This guide presents federal employees and retirees on their life insurance benefits and the questions that they need to ask about their choices and need for coverage under the Federal Employee Group Life Insurance (FEGLI) program that is available to permanent employees and annuitants.
Most federal employees, including both full time and part time employees, are eligible to enroll in the FEGLI program. When an individual enters federal service, the individual is automatically enrolled in the FEGLI “basic” insurance called the Basic Insurance Amount, or BIA. An employee’s BIA is equal to the greater of the employee’s salary rounded up to the next $1,000 plus $2,000, or $10,000. The federal government pays one-third of the premium cost of an employee’s BIA and employees pay the other 2/3 of the premium cost. When an employee is hired, the employee is automatically covered under the FEGLI BIA, unless the employee formally waives the BIA. New employees, or current employees enrolled in FEGLI, must complete a Life Insurance Election (SF 2817) to cancel the BIA.
Newly hired employees have the opportunity to elect additional coverage. There is Option A (standard, or $10,000), Option B (multiple of salary 1 to 5 times) and Option C (Family coverage, on a spouse and children). These coverages are discussed in more detail below. Employees will have some or all of the optional coverages only if the employee elects to enroll. Newly hired employees must elect the optional coverage at their initial hire date using Form SF 2817. Employees pay all the premiums for the optional coverages with no federal government contribution.
BIA coverage for new employees becomes effective on the first day an employee is in a pay and duty status in an eligible position. Optional insurance for new employees is effective on the first day an employee is in a pay and duty status in an eligible position on or after the day the employee’s human resources office receives the employee’s SF 2817 form to elect the optional coverage.
The Basic Insurance Amount (BIA) provides term life insurance at group rates. The BIA is equal to the greater of: (a) an employee’s salary rounded up to the next $1,000, plus $2,000; or (b) $10,000. The federal government pays one-third of the premium cost of the BIA and an employee pays the other 2/3 of the premium cost. Those employees who are eligible for the BIA – full or part time permanent employees – are automatically covered unless the employee formally declines the coverage using Form SF 2817.
As a group plan sponsored by the US government, FEGLI BIA uses a composite premium structure. This means that the BIA premium rate is the same for each enrollee in the group, regardless of age or health status. The following table summarizes the cost of FEGLI BIA:
Payroll Method
Withholding for Each $1,000 of Coverage
The following example illustrates: Joseph’s SF 50 salary is $97,300. His BIA is $100,000 ($97,300 salary rounded up to the next $1,000 or $98,000, plus $2,000, or $100,000).
His bi-weekly cost is $15 (number of thousands of dollars of coverage, or 100) times $0.15, or $15.00.
Younger employees are entitled to additional BIA life insurance provision called the “Extra Benefit” which doubles the amount of the BIA at no extra cost for enrollees age 35 or younger. Beginning at an enrollee’s 36 th birthday, the Extra Benefit decreases 10 percent each year until age 45, at which time there is no Extra Benefit. In the example above, if Joseph were age 35 or younger, he would have an extra $100,000 of coverage for a total of $200,000. If Joseph were age 40, he would have a total of $150,000 of coverage ($100,000 plus $50,000).
Employees may elect additional life insurance under FEGLI. This is called Optional insurance. New employees can elect the following optional insurance coverages: Option A – Standard; Option B – Additional, and Option C- Family coverage. These coverages are not automatic as a new employee must elect any or all of the optional coverages within 60 days of the employee’s appointment to an eligible position. A completed Life Insurance Election from (SF 2817) must be completed and submitted to the employee’s Human Resources Office. After the initial 60 day enrollment period, opportunities to enroll in FEGLI BIA and optional coverages are limited and will be discussed in a separate column.
Option A – Standard is a flat amount of $10,000. The cost for Option A varies by age. The current premium rates are summarized in the table below:
Option A – Standard
Withholding for $10,000 Insurance
*For insurance withholding purposes, these ages are reached on the first day of the pay period that starts after an employee’s birthday or the first day of the month that starts after an annuitant’s birthday.
Example. Angela is a 46 year old employee. She elects Option A. Angela is paid on a bi-weekly basis. Her cost for Option A is therefore $0.70 bi-weekly, as shown in the table above.
Option B – Additional is an amount equal to one, two, three, four or five times an adjusted SF 50 salary, rounded up to the next $1,000, plus $1,000. The cost of Option B is presented in the following table. Note again that an employee or annuitant must be enrolled in the FEGLI BIA in order to be enrolled in Option B.
Option B – Additional
Withholding Per $1,000 of Insurance
*For insurance withholding purposes, these ages are reached on the first day of the pay period that starts after an employee’s birthday or the first day of the month that starts after an annuitant’s birthday.
Example. William is a 51 year old employee. He elects five multiples of Option B. His annual pay is $49,500. Rounded up to the next $1,000, his pay is $50,000. Five times his annual pay is $250,000. William is paid on a bi-weekly basis. Therefore his cost for Option B is 250 times $0.11, or $27.50 bi-weekly.
Option C – Family is to insure an employee’s spouse and eligible dependent children. When an employee elects Option C, all eligible family members are automatically covered. An employee may elect one, two, three, four, or five multiples of coverage. Each multiple is equal to $5,000 for a spouse and $2,500 for each of one’s eligible dependent children.
Each multiple is a unit. For example, if an employee elects two multiples, then the employee has two multiples of coverage on his or her spouse and two multiples of coverage on each of his or her eligible dependent children. In other words, a different multiple cannot be chosen for spouse and for dependent children.
Spouses include a spouse from a valid common law marriage. To be eligible, dependent children must be unmarried and under age 22. A child 22 or older who is incapable of self-support because of a mental or physical disability that existed before the child reached age 22 is also eligible.
The cost for Option C –based on the employee’s or an annuitant’s age is summarized below:
Cost of Option C – Family Coverage
The bi-weekly and monthly cost for Option C is shown in the table below. Note that cost varies by age. The age is the age of the employee or the annuitant and not the insured.
Option C – Family Coverage
Withholding for Each Multiple
*For insurance withholding purposes, these ages are reached on the first day of the pay period that starts after an employee’s birthday or the first day of the month that starts after an annuitant’s birthday.
The following example illustrates: Harold is a 48 year old married employee with four children under the age of 22. He elects five multiples of Option C which equals $25,000 for his spouse (5 times $5,000) and $12,500 for each child (5 times $2,500). His bi-weekly cost for Option C coverage is therefore $2.95 (5 times $0.59).
Option C benefits are paid to the employee or annuitant. An employee or annuitant cannot designate a beneficiary.
Accidental death and dismemberment (AD&D) insurance provides additional life insurance proceeds to be paid in the event of a fatal accident which also results in the loss of a limb or eyesight. For benefits to be paid, the death or loss must occur not more than one year from the date of the accident and be a direct result of bodily injury sustained from that accident, independent of all other causes.
AD&D insurance is automatically included in the BIA for employees at no extra cost. It is equal to one’s BIA. AD&D insurance is also automatically included in Option A in the amount of $10,000 for employees at no additional cost. Options B and C do not include AD&D insurance.
Note that regular life insurance amounts (BIA and Option A – Standard) are payable regardless of cause or location of death. AD&D coverage also ends when an employee retires, regardless if the employee retains FEGLI BIA and Option A in retirement.
The following is a list of covered losses under AD&D insurance and the corresponding amounts payable:
AD&D Schedule of Losses
For the loss of …
The amount payable is…
Two or more members*
50 percent of full amount
* A member is a hand, foot or the sight in one eye.
Note for all losses resulting from any one accident, no more than the full amount is payable.
The Office of Federal Employees’ Group Life Insurance (FEGLI) will not pay AD&D benefits if your death or loss in any way results from, is caused by, or is contribute to by:
• physical or mental illness;
• the diagnosis of or treatment of physical or mental illness;
• a war (declared or undeclared), any act of war, or any armed aggression against the united States in which nuclear weapons are actually being used;
• a war (Declared or undeclared), any act of war, or any armed aggression or insurrection in which you are in actual combat at the time bodily injuries are sustained;
• suicide or attempted suicide;
• injuring yourself on purpose;
• illegal or illegally obtained drugs that you administer to yourself;
• operating any motor vehicle while intoxicated, as defined by the laws of the jurisdiction in which you were operating the vehicle.
Those federal employees who initially waived the FEGLI Basic Insurance Amount (BIA), who did not elect the optional insurances when they were first hired, or who want additional coverage than they currently have, have three opportunities to make changes, namely: (1) During a FEGLI “open season”; (2) by applying and qualifying on their own, providing evidence of medical insurability; or (3) experiencing a life event. These three opportunities are now discussed.
FEGLI “open seasons” are infrequent. The last FEGLI open season was held during September 2016, and the “open season” held before that was exactly 12 years before during September 2004. Previous FEGLI “open seasons” were held in 1999 and 1992. During an “open season”, an employee is guaranteed enrollment and does not have to provide any evidence of medical insurability.
Applying and Providing Evidence of Medical Insurability
Provided at least one year has passed since an employee’s last waiver of FEGLI coverage, an employee can apply for FEGLI coverage on his or her own by providing satisfactory medical information that the employee is insurable. To do so, an employee needs to download Form SF 2822 (Request for Insurance) which is available on the OPM Web site at www.opm.gov/forms/standard-forms/.
An employee and his or her agency must complete part of Form SF 2822. The employee then takes the form to the employee’s physician or other medical professional who will examine the employee at the employee’s expense. The medical professional will complete the rest of Form SF 2822 and then send the completed form to the Office of FEGLI (OFEGLI).
If the OFEGLI approves the employee’s application for insurance, then the employee will automatically be covered by the Basic Insurance Amount (BIA) on the first day the employee is in pay and duty status. The employee will then have 60 days from the approval date to elect Option A (Standard) and/or elect Option B (Multiples of Salary), or increase the number of multiples of Option B, up to a total of five. This is done by completing a Life Insurance Election: FEGLI form (SF 2817) (available at www.opm.gov/forms/standard-forms/) and submitting the completed form to the employee’s human resources office.
An employee cannot elect Option C (Family Coverage) or increase Option C multiples by providing medical information. Option C can be obtained during an “open season” or based on a life event, as discussed next.
A FEGLI qualifying live event includes marriage, divorce, death of a spouse, or acquisition of a child. An acquisition of an eligible child includes a child born to the insured, the insured adopts a child, the insured acquires a foster child, stepchild, the insured’s step child or recognized child moves in with the insured, an otherwise child’s marriage is dissolved by divorce or annulment, or his or her spouse dies; and the insured gains custody of an eligible child.
As a result of a life event, an employee can elect the FEGLI Basic Insurance Amount, Option A, Option B and Option C. An employee who has a qualifying life event may also increase the number of multiples of Option B and/or Option C.
In order to increase coverage under a life event, an employee must complete Form SF 2817 and submit the completed form to the employee’s human resources office within 60 calendar days after the occurrence of the life event. Form SF 2817 can be filed up to 31 days before the life event. Proof of the life event must be provided no later than 60 calendar days following the event.
The FEGLI program handbook is quite clear: An employee is responsible for knowing when his or her FEGLI stops. In other words, if an employee continues in federal service and wishes to stop FEGLI coverage, then the employee must formally do so by filling out and submitting to his or her human resources office Form SF 2817. If Form SF 2817 is not submitted and accepted by the human resources office, then premiums will continue to be deducted from the employee’s paycheck and FEGLI coverage continues. Note that Option C, which includes life insurance coverage on an employee’s child younger than age 22, ceases when the child becomes age 22. However, if an employee or annuitant does complete and submit Form SF 2817 thereby formally removing the child from Option C coverage, then premiums will continue to be deducted from the employee’s paycheck or annuitant’s annuity check even though the child is no longer insured under Option C.
An employee’s FEGLI life insurance coverage – including Accidental Death and Dismemberment – will stop on the earliest of the following dates:
• The date an employee separates from federal service. An employee may be eligible to continue coverage as an annuitant or while in receipt of workers’ compensation.
• The end of a period of 12 months in non-pay status. An employee may be eligible to continue coverage while in receipt of workers’ compensation. The 12 months may be continuous or broken by periods of less than four consecutive months of pay status.
• The end of the last day of the pay period in which the employee’s human resources office receives the employee’s Form SF 2817. Only the coverage the employee waives cancels some or all life insurance. But if the FEGLI Basic Insurance Amount is canceled, then all optional coverages are also canceled.
• The date an employee transfers to an excluded position.
• The end of the last day of the last pay period in which an employee’s agency withheld life insurance premiums from an employee’s paycheck. This is because the agency has determined that for the next six months or more the employee’s paycheck will be insufficient to cover the required FEGLI premium withholdings, and the employee has decided not to make arrangements to pay the premiums directly instead of payroll deduction.
A federal employee who has been enrolled in FEGLI will have his or her FEGLI coverage automatically continue into retirement if the employee: (1) Retires on an immediate annuity; (2) has been enrolled in FEGLI for the five years immediately before the starting date of the annuity, or for annuitants retiring under the Federal Employees Retirement System (FERS) “MRA + 10” (postponed retirement), the five years before their separating date for annuity purposes; and (3) did not convert the FEGLI coverage to an individual whole life insurance policy. Note that an employee must meet the five year participation requirement for the Basic Insurance Amount (BIA) and each type of FEGLI “optional” insurance – Options A, B and C – in order to continue those coverages into retirement.
If an employee has met the prerequisites discussed in the previous paragraph for continuing FEGLI coverage into retirement, then the employee has several choices as to how much of the FEGLI life insurance coverage the employee can carry into and throughout retirement. These choices for the BIA and Options A, B and C are now explained.
The amount of a retiring employee’s BIA in retirement is the employee’s BIA on the day before the employee retires from federal service. If the employee retires before age 65, this BIA amount continues until the annuitant reaches age 65, after which it may be reduced based on two of the options discussed below. There is no Accidental Death and Dismemberment coverage throughout retirement.
Shortly before an employee retires, the employee must choose the type of reduction by completing Form SF 2818 (Continuation of Life Insurance Coverage As An Annuitant or Compensationer) provided by the employee’s human resources office. There are three choices for the BIA: (1) 75 percent reduction; (2) 50 percent reduction; or (3) no reduction. An annuitant can change to 75 percent reduction at any time. In so doing, the annuitant’s BIA will be as if the annuitant had elected 75 percent reduction and the extra premium will cease. But there will be no refund of any extra premiums paid up to the change.
A 75 percent reduction means the annuitant’s BIA will reduce by 2 percent of the BIA amount each month until it reaches 25 percent. The reduction starts at the beginning of the second month after the annuitant’s 65 th birthday or at retirement, whichever is later. The BIA will continue to reduce until 25 percent of the original BIA amount. Once the BIA starts to reduce, the cost of the BIA is free. Note that if the retiring employee chooses the 75 percent reduction on Form SF 2818, the election cannot be changed later.
This means the annuitant’s BIA will reduce by 1 percent of the BIA each month. The reduction starts at the beginning of the second month after the annuitant’s 65 th birthday or at retirement, whichever is later. The BIA will continue to reduce until 50 percent of the BIA amount remains. The premium cost for 50 percent reduction is shown below.
This means that the annuitant’s BIA does not reduce throughout retirement. The cost for No Reduction BIA is shown in the following table under “None”:
Cost of BIA After Retirement
Reduction at age 65
Monthly cost before age 65
Monthly cost starting at age 65
*Per $1,000 per month
The following example illustrates:
When Jan retires on Sept. 30, 2017, she has $100,000 of BIA coverage. Jan is age 62 when she retires. The following table shows the premium cost for Jan depending on what she chooses on Form SF 2818:
Reduction at age 65
Monthly cost before age 65
Monthly cost starting at age 65
The amount of an annuitant’s FEGLI optional insurance in retirement depends on the options – Options A, B and/or C the annuitant had on the day the annuitant separated as an employee. This amount continues until the annuitant reaches age 65 if the employee retires before age 65 or until the month the employee retires if the employee retires after age 65.
Option A – Standard
Any employee eligible to continue Option A into retirement will have his or her pre-retirement amount ($10,000) reduce by two percent ($200) per month until it reaches 25 percent ($2,500) of the pre-retirement amount. The reduction starts at the beginning of the second month after the annuitant’s 65 th birthday or the month after an employee retires if the employee retires after age 65.
Note that an employee cannot elect No Reduction for Option A. The monthly premium cost for Option A is shown below. An example is presented below.
Option B – Additional
The amount of Option B coverage in retirement is determined by an employee’s final SF 50 salary rounded up to the next $1,000 plus $1,000, multiplied by the number of Option B multiples that were in effect for the five years of service immediately before the employee’s retirement date. This is the maximum amount of Option B that an employee can carry into retirement. A lower number of Option B multiples can be carried into retirement.
A retiring employee must elect how many Option B multiples to carry into retirement. In addition, the employee must elect if he or she wants Full Reduction or No Reduction for each multiple. For example, an employee who has three multiples can elect to have two multiples with Full Reduction and one multiple with No Reduction. “Mixed elections” are allowed. At the later of age 65 or at retirement an employee has a second opportunity to choose how the multiples reduce.
The following is a summary of the cost of Option B:• Full reduction. Coverage is free (no premium cost) starting at later of the month after one’s retirement if the annuitant retires after age 65 or the month one becomes age 65 if the employee retires before age 65. Effective the month one becomes age 65 or the month after one retires if later, the value of one’s Full Reduction Option B multiples will reduce by 2 percent of the pre-retirement amount per month for 50 months at which time coverage on those multiples will end.
• No Reduction. A retiring employee who chooses No Reduction will continue the FEGLI premium for the annuitant’s age group for the No Reduction multiples until the annuitant dies, or the annuitant changes those multiples to Full Reduction, or the annuitant cancels those multiples. If an employee at the time of retirement chooses – via Form SF 2818 – No Reduction, the annuitant can change to Full Reduction at any time. Note that if an annuitant chooses the Full Reduction, the level of coverage will be as if the annuitant originally elected Full Reduction at the time of retirement. But there will be no refund of previously paid Option B premiums.
The cost of Option B depends on one’s age and the number of multiples on has. The summary of the monthly cost is shown below. Note the following: (1) Annuitants under the age of 65 pay the same monthly premiums as employees; the monthly cost per $1,000 of coverage is broken down into five year brackets; (2) when an annuitant becomes age 65 (or the month after an employee retires if the employee retires after age 65), the Option B premium cost may or may not continue based on whether the employee at the time of retirement chooses via Form SF 2818 Full Reduction; (3) when an annuitant has a birthday, that moves the annuitant into another five year age bracket and the change in premium cost will become effective at the beginning of the month following the annuitant’s birthday. An example of Option B coverage is presented below.
Option C – Family Coverage
The amount of Option C – Family Coverage – is determined by the number of Option C multiples that were in effect for the five years of service immediately before an employee’s retirement date. Each multiple – up to five – on a spouse is worth $5,000 while each multiple on an eligible child is worth $2,500.
An employee who retires before age 65 elects on Form SF 2818 how many Option C multiples the employee wants to carry into retirement. In addition, the employee elects if the employees wants Full Reduction or No Reduction for each multiple. For example, an employee who has three multiples can elect to elect to have two multiples with Full Reduction and one multiple with No Reduction. “Mixed elections” are allowed. At age 65 or at retirement if later, an annuitant will have a second opportunity to choose how many multiples will be reduced.
• Full Reduction. If an employee chooses Full Reduction, coverage is free on those multiples after an annuitant becomes age 65 or the month after the employee retires if the employee retires after age 65. Effective at the month after an annuitant becomes age 65 or later if the employee retires after age 65, the value of the annuitant’s Full Reduction Option C multiples will reduce by 2 percent of the pre-retirement amount per month for 50 months, at which time coverage on those multiples will end.
• No Reduction. If an employee on Form SF 2818 chooses No Reduction for Option C, the annuitant continues to pay the premiums for the annuitant’s age group for the No Reduction multiples until the annuitant dies or the annuitant changes those multiples to Full Reduction or cancels those multiples. The value of an annuitant’s Option C multiples with a No Reduction election will not reduce. Annuitants who choose No Reduction can change to Full Reduction after they reach age 65 will have the level of coverage as if the annuitant had originally elected Full Reduction. But the annuitant will not receive a refund of premiums.
The cost of Option C depends on an employee’s or an annuitant’s age in five year brackets and the number of multiples the employee/annuitant has. Annuitants pay the same rate for Option C as employees do until they reach age 65, after which their premiums may or may not continue based on the reduction election above. When an employee or annuitant has a birthday that moves the employee/annuitant to another age group, the change in premiums will be effective at the beginning of the month following the birthday.
If an employee elected Full Reduction for Option C at retirement, the coverage begins to reduce and is free when an annuitant becomes age 65 (or at retirement if the employee retires after age 65), unless the annuitant changed it to No Reduction at age 65. In this case the annuitant will continue to pay the premiums.
The following table summarizes the current premium rates for Option A, Option B and Option C:
Premium Rates for OPTIONAL Insurance
Employee or Annuitant
Option A – Standard ($10,000 Coverage)
Option B – Additional (per $1,000 of coverage)
