final decision on the

individual's application for annuity or supplemental annuity or

an individual's request to continue life insurance as a

compensationer. If there is no valid election, OPM considers the

individual to have chosen the option described in paragraph
-30-

(a)(2) of § 870.702.

(d) If the annuity or compensation of an insured individual

is terminated, or if the Department of Labor finds that an

insured compensationer is able to return to duty, his/her Basic

life insurance held as an annuitant or compensationer stops on

the date of the termination or finding. There is no 31-day

extension of coverage or conversion right.

(e)(1) An annuitant or compensationer who is eligible to

continue or have reinstated Basic insurance is also eligible to

continue or have reinstated Optional insurance if he/she meets

the same coverage requirements for Optional insurance as those

stated in paragraph (a) or (b) of this section for Basic

insurance.

(2) For the purpose of continuing insurance as an annuitant

or compensationer, an employee is not considered to have been

eligible for Option C during any period when the employee had no

eligible family members.

§ 870.702 Election of Basic insurance.

(a) Unless he/she has elected a Living Benefit, an

individual who makes an election under § 870.701(c) must select

one of the following options:

(1) Termination of the insurance. The individual's

insurance stops upon conversion to an individual policy as

provided under § 870.603. If the individual doesn't convert to

an individual policy, insurance stops at the end of the month in

which OPM or the employing office receives the election;

(2) Continuation or reinstatement of Basic insurance with a

maximum reduction of 75 percent during retirement. Premiums are

withheld from annuity or compensation (except as provided under 

870.401(d)(1)). The amount of Basic life insurance in force

reduces by 2 percent of the BIA each month until the maximum

reduction is reached. This reduction starts at the beginning of

the 2nd month after the date the insurance would otherwise have

stopped or the date of the insured's 65th birthday, whichever is

later;

(3) Continuation or reinstatement of Basic insurance with a

maximum reduction of 50 percent during retirement. Premiums are

withheld from annuity or compensation. The amount of Basic

insurance in force reduces by 1 percent of the BIA each month

until the maximum reduction is reached. This reduction starts at

the beginning of the 2nd month after the date the insurance would

otherwise have stopped or the date of the insured's 65th

birthday, whichever is later; or

(4) Continuation or reinstatement of Basic insurance with no

reduction after age 65. Premiums are withheld from annuity or

compensation.

(b)(1) Unless an employee has elected a partial Living
-31-

Benefit under subpart K of this part or an individual has

assigned the insurance under subpart I of this part, an insured

individual may cancel an election under paragraph (a)(3) or

(a)(4) of this section at any time. The amount of Basic

insurance automatically switches to the amount that would have

been in force if the individual had originally elected the 75

percent reduction. This revised amount is effective at the end

of the month in which OPM receives the request to cancel the

previous election.

(2) If an individual files a waiver of insurance, the

coverage stops without a 31-day extension of coverage or

conversion right. This is effective at the end of the month in

which OPM receives the waiver.

(c) Unless he/she chooses to terminate his/her insurance, an

employee who has elected a partial Living Benefit must choose the

no reduction election under paragraph (a)(4) of this section. 

He/she cannot later change to the 75 percent reduction.

(d) If an employee has assigned his/her insurance, he/she

cannot cancel an election under paragraph (a)(3) or (a)(4) of

this section. Only the assignee(s) may cancel this election. 

Exception: if the employee elected a partial Living Benefit

before assigning the remainder of his/her insurance, the

assignee(s) cannot cancel the election under paragraph (a)(4) of

this section.

§ 870.703 Amount of life insurance.

(a)(1) The amount of Basic insurance an annuitant or

compensationer can continue is his/her BIA on the date insurance

would otherwise have stopped because of separation from service

or completion of 12 months in nonpay status. The amount of Basic

insurance in force is the BIA minus any reductions applicable

under § 870.702(a).

(2) For the purpose of paying benefits upon the death of an

insured individual under age 45 who is retired or receiving

compensation, the BIA will be multiplied by the appropriate age

factor shown in § 870.202(c). Exceptions:

(i) If the insured individual retired or started receiving

compensation before October 10, 1980, or

(ii) If the insured individual elected a partial Living

Benefit as an employee under subpart K of this part.

(3)(i) For an annuitant or compensationer who elected a

partial Living Benefit as an employee, the amount of Basic

insurance he/she can continue is the post-election BIA, as shown

in § 870.203(a)(2).

(ii) For the purpose of paying benefits upon the death of an

insured annuitant or compensationer under age 45 who elected a

partial Living Benefit as an employee, the BIA will be multiplied

by the age factor in effect on the date OFEGLI received the
-32-

completed Living Benefit application.

(b)(1) The amount of Option A coverage an annuitant or

compensationer can continue is the amount in force on the date

insurance would otherwise stop.

(2) An annuitant's or compensationer's Option A coverage

reduces by 2 percent a month up to a maximum reduction of 75

percent. This reduction starts at the beginning of the 2nd month

after the date the insurance would otherwise have stopped or the

date of the insured's 65th birthday, whichever is later.

(c)(1) The number of multiples of Option B coverage an

annuitant or compensationer can continue is the smallest number

of multiples in force during the applicable period of service

required to continue Option B.

(2) Each multiple of an annuitant's or compensationer's

Option B coverage reduces by 2 percent a month. This reduction

starts at the beginning of the 2nd month after the date the

insurance would otherwise have stopped or the insured's 65th

birthday, whichever is later. At 12:00 noon on the day before

the 50th reduction, the insurance stops, with no extension of

coverage or conversion right.

(d) The amount of an annuitant's or compensationer's Option

C coverage on each family member reduces by 2 percent a month. 

This reduction starts at the beginning of the 2nd month after the

date the insurance would otherwise have stopped or the

annuitant's or compensationer's 65th birthday, whichever is

later. At 12:00 noon on the day before the 50th reduction, the

insurance stops, with no extension of coverage or conversion

right.

(e)(1) Judges retiring under 28 U.S.C. 371(a) and (b), 28

U.S.C. 372(a), and 26 U.S.C. 7447 are considered employees under

the FEGLI law. Basic and Optional insurance for these judges

continues without interruption or reduction upon retirement.

(2) If a judge chooses to receive compensation instead of an

annuity, his/her Basic and Optional insurance reduces as stated

in § 870.702 and paragraphs (b), (c), and (d) of this section.

§ 870.704 Reinstatement of life insurance.

(a) An annuitant whose disability annuity terminates because

he/she recovers from the disability or because his/her earning

capacity returns, and whose disability annuity is later restored

under 5 U.S.C. 8337(e) (after December 31, 1983), may elect to

resume the Basic insurance held immediately before his/her

disability annuity terminated. OPM must receive the election

within 60 days after OPM mails a notice of insurance eligibility

and an election form.

(b) An annuitant described in paragraph (a) of this section

may elect to resume any Optional insurance held immediately

before the annuity terminated if:
-33-

(1) He/she has made an election under paragraph (a) of this

section; and

(2) OPM receives the election within 60 days after OPM mails

a notice of insurance eligibility and an election form.

(c) Basic and Optional insurance reinstated under paragraphs

(a) and (b) of this section is effective on the 1st day of the

month after the date OPM receives the election. Any applicable

annuity withholdings are also reinstated on the 1st day of the

month after OPM receives the election.

(d) The amounts of Basic and Optional insurance reinstated

under paragraphs (a) and (b) of this section are the amounts that

would have been in force if the individual's annuity hadn't

terminated.

§ 870.705 Reemployed annuitants.

(a)(1) If an insured annuitant is appointed to a position in

which he/she is eligible for insurance, the amount of his/her

Basic life insurance as an annuitant (and any applicable annuity

withholdings) is suspended on the day before the 1st day in pay

status under the appointment, unless the reemployed annuitant

waives all insurance coverage. The Basic insurance benefit

payable upon the death of a reemployed annuitant who has Basic

insurance in force as an employee can't be less than the benefit

which would have been payable if the individual hadn't been

reemployed.

(2) Except as provided in paragraph (b) of this section, the

Basic insurance obtained as an employee stops with no 31-day

extension of coverage or conversion right, on the date

reemployment terminates. Any suspended Basic insurance (and any

applicable annuity withholdings) is reinstated on the day

following termination of the reemployment.

(b) Basic insurance obtained during reemployment can be

continued after the reemployment terminates if:

(1) The annuitant qualifies for a supplemental annuity or

receives a new retirement right;

(2) He/she has had Basic insurance as an employee for at

least 5 years of service immediately before separation from

reemployment or for the full period(s) during which such coverage

was available to him/her, whichever is less; and

(3) He/she doesn't convert to nongroup insurance when Basic

insurance as an employee would otherwise terminate.

(c) If the Basic insurance obtained during reemployment is

continued as provided in paragraph (b) of this section, any

suspended Basic life insurance stops, with no 31-day extension of

coverage or conversion right.

(d)(1) An annuitant appointed to a position in which he/she

is eligible for Basic insurance, is also eligible for Optional

insurance as an employee, unless he/she has on file an
-34-

uncancelled waiver of Basic or Optional insurance.

(2) If the individual has Option A or C as an annuitant,

that insurance (and applicable annuity withholdings) is suspended

on the day before his/her 1st day in pay status under the

appointment. Unless he/she waives Option A or C (or waives Basic

insurance), he/she obtains option A or C as an employee.

(3) If the individual has Option B as an annuitant, that

insurance (and applicable annuity withholdings) continues as if

the individual weren't reemployed, unless:

(i) The individual files with his/her employing office an

election of Option B, in a manner designated by OPM, within 31

days after the date of reemployment. In this case Option B (and

applicable annuity withholdings) as an annuitant is suspended on

the date that Option B as an employee becomes effective; or

(ii) The individual waives Basic insurance.

(4) The Option B benefit payable upon the death of a

reemployed annuitant is the amount in effect as an annuitant,

unless he/she elected to have Option B as an employee.

(5) Except as provided in paragraph (e) of this section, the

Optional insurance obtained as an employee stops, with no 31-day

extension or conversion right, on the date reemployment

terminates. The amount of suspended Optional insurance which

remains in force after applicable monthly reductions after age 65

(and corresponding withholdings) is reinstated on the day after

reemployment terminates.

(e) Optional life insurance obtained during reemployment may

be continued after the reemployment terminates if the annuitant:

(1) Qualifies for a supplemental annuity or receives a new

retirement right;

(2) Continues his/her Basic life insurance under paragraph

(a)(2), (3), or (4) of § 870.702; and

(3) Has had Optional insurance as an employee for at least

the 5 years of service immediately before separation from

reemployment or for the full period(s) of service during which it

was available to him/her, whichever is less.

(f) If Optional insurance obtained during reemployment is

continued as provided in paragraph (e) of this section, any

suspended Optional insurance stops, with no 31-day extension of

coverage or conversion right.

(g) If a reemployed annuitant waives life insurance as an

employee, the waiver also cancels his/her life insurance as an

annuitant.

§ 870.706 MRA-plus-10 annuitants.

(a) The Basic insurance of an individual whose coverage

terminates under § 870.601(b), and who meets the requirements for

continuing Basic insurance after retirement as stated in

§ 870.701(a), resumes on the starting date of annuity or on the
-35-

date OPM receives the application for annuity, whichever is

later. The individual must file an election as provided in

§ 870.701(c) so that OPM receives it within 60 days after OPM

mails a notice of insurance eligibility and an election form.

(b) Optional insurance of an individual whose coverage

terminates under § 870.602(b), and who meets the requirements for

continuing Optional insurance after retirement under

§ 870.701(e), resumes on the starting date of annuity or on the

date OPM receives the application for annuity, whichever is

later.

Subpart H - Order of Precedence and Designation of Beneficiary 

§ 870.801 Order of precedence and payment of benefits.

(a) Benefits are paid according to the order of precedence

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

(1) To the designated beneficiary (or beneficiaries);

(2) If none, to the widow(er);

(3) If none, to the child, or children in equal shares, with

the share of any deceased child going to his/her children;

(4) If none, to the parents in equal shares or the entire

amount to the surviving parent;

(5) If none, to the executor or administrator of the estate;

(6) If none, to the next of kin according to the laws of the

State in which the insured individual legally resided.

(b) If an insured individual provides in a valid designation

of beneficiary for insurance benefits to be payable to the

insured's estate, or to the Executor, Administrator, or other

representative of the insured's estate, or if the benefits would

otherwise be payable to the duly appointed representative of the

insured's estate under the order of precedence specified in 5

U.S.C. 8705(a), payment of the benefits to the duly appointed

representative of the insured's estate bars recovery by any other

person.

(c) Option A and B insurance in force on a person on the

date of his/her death is paid, on receipt of a valid claim, in

the same order of precedence and under the same conditions as

Basic insurance. A designation of beneficiary for Basic

insurance is also a designation of beneficiary for Options A and

B, unless the insured individual states otherwise in his/her

designation.

(d) Upon the death of an insured family member, Option C

benefits are paid to the employee, annuitant, or compensationer

responsible for withholdings under § 870.402(f), except as

provided in paragraph (e) of this section.

(e) If an employee, annuitant, or compensationer entitled to

receive Option C benefits dies before the benefits are paid, the

Option C benefits are paid to the individual(s) entitled to
-36-

receive Basic life insurance benefits under the statutory order

of precedence. However, if the insurance has been assigned in

accordance with subpart I of this part, any prior designations of

beneficiary were cancelled; benefits in this instance are paid

under the statutory order of precedence, starting with the second

on the list.

§ 870.802 Designation of beneficiary.

(a) If an insured individual wants benefits paid differently

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

beneficiary. A designation of beneficiary cannot be filed by

anyone other than the insured individual. Exception: if the

insurance has been assigned under subpart I of this part, the

insured individual cannot designate a beneficiary; only the

assignee(s) can designate beneficiaries.

(b) A designation of beneficiary must be in writing, signed

by the insured individual, and witnessed and signed by two

people. The employing office (or OPM, in the case of an

individual receiving an annuity or compensation) must receive the

designation before the death of the insured.

(c) A designation, change, or cancellation of beneficiary in

a will or any other document not witnessed and filed as required

by this section has no legal effect with respect to benefits

under this chapter.

(d) A witness to a designation of beneficiary cannot be

named as a beneficiary.

(e) Any individual, firm, corporation, or legal entity can

be named as a beneficiary, except an agency of the Federal or

District of Columbia Government.

(f) An insured individual (or an assignee) may change

his/her beneficiary at any time without the knowledge or consent

of the previous beneficiary. This right cannot be waived or

restricted.

(g)(1) A designation of beneficiary is automatically

cancelled 31 days after the individual stops being insured.

(2) An assignment under subpart I of this part automatically

cancels an insured individual's designation of beneficiary.

(h) An insured individual may provide that a designated

beneficiary is entitled to the insurance benefits only if the

beneficiary survives him/her for a specified period of time (not

more than 30 days). If the beneficiary doesn't survive for the

specified period, insurance benefits will be paid as if the

beneficiary had died before the insured.

§ 870.803 Child incapable of self-support.

(a) When it receives a claim for Option C benefits because

of the death of a child age 22 or older, OFEGLI determines, based

on whatever evidence it considers necessary, whether the deceased
-37-

child was incapable of self-support because of a mental or

physical disability which existed before the child reached age

22.

(b) If an employee elects Option C under § 870.506(a)(3),

and the opportunity to elect is based solely on the acquisition

of a child age 22 or older, the employee must submit to the

employing office, at the time of making the election, a doctor's

certificate stating that the child is incapable of self-support

because of a physical or mental disability which existed before

the child reached age 22 and which is expected to continue for

more than 1 year. The certificate must include the name of the

child, the type of disability, how long it has existed, and its

expected future course and duration. The certificate must be

signed by the doctor and show his/her office address.

Subpart I - Assignments of Life Insurance

§ 870.901 Assignments permitted.

(a)(1) Section 208 of the Bankruptcy Amendments and Federal

Judgeship Act of 1984, Pub. L. 98-353 (98 Stat. 355), effective

July 10, 1984, permits Federal judges to irrevocably assign their

FEGLI coverage to one or more individuals, corporations, or

trustees. Section 4 of Pub. L. 103-336 (108 Stat. 2661),

effective October 3, 1994, extended this right to all Federal

employees, annuitants, and compensationers.

(2) An individual may assign ownership of all life insurance

under this part, except Option C. If an individual wishing to

make an assignment owns more than one type of coverage, he/she

must assign all the insurance; an individual cannot assign only a

portion of the coverage. Option C cannot be assigned.

(b) An individual cannot name conditional assignees in case

the primary assignee dies before the insured individual.

(c) If the insurance is assigned to two or more individuals,

corporations, or trustees, the insured individual must specify

percentage shares, rather than dollar amounts or types of

insurance, to go to each assignee.

(d) If an individual who has made an assignment later elects

increased insurance coverage under § 870.506 or during an open

enrollment period, the increased coverage is considered included

in the already existing assignment. The right to increase

coverage remains with the insured individual, rather than

transferring to the assignee.

(e) An individual who assigns ownership of insurance

continues to be the insured individual, but the assignee receives

those rights of an insured individual that are specified in this

part.

(f) Once assigned, the value of the insurance increases or

decreases automatically as provided by this part. Exception: if
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the insured individual elected a Living Benefit before assigning

the remainder of his/her insurance, the amount of Basic insurance

does not increase or decrease.

(g) An insured individual who has assigned his/her insurance

cannot elect a Living Benefit; nor can an assignee elect a Living

Benefit on behalf of the insured individual.

(h) An insured individual who has elected a Living Benefit

under subpart K of this part may assign the remainder of his/her

insurance. The assignment would affect Option A, Option B, and,

for an employee who elected a partial Living Benefit, Basic

insurance.

§ 870.902 Making an assignment.

To assign insurance, an insured individual must complete an

approved assignment form. Only the insured individual may make

an assignment; no one can assign on behalf of an insured

individual. The individual must submit the completed and signed

form to the employing office indicating the intent to irrevocably

assign all ownership of the insurance; the form must also be

signed by 2 witnesses. (Assignments submitted prior to November

28, 1986, were accepted without an approved assignment form.)

§ 870.903 Effective date of assignment.

An assignment under this subpart is effective on the date

the employing office receives the properly completed, signed, and

witnessed assignment form.

§ 870.904 Amount of insurance.

The amount of insurance is the amount of the insured

individual's Basic insurance, plus any Option A and Option B

coverage.

§ 870.905 Withholdings.

Premium withholdings for assigned insurance are withheld

from the salary, annuity, or compensation of the insured

individual, as provided in subpart D of this part.

§ 870.906 Cancellation of insurance.

(a) The right to cancel (or reduce) insurance transfers to

the assignee; the insured individual cannot cancel (or reduce)

insurance after making an assignment.

(b) The assignee has the right to cancel insurance according

to the provisions of §§ 870.502 and 870.505. When there is more

than one assignee, all assignees must agree to the cancellation. 

A cancellation of Basic insurance also cancels all Optional

insurance.

§ 870.907 Termination and conversion.
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(a) Assigned insurance terminates under the conditions

stated in subpart F of this part.

(b)(1) When an insured individual's insurance terminates, an

assignee has the right to convert all or part of the group

insurance to an individual policy on the insured individual. The

conditions stated in subpart F of this part apply to assignees

who elect to convert.

(2) When there is more than one assignee, each assignee has

the right to convert all or part of his/her share of the

insurance. Any assignee who doesn't convert loses all ownership

of the insurance.

(3) When there is more than one assignee, the maximum amount

of insurance each assignee will be able to convert is determined

by the dollar amount corresponding to the assignee's share of the

total insurance. This amount will be rounded up to the next

higher thousand, if it's not already an even thousand dollar

amount.

(4) Premiums for converted life insurance are based on the

insured individual's age and class of risk at the time the

conversion policy is issued.

(5) The employing office must notify each assignee of the

conversion right at the time the assigned group insurance

terminates.

(c) The assignment terminates 31 days after the insurance

terminates, unless the insured individual is reemployed in or

returns to a position in which he/she is entitled to coverage

under this chapter within 31 days after the insurance terminates.

§ 870.908 Annuitants and compensationers.

(a) If an employee assigns Basic insurance and later becomes

eligible to continue such insurance coverage as an annuitant or

compensationer as provided in § 870.701:

(1) At the time he/she retires or becomes eligible as a

compensationer, the insured individual may elect unreduced or

partially reduced insurance coverage as provided in § 870.702(a). 

This right remains with the insured individual and does not

transfer to the assignee. Exception: if the insured individual

elected a partial Living Benefit as an employee under subpart K

of this part, he/she can only elect unreduced insurance coverage.

(2) After the individual has made the election described in

paragraph (a)(1) of this section, the assignee (or, if more than

one, all of the assignees acting together) may, at any time,

elect to cancel the annuitant's or compensationer's election of

increased coverage, as provided in § 870.702(b). The right to

cancel the election transfers to the assignee; the annuitant or

compensationer cannot cancel the election after making an

assignment. Exception: if the individual elected a partial

Living Benefit as an employee under subpart K of this part, the
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assignee(s) cannot cancel the election of unreduced insurance

coverage.

(b) When more than one assignee has been named, at the time

the insured individual becomes eligible to continue coverage as

an annuitant or compensationer, some assignees may choose to

convert their part of the insurance, while others may choose to

continue the coverage during the insured individual's retirement

or receipt of compensation. The amount of each type of continued

insurance is determined by the total percentage of the shares of

the assignees who choose to continue the coverage.

(c)(1) When an annuitant who has assigned his/her insurance

is reemployed in a position in which he/she is entitled to life

insurance coverage, the coverage he/she acquires as a reemployed

annuitant is subject to the existing assignment.

(2) The right of a reemployed annuitant to elect Option B

coverage as an employee rather than as an annuitant under

§ 870.705(d)(3) remains with the insured individual and does not

transfer to the assignee. Any Option B coverage elected as an

employee is subject to the existing assignment.

§ 870.909 Designations and changes of beneficiary.

(a)(1) An assignment automatically cancels an insured

individual's prior designation of beneficiary. After making an

assignment, an individual cannot designate a beneficiary; the

right to designate beneficiaries transfers to the assignee.

(2) Each assignee may designate a beneficiary or

beneficiaries to receive insurance benefits upon the death of the

insured individual and may also later change the beneficiaries. 

An assignee may designate himself/herself the primary beneficiary

and name another contingent beneficiary(ies) to receive insurance

benefits if the assignee dies before the insured individual.

(b) Benefits for assigned insurance are paid to the

assignee(s) if the assignee(s) did not designate a beneficiary.

(c) Benefits for assigned insurance are paid to an

assignee's estate if the assignee dies before the insured

individual and:

(1) The assignee (or the assignee's heirs) did not designate

a beneficiary; or

(2) The assignee's designated beneficiary dies before the

insured individual.

(d) The provisions of § 870.802 apply to designations of

beneficiary made by assignees.

§ 870.910 Notification of current addresses.

Each assignee and each beneficiary of an assignee must keep

the office where the assignment is filed informed of his/her

current address.
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Subpart J - Benefits for United States Hostages in Iraq and

Kuwait and United States Hostages Captured in Lebanon

§ 870.1001 Purpose.

This subpart sets forth the conditions for life insurance

coverage according to the provisions of section 599C of Pub. L.

101-513 (104 Stat. 2035).

§ 870.1002 Definitions.

In this subpart:

Hostage and hostage status have the meaning set forth in

section 599C of Pub. L. 101-513 (104 Stat. 2035).

Pay period for individuals insured under this subpart means

the pay period set by the U.S. Department of State.

Period of eligibility means the period beginning on the

effective date set forth in § 870.1004 and ending 12 months after

hostage status ends for hostages in Iraq and Kuwait and 60 months

after hostage status ends for hostages captured in Lebanon.

§ 870.1003 Coverage and amount of insurance.

(a) An individual is covered under this subpart when the

U.S. Department of State determines that the individual is

eligible under section 599C of Pub. L. 101-513 (104 Stat. 2035).

(b)(1) The amount of Basic life insurance for these

individuals is the amount specified in § 870.202, subject to the

applicable conditions stated in this subpart.

(2) The BIA under § 870.202 is the amount of the payment

specified in section 599C(b)(2) of Pub. L. 101-513 (104 Stat.

2035), rounded to the next higher $1,000, plus $2,000.

(c) Individuals who have Basic insurance under this section

also have group accidental death and dismemberment insurance.

(d) Individuals insured by this subpart are not eligible for

Optional insurance.

(e) Individuals insured by this subpart are not considered

employees for the purpose of this part.

(f) Eligibility for insurance under this subpart depends on

the availability of funds under section 599C(e) of Pub. L. 101-

513 (104 Stat. 2035).

§ 870.1004 Effective date of insurance.

Insurance under this subpart was effective on August 2,

1990, for hostages in Iraq and Kuwait and on June 1, 1982, for

hostages captured in Lebanon, unless the U.S. Department of State

sets a later date.

§ 870.1005 Premiums.

(a) Government contributions and employee withholdings

required under subpart D of this part are paid from the funds
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provided under section 599C(e) of Pub. L. 101-513 (104 Stat.

2035).

(b) If an individual isn't insured for the full pay period,

premiums are paid only for the days he/she is actually insured. 

The daily premium is the monthly premium multiplied by 12 and

divided by 365.

(c) OPM may accept the payments required by this section in

advance from a State Department appropriation, if necessary to

fund the 12-month period of coverage beginning the earlier of:

(1) The day after sanctions or hostilities end; or

(2) The day after the individual's hostage status ends.

(d) OPM will place any funds received under paragraph (c) of

this section in an account set up for that purpose. OPM will

make the deposit required under 5 U.S.C. 8714 from the account

when the appropriate pay period occurs.

§ 870.1006 Cancellation of insurance.

(a) An individual who is insured under this subpart may

cancel his/her insurance at any time by written request. The

cancellation is effective on the 1st day of the pay period after

the pay period in which the U.S. Department of State receives the

request.

(b) Cancellation must be requested by the insured individual

and cannot be requested by a representative acting on the

individual's behalf.

(c) An individual who cancels the insurance under this

section cannot obtain the insurance again, unless the U.S.

Department of State determines that it would be against equity

and good conscience not to allow the individual to be insured.

§ 870.1007 Termination and conversion.

(a) Insurance under this subpart terminates 12 months after

hostage status ends, unless the individual cancels the insurance

earlier.

(b) Insured individuals whose coverage terminates are

eligible for the 31-day extension of coverage and conversion as

set forth in subpart F of this part, unless the individual

cancelled the coverage.

§ 870.1008 Order of precedence and designation of beneficiary.

Insurance benefits are paid under the order of precedence

set forth in 5 U.S.C. 8705(a) and under the provisions of subpart

H of this part.

§ 870.1009 Responsibilities of the U.S. Department of State.

(a) The U.S. Department of State functions as the "employing

office" for individuals insured under this subpart.

(b) The U.S. Department of State must determine the
-43-

eligibility of individuals under Pub. L. 101-513 (104 Stat. 2035)

for insurance under this subpart. This includes determining

whether an individual is barred from insurance under chapter 87

of title 5 U.S.C. because of other life insurance as provided in

section 599C of Pub. L. 101-513 (104 Stat. 2035).

Subpart K - Living Benefits

§ 870.1101 Eligibility for a Living Benefit.

(a) Effective July 25, 1995, an insured individual who is

certified by his/her doctor as terminally ill, as defined in

§ 870.101, may elect to receive a lump-sum payment of Basic

insurance.

(b) Optional insurance is not available for payment as a

Living Benefit.

(c)(1) The effective date of a Living Benefit election is

the date on which the Living Benefit payment is cashed or

deposited. Once an election becomes effective, it can't be

revoked. No further election of Living Benefits can be made.

(2) If the insured individual dies before cashing or

depositing the Living Benefit payment, the payment must be

returned to OFEGLI.

(d) If an insured individual has assigned his/her insurance,

he/she cannot elect a Living Benefit; nor can an assignee elect a

Living Benefit on behalf of an insured individual.

(e) If an individual has elected a Living Benefit, he/she

may assign his/her remaining insurance.

§ 870.1102 Amount of a Living Benefit.

(a)(1) An employee may elect to receive either:

(i) A full Living Benefit, which is all of his/her Basic

insurance, or

(ii) A partial Living Benefit, which is a portion of his/her

Basic insurance, in a multiple of $1,000.

(2) An annuitant or compensationer may only elect to receive

a full Living Benefit.

(b) The amount of Basic insurance elected as a Living

Benefit will be reduced by an actuarial amount representing the

amount of interest lost to the Fund because of the early payment

of benefits.

(c)(1) If an individual elects a full Living Benefit, the

post-election BIA will be 0. If an employee elects a partial

Living Benefit, the post-election BIA will be the BIA reduced in

proportion to the amount of Basic insurance elected as a Living

Benefit, as prescribed by Pub. L. 103-409 (108 Stat. 4231).

(2) The post-election BIA cannot change after the effective

date of a Living Benefit election.

(d)(1) If an employee elects a full Living Benefit, Basic
-44-

accidental death and dismemberment coverage terminates as of the

effective date of the election.

(2) If an employee elects a partial Living Benefit, Basic

accidental death and dismemberment coverage is reduced to equal

the post-election BIA.

§ 870.1103 Election procedures.

(a) The insured individual must request information on

Living Benefits and an application form directly from OFEGLI.

(b)(1) Only the insured individual can apply for a Living

Benefit; no one can apply on his/her behalf.

(2) The insured individual must complete the first part of

the application and have his/her physician complete the second

part. The completed application must be submitted directly to

OFEGLI.

(c)(1) OFEGLI reviews the application, obtains certification

from the insured's employing office regarding the amount of

insurance and the absence of an assignment, and determines

whether the individual meets the requirements to elect a Living

Benefit.

(2) If OFEGLI needs additional information, it will contact

the insured or the insured's physician.

(3) Under certain circumstances, OFEGLI may require a

medical examination before making a decision. In these cases,

OFEGLI is financially responsible for the cost of the medical

examination.

(d)(1) If the application is approved, OFEGLI sends the

insured a check for the Living Benefit payment and an explanation

of benefits.

(i) Until the check has been cashed or deposited, the

individual may change his/her mind about electing a Living

Benefit; if this happens, the individual must mark the check

"void" and return it to OFEGLI.

(ii) Once the insured individual has cashed or deposited the

payment, the Living Benefit election becomes effective and cannot

be revoked; OFEGLI then sends explanations of benefits to the

insured's employing office, so it can make the necessary changes

in withholdings and deductions.

(2) If the application is not approved, OFEGLI will notify

the insured individual and the employing office. The decision is

not subject to administrative review; however, the individual can

submit additional medical information or reapply at a later date

if future circumstances warrant.

2. Part 871 is removed.

3. Part 872 is removed.

4. Part 873 is removed.

5. Part 874 is removed.
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Billing code: 6325-01