Life Insurance For Opm Retirees: What's Covered And What's Not?

The Federal Employees' Group Life Insurance (FEGLI) Program is the largest group life insurance program in the world, covering over 4 million federal employees and retirees, as well as their family members. Basic life insurance coverage is included in the FEGLI program, and it can be continued into retirement. The cost of basic insurance is shared between the employee and the government, with the employee paying 2/3 of the total cost and the government paying 1/3. While the cost of basic insurance does not change based on age, younger employees may pay a higher premium compared to older employees when age is taken into consideration. After the age of 65, retirees can continue some coverage at no cost.

Retirees can keep their basic life insurance coverage if they meet certain conditions

Basic life insurance coverage can be continued into retirement if certain conditions are met. The Federal Employees' Group Life Insurance (FEGLI) Program, established in 1954, is the largest group life insurance program globally, covering over 4 million federal employees, retirees, and their family members.

To keep your basic life insurance benefits after retiring, you must meet the following requirements:

• You must be enrolled in basic life insurance under the FEGLI program when you retire.
• You must not have converted your life insurance coverage to an individual policy.
• You must have had life insurance coverage for the five years immediately preceding retirement or for the full periods of federal service when coverage was available (if the coverage was for less than five years).
• Your annuity payments must start within 30 days.

If you are retiring under the Minimum Retirement Age (MRA) plus 10 provision of FERS, your health care and life insurance coverage will be suspended until your annuity starts, even if it is postponed.

The FEGLI Basic insurance premium is a level rate per thousand dollars of coverage, meaning the enrollee premium rates are equal for the duration of the coverage period. The cost of basic insurance is shared between the retiree and the government, with the retiree paying two-thirds and the government paying one-third. This level premium feature ensures that younger employees pay the same cost for basic coverage as older retirees.

Upon turning 65 or retiring (whichever is later), you must choose from the following options regarding your basic life insurance coverage:

• 75% Reduction: Your basic coverage reduces by 2% each month until it reaches 25% of its pre-reduction amount. This option is free of charge once the reductions begin and remains so until death.
• 50% Reduction: Your basic coverage reduces by 1% each month until it reaches 50% of its pre-reduction amount. There is an extra premium for this option, which you will pay until death, or until you switch to the 75% reduction or cancel basic coverage.
• No Reduction: Your basic coverage remains the same as when you were an employee. This option has a larger extra premium that you will pay until death, switching to the 75% reduction, or canceling basic coverage.

If you do not submit form SF 2818 to your HR office before retiring, you will be defaulted to the 75% reduction option.

The Federal Employees' Group Life Insurance (FEGLI) program covers over 4 million federal employees and retirees

The Federal Employees' Group Life Insurance (FEGLI) program was established on August 29, 1954, and is the largest group life insurance program in the world, covering over 4 million federal employees and retirees, as well as many of their family members.

FEGLI provides group term life insurance, which means it does not build up any cash value or paid-up value. It consists of Basic life insurance coverage and three additional options. Most employees are eligible for FEGLI coverage, and new federal employees are automatically covered by Basic life insurance, with premiums deducted from their paycheck unless they waive the coverage.

The Basic insurance premium is a level rate per one thousand dollars of coverage, and the rate for an individual enrollee does not change as the enrollee ages. This means that a younger employee pays the same cost for Basic coverage as a 64-year-old retiree. The cost of Basic insurance is shared between the employee and the government, with the employee paying 2/3 of the total cost and the government paying 1/3.

FEGLI coverage can be continued into retirement, and the retirement benefit is pre-funded by premium costs. This means that after age 65, or at retirement if later, some coverage can be continued by retirees at no cost. The cost of this post-65 benefit is included in the FEGLI Basic level premium. Younger enrollees' premiums cover the cost of their current coverage and also pre-fund a portion of the costs related to future coverage, including in retirement.

When continuing FEGLI life insurance into retirement, individuals must choose from the following options when they turn 65 or retire, whichever is later:

• 75% Reduction: Basic coverage reduces by 2% each month until it reaches 25% of its pre-reduction amount. This option is free once the reductions begin and remains free until death.
• 50% Reduction: Basic coverage reduces by 1% each month until it reaches 50% of its pre-reduction amount. There is an extra premium for this choice that the individual will continue to pay until death, until they switch to 75% reduction, or until they cancel Basic.
• No Reduction: Basic coverage does not reduce, and the individual maintains the same amount of Basic coverage they had as an employee. There is a larger extra premium for this choice that the individual will continue to pay until death, until they switch to 75% reduction, or until they cancel Basic.

The FEGLI Basic insurance premium is a level rate per $1,000 of coverage

Basic life insurance is not free for OPM retirees. However, the Federal Employees' Group Life Insurance (FEGLI) program does provide life insurance coverage for over 4 million federal employees and retirees, as well as their family members.

The FEGLI Basic insurance premium is based on a composite premium structure, meaning that the rate is the same for each enrollee in the group policy, regardless of age or health status. As a result, younger employees may pay comparatively higher premiums than they would with coverage based on age or with a commercial individually underwritten policy. However, younger employees are covered by an additional Basic insurance provision called the Extra Benefit, which doubles the amount of Basic insurance payable at no extra cost for enrollees aged 35 or younger. Beginning on an enrollee's 36th birthday, the Extra Benefit decreases by 10% each year until it is completely phased out by age 45.

The cost of Basic insurance under FEGLI is shared between the employee and the government. The employee pays 2/3 of the total cost, while the government contributes the remaining 1/3. Unlike the Basic insurance premium, the cost of Optional insurance (Option A, Option B, and Option C) is paid in full by the employee and is dependent on their age.

The FEGLI retirement benefit is pre-funded by premium costs so that after age 65, some coverage can be continued for free

The Federal Employees' Group Life Insurance (FEGLI) Program is the largest group life insurance program in the world, covering over 4 million federal employees and retirees, as well as many of their family members. The FEGLI Basic insurance premium is a level rate per $1000 of coverage, meaning the enrollee premium rates are equal for the duration of the coverage period. The FEGLI retirement benefit is pre-funded by premium costs, so that after the age of 65, some coverage can be continued for free. This means that younger enrollees' premiums cover the cost of their current coverage, as well as a portion of the costs related to future coverage in their careers and retirement.

The cost of Basic insurance is shared between the individual and the government. The individual pays 2/3 of the total cost, while the government pays 1/3. The enrollee's age does not affect the cost of Basic insurance, and the rate structure for all enrollees is subject to periodic adjustments based on claims experience. This means that a 25-year-old active employee pays the same cost for Basic coverage as a 64-year-old retiree.

If you retired before December 9, 1980, your basic life insurance will be reduced by 2% of the face value each month, starting with the second month after your 65th birthday or your retirement date, whichever is later. This reduction continues until your basic life insurance reaches 25% of the face value, and this coverage is free.

If you retired on or after December 9, 1980, but before January 1, 1990, you can elect one of the following reduction schedules for your basic life insurance:

• 75% reduction: Your basic life insurance reduces by 2% of the face value each month, starting with the second month after your 65th birthday or retirement date, whichever is later. This reduction continues until your basic life insurance reaches 25% of the face value, and this coverage is free.
• 50% reduction: Your basic life insurance reduces by 1% of the face value each month, starting with the second month after your 65th birthday or retirement date, whichever is later. This reduction continues until your basic life insurance reaches 50% of the face value. Premiums are withheld from your annuity beginning at retirement and continue for life.
• No reduction: The full amount of your basic life insurance is maintained after you reach age 65. There is no reduction in the value of your basic insurance, but premiums are withheld from your annuity beginning at retirement and continue for life.

In addition to the basic life insurance coverage, there are three optional coverages: Option A-Standard, Option B-Additional, and Option C-Family. If you are eligible to continue these coverages into retirement, you can make an election about how you want them to continue using form SF 2818 "Continuation of Life Insurance As an Annuitant or Compensationer."

There are three optional life insurance coverages in addition to the basic coverage

Basic life insurance coverage can be kept after retirement if the retiree meets the following conditions:

• Enrolled in basic life insurance under the Federal Employees' Group Life Insurance (FEGLI) program when you retire
• Haven't converted your life insurance coverage to an individual policy
• Had life insurance coverage for the 5 years immediately preceding retirement or for the full periods of federal service when coverage was available (if the coverage was for less than 5 years)
• Annuity payments start within 30 days

If you are retiring under the Minimum Retirement Age (MRA) plus 10 provision of FERS, health care and life insurance coverage are suspended until your annuity starts, even if it is postponed.

In addition to basic life insurance coverage, there are three optional coverages: Option A-Standard, Option B-Additional, and Option C-Family. If you have any of these coverages and are eligible to continue them into retirement, you are entitled to make an election about how you want them to continue in retirement. You can do so by using form SF 2818 "Continuation of Life Insurance As an Annuitant or Compensationer."

Option A-Standard

The amount of insurance (formerly known as Optional Insurance) is $10,000 at retirement. If you retired before October 30, 1998, your Option A insurance may have been higher than $10,000. If you have this coverage, it reduces by two percent per month or $200, beginning the second month after your 65th birthday or your retirement date, whichever is later, until it reaches 25 percent of the face value, or $2,500. We withhold premiums for Option A insurance from your annuity through the end of the month in which you are 65, unless you elect to cancel this coverage.

Option B-Additional

The amount of Option B insurance is from one to five times an employee's salary at the time of retirement. Effective April 24, 1999, or later, annuitants with Option B coverage are eligible to make an Option B reduction election at the time of retirement. The election choices are "Full Reduction" or "No Reduction". Shortly before reaching age 65, we mail annuitants with Option B coverage a letter to ask if they want to change the Option B reduction election they made at retirement. If you have this coverage and this applies to you, at that time you may keep the coverage you elected at retirement or change it to the alternative. You also may elect a full reduction or no reduction for each separate multiple of Option B you have, as applicable. For example, a person with five multiples may elect no reduction for two multiples, while the remaining three multiples fully reduce to $0 over 50 months.

Option C-Family

The amount of Option C insurance is from one to five multiples. Each multiple equals $5,000. Effective April 24, 1999, or later, annuitants with Option C coverage are eligible to make an Option C reduction election at the time of retirement. The election choices are "Full Reduction" or "No Reduction." Shortly before reaching age 65, we contact annuitants with Option C coverage to ask if they want to change the Option C reduction election they made at retirement. If you have this coverage and this applies to you, at that time you may keep the coverage you elected at retirement or change it to the alternative. You also may elect full reduction or no reduction for each separate multiple of Option C you have, as applicable. For example, a person with five multiples may elect no reduction for two multiples, while the remaining three multiples fully reduce to $0 over 50 months.

Frequently asked questions