Divorce is something that most individuals including federal employees would prefer to avoid. Some federal employees in the past, there are currently some federal employees, and there will be in the future some federal employees who will unfortunately continue to face the experience of divorce.
This column is the second of three columns discussing divorce and federal employees and will present how divorce may affect federal employee health and life insurance benefits.
SEE ALSO: Divorce and Federal Employees – Part I: Court Orders and CSRS and FERS Annuities
Former Spouses and Federal Employee Health Benefits (FEHB)
A former spouse of a federal employee may enroll in the Federal Employee Health Benefits Program (FEHB) as “self only” coverage if he or she meets the “spouse equity” requirements of the FEHB rules. A former spouse is also eligible to continue FEHB coverage for up to three years through the temporary continue of coverage (TCC) provisions of the FEHB. But a former spouse of a federal employee or an annuitant may not continue to participate in the FEHB under an employee’s or annuitants “self plus one” or “self and family” coverage after a divorce because the former spouse does not meet the definition of an eligible family member.
OPM cannot honor a court order requiring an employee or an annuitant to provide FEHB coverage to a former spouse because section 8902(a)(1) of Title 5 U.S. Code preempts state law in matters relating to the nature and extent of FEHB coverage and benefits.
Requirements to Continue FEHB Enrollment Under Spouse Equity Provisions
The following are the provisions that regulate when a former spouse can continue FEHB enrollment under the spouse equity provisions of the law as described in section 8905 of Title 5, U.S. Code. There are four requirements that the former spouse must meet. The former spouse must:
• Have been covered as a family member under the employee’s annuitant’s FEHB enrollment for at least one day during the 18 months prior to divorce
• Be entitled to receive a portion of the retirement annuity after the employee retires or a survivor annuity after an employee/annuitant dies
• Apply within 60 days after the divorce settlement to the agency employing office where the federal employee worked at the time of divorce by submitting a written notice that he or she wants to continue FEHB coverage under the spouse equity provisions of the FEHB law, and
• Not remarry prior to age 55.
Under spouse equity rules, a former spouse who qualifies must enroll for FEHB coverage on his or her own right and must pay both the employee’s and the federal government’s share of the FEHB premiums with no agency or federal government premium contribution. There is no additional tow percent administrative surcharge associated with temporary continuation of coverage. Coverage begins from the first day of the pay period after the employing office receives all properly completed qualifying documents.
Election of Coverage
A former spouse may elect to enroll in an approved FEHB health insurance plan as “self only” coverage within 60 days after the dissolution of the marriage. This is also the case of a former spouse of a former employee whose marriage was dissolved after the employee’s retirement.
The former spouse must elect to enroll in an approved FEHB health insurance plan as self only coverage within 60 days after the dissolution of the marriage. Or the former spouse may elect “self plus one” or “self and family” coverage to include a qualifying family member such as a child or children under the age of 26.
In either case, the former spouse agrees to pay the full amount of FEHB premiums with no federal government contributions. Premium payments are made to the employing agency if the spouse divorced from is a federal employee. If the spouse divorced from is a CSRS or FERS annuitant, FEHB premium payment must be sent to OPM.
Termination of FEHB Enrollment
A former spouse’s enrollment in the FEHB terminates, subject to the temporary extension of coverage under TCC for conversion, at midnight of the last day of the pay period in which the earliest of the following events occur:
• A court order ceases to provide entitlement to survivor annuity or portion of retirement annuity under either CSRS or FERS
• The former spouse remarries before age 55
• The former spouse dies
• The employee or annuitant on whose service the benefits are based, dies and no survivor annuity is payable
• The separated employee on whose service the benefits are based dies before the requirement for a deferred annuity have been met
• The employee on whose service benefits is based leaves federal service before establishing title to an immediate annuity or a deferred annuity
• There has been a refund of CSRS or FERS retirement contributions to the separated employee on whose services the health benefits are based, and
• The annuitant or surviving annuitant fails to pay the FEHB premium in a timely manner. Not paying FEHB premiums is considered a voluntary cancellation of FEHB health benefits.
Note that a former spouse whose enrollment is terminated may not reenroll at a later date. To cancel enrollment, a former spouse would have to file a completed health benefits form with the divorced spouse’s employing office.
Federal Employee Group Life Insurance (FEGLI)
Under FEGLI, a federal employee or an annuitant may make an irrevocable assignment of his or her life insurance coverage to another person or to a trust. Those individuals who assign their FEGLI ownership continue to be insured under the FEGLI program. In assigning the policy, the individual (the “assignor”) irrevocably transfers to the assigned (the “assignee”) many of the rights, benefits and responsibilities associated with FEGLI “Basic” and FEGLI optional coverages (FEGLI Option A and FEGLI Option B). However, family life insurance (FEGLI Option C) cannot be assigned.
What is the purpose of life insurance assignments’ Among other items related to life insurance policies, an assignment automatically cancels a prior designation of a life insurance beneficiary. They generally are made to comply with the requirements of a court order upon divorce.
Why would a federal employee or annuitant assign FEGLI coverage? An assignment of FEGLI coverage may be made by a federal employee or annuitant to comply with a court order for divorce. The court order frequently orders a federal employee or annuitant to name a former spouse as the beneficiary of his or her FEGLI life insurance proceeds. But under FEGLI law an insured person – the owner of the life insurance policy – may change designated beneficiary at any time. This is the case even if a court order directs otherwise.
FEGLI pre-exempts state law and court orders are based on state law to the extent that they are inconsistent with the contract. Assigning FEGLI coverage to a former spouse provides a means for ensuring that when FEGLI benefits are awarded to a former spouse in a divorce. The employee or annuitant is unable to circumvent the award by changing the designated beneficiary or canceling FEGI coverage at some later date.
It should be noted that the law does not authorize OPM to enforce or comply with the provisions of a court order directing OPM or a federal employee or annuitant to make an assignment of FEGLI coverage, if he or she so chooses. It is the responsibility of the court-designated assignee to ensure that the court order is enforced.
Assignments of FEGLI must be made on OPM Form RI 7610 (Assignment of Federal Employees’ Group Life Insurance).
Edward A. Zurndorfer is a CERTIFIED FINANCIAL PLANNER®, Chartered Life Underwriter, Chartered Financial Consultant, Registered Health Underwriter and Enrolled Agent in Silver Spring, MD. Tax planning, Federal employee benefits, retirement and insurance consulting services offered through EZ Accounting and Financial Services, located at 833 Bromley Street Suite A, Silver Spring, MD 20902-3019