What is FEGLI and How Does It Benefit a Federal Employee?

Changes have been made to the federal FEGLI program. What is FEGLI and what are the changes? Here is a summary.

What is FEGLI?

FEGLI is one of the many government programs with an acronym that is meaningless to the outside world and, perhaps, also unknown to many federal employees.

It stands for Federal Employees’ Group Life Insurance. FEGLI is group term life insurance. It does not build up cash value. You cannot take a loan out against your FEGLI insurance.

OPM has a contract with the Metropolitan Life Insurance Company (MetLife) to provide this life insurance.

The details of the federal life insurance program get complicated and my guess is that many employees don’t often pay much attention to the program. We also see comments from readers that they get a better deal on life insurance from other sources even though, under the FEGLI program, the government pays part of the cost.

Our advice is to check around and see which program is the best one for your lifestyle and circumstances. At a minimum, you should take a few minutes to understand how the FEGLI program may benefit you and your family.

There are changes that have recently been made to the FEGLI program that may impact you and your family. The changes may also impact former federal employees who are now retired. HEre is a brief explanation.

As an eligible federal employee, you are automatically enrolled in the FEGLI basic insurance program, unless you waive this coverage. Basic insurance is based on your annual rate of basic pay, rounded up to the nearest $1,000, plus $2,000 (called the Basic Insurance Amount, or BIA). Uncle Sam pays one-third of the premium cost for Basic and you pay two-thirds. The U.S. Postal Service pays the entire cost of Basic insurance for its employees.

If you have the basic insurance, you may also elect optional insurance. You are not automatically covered by optional insurance. You must take action to elect Optional insurance. You pay the full cost for all Optional insurance you elect.

There are three types of Optional insurance: Option A-Standard, Option B-Additional, and Option C-Family.

  • Option A insurance provides $10,000 of coverage.
  • Option B insurance coverage comes in 1, 2, 3, 4, or 5 multiples of your annual rate of basic pay.
  • Option C coverage insures your spouse and eligible dependent children. It comes in up to five5 multiples of coverage. Each multiple is equal to $5,000 for a spouse and $2,500 for each of your eligible dependent children.

Changes to FEGLI

Effective October 1st, new regulations went into effect that change this insurance program.

The time frame has been changed for making an initial election of optional insurance. The previous time frame was 30 days. That has been changed to 60 days after an employee becomes eligible for coverage.

FEGLI Life Events

The FEGLI program allows you to make changes as a result of life changing events. These events are:

  • Marriage;
  • Divorce;
  • Death of a spouse;
  • Acquiring an eligible child.

When you have one of these qualifying events in your life, the new regulations allow you 60 days to elect basic and any optional insurance you may want as allowed by the FEGLI program.

The regulations also now provide a later chance to select insurance coverage based on one of these life events—under some circumstances. Within six months after an employee becomes eligible to make an election due to a change in family circumstances, an employing office may determine that the employee was unable, for reasons beyond his or her control, to elect or increase basic or optional insurance within the time limit. This decision will be made by your employing agency; OPM is not involved in the determination.

If your agency decides that you can make this election, you have 60 days from the date of the agency’s decision to make your election. OPM says that:  “Any insurance you elect is retroactive to the first day of the first pay period beginning after the date the employee became eligible if the employee was in pay and duty status that day.”

What About Retirees?

When you retire, you are eligible to continue FEGLI if you meet all of the following requirements:

  • You are entitled to retire on an immediate annuity under a retirement system for civilian employees;
  • You have been insured for the five years of service immediately before the starting date of your annuity, or for the full period(s) of service during which you were eligible to be insured if less than 5 years;
  • You are enrolled in FEGLI on the date of retirement; and
  • You have not converted to an individual policy.

The new regulations provide only one election opportunity to choose how your Option B and Option C coverage may go down beginning at age 65. You will have to make this decision when you retire.

When you make this decision, you can choose “No Reduction” for some multiples and “Full Reduction” for other multiples. You can choose a “Mixed election.”  For example, if you have three multiples, you can elect to have two with “Full Reduction” and one with “No Reduction.” There is no longer be a second election at age 65.

If you retired since this statutory provision became effective on April 24, 1999, are under age 65 and have Option B and or Option C will be given the opportunity to make their “final” election. You will be sent information on this option by OPM.

When is Open Season for FEGLI?

An open season is coming up for many of the federal insurance programs available to federal employees. Several readers have asked if they can use the regularly scheduled open season to enroll in this federal insurance program.

Here is how OPM describes the open season for FEGLI: “There are no regularly scheduled open seasons to elect or increase coverage under FEGLI. Open seasons are held only when specifically scheduled by OPM.” Also, the agency recently stated in a press release: “The U.S. Office of Personnel Management (OPM) has announced that this year’s open season for health benefits, dental and vision insurance, and Flexible Spending Accounts will run from November 8 through December 13, 2010. This open season will give federal employees and retirees the opportunity to change their health-care coverage and employees who are not enrolled, but are eligible to participate, the opportunity to elect coverage.”

Note the absence of any reference to life insurance or any related term in describing the upcoming open season.

For more information, you will need to contact your servicing human resources office and check out the OPM website section on life insurance. Also, here is a summary of the recent regulatory changes to the program.

About the Author

Ralph Smith has several decades of experience working with federal human resources issues. He has written extensively on a full range of human resources topics in books and newsletters and is a co-founder of two companies and several newsletters on federal human resources. Follow Ralph on Twitter: @RalphSmith47