Military Leave: A Life-Changing Event For Insurance?

Military discharge is a life-changing event that can affect a person's health insurance needs. In the United States, military discharge is considered a qualifying life event (QLE) for insurance purposes, allowing individuals to make changes to their health insurance plans or enrol in new coverage outside of the annual Open Enrollment Period. This means that individuals who have recently left the military have the opportunity to review and adjust their health insurance coverage to ensure it aligns with their current needs and circumstances.

Military leave and health insurance changes

Qualifying Life Events and Health Insurance Changes:

When individuals experience significant life changes, they may need to modify their health insurance plans. These changes are known as Qualifying Life Events (QLEs). A QLE allows individuals to enroll in or make adjustments to their health insurance outside of the standard annual Open Enrollment Period. Marriage, divorce, and becoming a parent are common examples of QLEs. In the context of military service, discharge, retirement, and returning from active duty are also considered QLEs.

Special Enrollment Period:

When a QLE occurs, a Special Enrollment Period is typically triggered. This period allows individuals to make changes to their health insurance plans or enroll in a new plan. The duration of this special period can vary, usually lasting between 30 and 60 days before or after the qualifying event. It is important to note that specific documentation may be required to confirm the QLE, and this process should be initiated promptly to avoid missing the enrollment window.

Military-Specific Health Insurance Options:

Now, let's focus on the health insurance options available to military personnel:

• Servicemembers' Group Life Insurance (SGLI): SGLI is a low-cost term life insurance program offered to eligible active-duty service members. It provides coverage of up to $500,000, with monthly premiums automatically deducted from the member's base pay. SGLI also includes Traumatic Injury Protection (TSGLI) coverage for an additional $1 per month.
• Veterans' Group Life Insurance (VGLI): After leaving the military, service members can apply for VGLI within a specific time frame, depending on their circumstances. VGLI allows them to maintain their life insurance coverage as long as they continue paying the premiums. The amount of coverage is based on their SGLI coverage when they left the military, with the option to increase it over time.
• Federal Employees' Group Life Insurance (FEGLI): When called to active military duty, federal civilian employees can retain their FEGLI coverage. If they keep their federal job, FEGLI coverage is provided for free for up to 12 months of non-pay status. They can also elect to continue coverage for a second 12 months, but they must pay all premiums, including the agency's share.
• Supplemental Life Insurance: It is recommended that military members with SGLI or VGLI consider purchasing additional life insurance policies to ensure their families are adequately protected in the event of their death or disability. This supplemental coverage can provide peace of mind and fill any gaps in the government-sponsored insurance.

Military life insurance options

Military life insurance is a complex topic, and there are many options available to service members and their families. Here is an overview of some of the key military life insurance options:

Servicemembers' Group Life Insurance (SGLI)

SGLI is a low-cost term life insurance program offered by the US Department of Veterans Affairs to eligible service members. It provides coverage of up to $400,000 or $500,000, depending on the source, in $50,000 increments. Active-duty members of the Army, Navy, Air Force, Space Force, Marines, or Coast Guard are eligible, as are commissioned members of the National Oceanic and Atmospheric Administration (NOAA) and the US Public Health Service (USPHS). Cadets and midshipmen of US military academies and members of the Reserve Officers Training Corps (ROTC) are also eligible, as are members of the Ready Reserve or National Guard who meet certain criteria. SGLI is a valuable option for military members as it is a guaranteed life insurance policy at a flat rate, and members do not need to go through an underwriting process. However, SGLI cannot be retained after leaving military service, although it can be converted to a Veterans' Group Life Insurance (VGLI) policy.

Veterans' Group Life Insurance (VGLI)

VGLI is a government-backed life insurance policy available to service members upon their release from active duty. It allows them to convert their SGLI coverage to a renewable term life insurance policy. With VGLI, veterans can receive coverage in increments of $10,000 up to a maximum of $400,000. VGLI rates are based on age and change over time. One advantage of VGLI is that service members can convert their SGLI policy to a VGLI policy without going through an underwriting process. However, if they wait too long after leaving the military to convert, they may have to go through underwriting if they decide to apply for VGLI later.

Armed Forces Insurance

Armed Forces Insurance offers both term and permanent life insurance coverage for current and former military members, including those in the Guard and Reserves, surviving spouses, active and retired DoD civilian employees, commissioned officers in the NOAA and PHS, service academy and ROTC members, and more.

Navy Mutual Life Insurance

Navy Mutual is a non-profit Veterans Service organization that has served the military community for over 100 years. They offer term life insurance, whole life insurance, and several types of annuities.

USAA Life Insurance

USAA is a well-known financial services and insurance company that serves military members and their families. Their life insurance policies can complement SGLI or VGLI coverage. USAA offers interactive tools that help individuals determine the type and amount of life insurance they need.

When considering military life insurance options, it is important to assess your needs, compare rates and coverage, and carefully review the terms and conditions of each policy. It may be beneficial to consult with a financial professional or insurance specialist to ensure you make the right choice for your specific circumstances.

Qualifying life events

A qualifying life event (QLE) is a change in life situation that makes a person eligible to enroll in health insurance outside of the annual Open Enrollment Period. Depending on your plan, a qualifying life event gives you 30 days (sometimes 60 days) to make plan changes or sign up for new coverage.

There are four basic types of qualifying life events:

Loss of Health Insurance

• Turning 26 years old and losing coverage through a parent's insurance plan
• Losing job-based coverage, COBRA, or a student plan
• Losing eligibility for Medicare, Medicaid, or the Children's Health Insurance Program (CHIP)
• Losing health insurance for any reason other than not paying the premiums

Changes in Household

• Getting married, separated, or divorced
• Having a baby, adopting a child, or receiving a foster child
• Experiencing the death of someone on your health insurance policy

Changes in Residence

• Moving to a different county or zip code
• For students, moving to or from school
• For seasonal workers, moving to or from a work location
• Moving in or out of a shelter or transitional housing
• Moving to the U.S. from a U.S. territory or foreign country

Changes to Your Eligibility

• Changes in income that affect your eligibility for Medicaid coverage
• After already having an ACA plan, becoming eligible for tax credits that lower premiums
• Becoming a member of a federally recognized tribe
• For new U.S. citizens, becoming eligible for Marketplace coverage
• For AmeriCorps VISTA members, beginning or ending service
• Being discharged from the military
• Being released from incarceration

Service members' group life insurance

Servicemembers' Group Life Insurance (SGLI) is a low-cost term life insurance program purchased by the U.S. Department of Veterans Affairs for eligible members of the uniformed services. It is one of the government programs that work, as quoted by Hans Scheil, president of Cardinal Retirement Planning.

Eligibility

To be eligible for SGLI, you must meet at least one of the following criteria:

• Be an active-duty member of the Army, Navy, Air Force, Space Force, Marines, or Coast Guard.
• Be a commissioned member of the National Oceanic and Atmospheric Administration (NOAA) or the U.S. Public Health Service (USPHS).
• Be a cadet or midshipman of the U.S. military academies.
• Be a member, cadet, or midshipman of the Reserve Officers Training Corps (ROTC) engaged in authorized training and practice cruises.
• Be a member of the Ready Reserve or National Guard, assigned to a unit, and scheduled to perform at least 12 periods of inactive training per year.
• Be a volunteer in an Individual Ready Reserve (IRR) mobilization category.

Benefits

If you qualify for SGLI, you will be automatically signed up through your service branch. Some of the benefits of SGLI include:

• Coverage up to $500,000 in $50,000 increments.
• 120 days of free coverage from the date you left the military.
• Extension of free coverage for up to 2 years if you are totally disabled when you leave the military.
• Part-time coverage if you are a Reserve member who doesn't qualify for full-time coverage.

Cost

The current basic SGLI premium rate is 6 cents per $1,000 of insurance coverage, with an additional $1 per month for Traumatic Injury Protection coverage (TSGLI). For example, for a coverage amount of $500,000, the monthly premium rate is $30, plus $1 for TSGLI, making a total monthly premium deduction of $31.

Changes to Coverage

You can make changes to your SGLI coverage, such as choosing your level of coverage or selecting your beneficiaries. Any changes to your beneficiaries or coverage can be submitted online through the SGLI Online Enrollment System (SOES).

Federal civilian job and military service

Federal employees who are members of the Uniformed Services and are called to active military duty (or volunteer for active duty) are entitled to certain rights and benefits. These include:

• Employee Assistance Programs (EAP) that provide short-term counselling and referral services to help with financial, emotional, and dependent care problems.
• Paid military leave of 15 days (120 hours) each fiscal year, with the ability to carry over up to 15 days (120 hours) of unused leave.
• An additional 22 days of military leave if the leave is for the purpose of providing military aid to assist domestic civilian authorities or if the employee performs full-time military service in support of a contingency operation.
• The option to use annual leave, receive a lump-sum payment for all accrued and accumulated annual leave, or elect to use military leave or annual leave.
• Continuation of Federal Employee Health Benefits (FEHB) coverage for up to 24 months from the date of separation or the beginning of Leave Without Pay (LWOP). If called to active duty as a reservist in support of a contingency operation, FEHB coverage is provided at no charge.
• Continuation of Federal Employees' Life Insurance Program (FEGLI) coverage at no cost for up to 12 months of non-pay status or until 90 days after military service ends, whichever comes first. After 12 months of active duty, employees may elect to continue or terminate coverage.
• Continuation of Federal Employees' Dental and Vision Insurance Program (FEDVIP) coverage, with direct billing to the employee after two consecutive pay periods of LWOP.
• Continuation of Long Term Care (LTC) insurance coverage as long as premiums are paid.
• Flexible Spending Account (FSA) options, including freezing the account, prepaying allotments, cancelling election, or electing a Qualified Reservist Distribution (QRD) if called to active military service for 180 days or more.

Federal employees who perform active military duty are also protected under the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA), which requires employers to place employees on LWOP upon entering active duty unless they choose to be placed on military leave or annual leave, or request separation. Employees generally have full job protection and must be restored to their previous positions upon return to active Federal civilian service, with certain time limitations. They are also protected from reduction in force (RIF) and discharge from employment for one year following separation, except for reasons of poor performance, conduct, or suitability.

In terms of hiring, the Department of Defense (DOD) offers various job opportunities for current and prior Federal employees, including those with and without competitive status. Competitive status allows for applications to merit promotion positions and positions open to everyone on USAJOBS, as well as direct hiring authorities and Veteran authorities with previous qualifying military service. Prior Federal employees with competitive status may be eligible for reinstatement, especially if they have acquired career tenure after three years of continuous competitive service. Current and prior Federal employees without competitive status can apply for positions open to the public or open to Federal employees in the excepted service.

Overall, there are a range of benefits, protections, and opportunities available to Federal civilian employees who transition to active military duty or have prior military service.

Frequently asked questions