FEGLI Optional Insurance for Retirees
Options A, B, C
If you are eligible to continue or have reinstated Basic insurance, you are also eligible to continue or have reinstated Optional insurance if you meet the same coverage requirements for Optional insurance as those for Basic insurance.
For the purpose of continuing insurance as an annuitant or compensationer, you are not considered to have been eligible for Option C during any period when you had no eligible family member.
Amount of Optional Insurance
The amount of Option A insurance you can continue as an annuitant or compensationer is $10,000.
The number of multiples of Option B and Option C insurance you can continue as an annuitant or compensationer is the number of multiples in force during the entire period of service required to continue Option B and Option C (or you can choose fewer multiples).
Example: Toshi carried 2 multiples of Option B and increased coverage to 5 multiples during the 1993 open enrollment period. He retired on September 30, 1996. He is allowed to continue 2 multiples as an annuitant, since that's the number he had during the entire 5-year period preceding his retirement (10/1/91-9/30/96). He didn't have the full 5 multiples long enough to meet the 5-year requirement. (He could choose to continue only 1 multiple, instead.)
Post-65 Reduction In The Amount of Coverage
The amount of Option A automatically reduces when you reach age 65 (or retire, if later). There is no election to be made.
The amount of coverage reduces by 2% ($200) each month until the amount has been reduced by 75%. Only 25% of the original amount is payable ($2,500) as a death benefit once the full reduction has been reached.
Options B and C
Effective April 24, 1999, at the time of retirement or becoming insured as a compensationer, you will:
elect how many of your Option B and C multiples you wish to continue into retirement; and
choose whether to have all of those multiples reduce ("Full Reduction") or none of them reduce ("No Reduction") when you reach age 65 (or retire, if later).
Note: Both your separation date and annuity starting date must be on or after April 24, 1999 to be eligible to make an Option C reduction election.
If you choose to continue fewer multiples than you are eligible to continue, you indicate this on the new Continuation of Life Insurance Coverage Form (SF 2818). You should not complete a Life Insurance Election form (SF 2817) to reduce the number of multiples at retirement. You will have a 31-day extension of coverage and the right to convert those multiples. Note: if you have assigned your insurance, you cannot elect to continue fewer multiples of Option B than you are eligible to continue.
You may choose Full Reduction for one type of insurance and No Reduction for the other type of insurance, or Full Reduction or No Reduction for both.
If you do not make an election, you will automatically continue all multiples for which you are eligible and will get Full Reduction for all multiples.
At Age 65
Shortly before you reach age 65, you will get the opportunity to change your Full Reduction/No Reduction election. At that time you can also choose to have some multiples reduce and others not reduce.
If you choose Full Reduction, each multiple of coverage reduces by 2% of the original amount each month until the amount has been reduced by 100%. The insurance stops at 12:00 noon on the day before the 50th reduction; after that no benefits are payable upon your death (for Option B) or your family member's death (for Option C).
The reduction starts at the beginning of the 2nd month after your 65th birthday or the beginning of the 2nd month after your retirement, if later. Withholdings stop the month after your 65th birthday (or retirement, if later) and Options B and/or C are free.
Judy is retired and has Option A, 3 multiples of Option B worth $30,000 each, and two multiples of Option C. She has chosen to continue all of the multiples into retirement and has chosen Full Reduction of her Options B and C multiples. She turns 65 on March 15, 2000.
Option A reduces by $200 each month ($10,000 x 2%), starting May 1, 2000. On June 1, 2003, the maximum reduction will be reached, and 25% of the amount of Option A ($2,500) will be paid to her beneficiaries upon her death.
Each multiple of Option B reduces by $600 each month ($30,000 x 2%), starting May 1, 2000. At 12:00 noon on May 31, 2004, the full reduction will be reached, and Option B coverage will stop. No Option B benefits will be paid upon Judy's death.
Option C reduces by $200 each month for Judy's spouse ($10,000 x 2%) and $100 per month for each of her eligible children ($5,000 x 2%), starting May 1, 2000. At 12:00 noon on May 31, 2004, the full reduction will be reached, and Option C coverage will stop. No benefits will be paid to Judy if her spouse or eligible child(ren) dies after that date.
If you choose No Reduction, your Options B and/or C coverage will not reduce at all. After age 65 (or retirement, if later), you will continue to pay premiums appropriate to your age.
When Jake retired, he chose to continue three multiples of Option B worth $45,000 each and three multiples of Option C into retirement. He chose No Reduction of his Option B coverage and Full Reduction of his Option C coverage after age 65. He turns 65 on July 4, 2001.
When he reaches age 65, his Option B coverage will not reduce and he will continue to pay the premiums for his age group; $135,000 in Option B benefits ($45,000 x 3) will be paid to his beneficiaries upon his death.
Starting on September 1, 2001, his Option C coverage will reduce by $300 per month for Jake's spouse ($15,000 x 2%) and $150 per month for Jake's eligible children ($7,500 x 2%). At 12:00 noon on September 30, 2005, the full reduction will be reached and Option C coverage will stop. No benefits will be paid to Jake if his spouse or eligible child dies after that date.
How to Make the Election
When you retire or become insured as a compensationer, you will make your election on the Continuation of Life Insurance Coverage form (SF 2818). This form has been revised to allow for your choice regarding continuation of Basic as well as Options B and C. The May 2001 version of the SF 2818 should be used. The new form makes the Option B and C Election Notice obsolete. Your employing office will include the completed SF 2818 with the retirement package when it is submitted to the Office of Personnel Management.
Can I Change My Election?
If you elect No Reduction, you can change to Full Reduction at any time (unless you have assigned your insurance). If you are over age 65, the amount of insurance in force will be computed as if you had elected Full Reduction originally. You will not get any refund of premiums.
If you elect Full Reduction, you can change to No Reduction at any time up until the 2nd month following your 65th birthday. You cannot change from Full Reduction to No Reduction once your annuity check has been issued that does not withhold premiums for the Full Reduction multiples.
As with your original election, up until age 65 these changes apply to all multiples.
When Fred retired, he chose No Reduction of his three Option B multiples worth $25,000 each. He turned 65 on June 10, 2000. He can change from No Reduction to Full Reduction at any time. He elects on July 1, 2001 to change his election to Full Reduction of these multiples. His Option B insurance in force immediately reduces to $57,000 and will continue to reduce by 2% of the original $75,000 amount each month. He will no longer have Option B premiums withheld from his annuity. His Option B insurance will stop at 12:00 noon on August 31, 2004.
At the same time, Fred wanted to change his original choice of Full Reduction of his Option C coverage to No Reduction. He cannot make this change, since it is past the 2nd month following his 65th birthday.
What is the Difference between Cancelling a Multiple and Changing to Full Reduction?
If you cancel a multiple, it causes that coverage (and the premiums) to stop right away. If you become reemployed, you cannot get that coverage back unless you had a break in service of at least 180 days. If you die after cancelling a multiple, no benefits are paid for that multiple.
If you change to Full Reduction, your coverage goes away gradually (2% each month) instead of all at once. The reductions don't start (and premiums don't stop) until the 2nd month after you reach age 65. If you die after changing a multiple to Full Reduction, benefits are paid on whatever amount of that multiple is left at the time of your death.
What If I have Assigned my Insurance?
If you have assigned your insurance, you make the initial election regarding Option B reductions, just as you do for Basic. (Option C isn't subject to assignment.) After you have made the Option B election, you can change only from Full Reduction to No Reduction (before you reach age 65); you cannot change from No Reduction to Full Reduction.
Only your assignee can change from No Reduction to Full Reduction; your assignee cannot change from Full Reduction to No Reduction.
|Related Articles & Resources|
· FEGLI Basic Insurance for Retirees