Once in a Blue Moon

March 27, 2017 George Ray

This post was originally posted on August 19, 2015 at federalbenefitsadvocates.com

by George Ray

On August 7, 2015 the Office of Personnel Management (OPM) issued Benefits Administration Letter 15-203 announcing an Open Season enrollment and changes in the Federal Employees Group Life Insurance (FEGLI) rates. A copy of BAL 15-203 is attached here (PDF).

OPEN SEASON ENROLLMENT

A Federal employee is provided with basic group term life insurance coverage when he enters employment. If the employee chooses to decline this coverage, and later decides that he wants or needs it, he must apply for coverage. This is typically done by completing Standard Form 2822 (SF-2822) and requires a physician’s examination, at the employee’s expense.

Alternatively, an employee could simply wait for an Open Season life insurance enrollment to obtain life insurance, but Open Season enrollments for life coverage are rarer than a blue moon. The most recent FEGLI open seasons were held in 2004 and back in 1999. OPM’s announcement indicates that an Open Season enrollment is now scheduled. Here’s what you need to know about the next Open Season for life insurance:

It will be offered from September 1 – September 30, 2016 (No, that’s not a typo. It’s more than a year away -- not September 2015).
Coverage will be delayed one full year after enrollment. This means that it will take effect beginning in the first full pay period on or after October 1, 2017 (yes, that’s 2017).
An employee can elect coverage or increase his FEGLI life insurance by submitting his request to his human resources office. This can be done electronically if available through the agency.
Retirees can never increase coverage, even during Open Season enrollment. (But both retirees and employees can reduce or cancel coverage at any time.)

NEW FEGLI PREMIUMS

The announcement also indicated that effective on January 1, 2016, FEGLI premium rates will change for some types of life insurance coverage. Payroll offices will apply the new rates for the first pay period beginning on or after that date.

Federal employees are offered basic group term life coverage, along with three optional coverages – Option A, Option B, and Option C. Some rates will remain the same, some will go down, and some will go up depending upon the age of the employee. The Benefits Administration Letter included tables with the new rates, but here’s an examination of the rate changes in a nutshell.

Basic: (The amount provided is the employee's salary rounded up to the nearest $1,000, and add $2,000.)
For employees: There are no changes to the premium rates for Basic life coverage. Rates remain at $0.15 per thousand dollars of coverage per pay period.
For retirees: Premium rates for post-retirement Basic coverage remain at $ 0.32 per thousand per month prior to age 65. Rates do increase only for the ‘50% Reduction’ and the ‘No Reduction’ option. (This means that it will be more expensive for an annuitant to keep a greater amount of his coverage beginning at age 65, or later if retiring after age 65.)

Option A: (The amount provided is a flat $10,000.)
For employees: Option A premiums will decrease at ages below 60. There is no change to premiums at age 60 and above.
For retirees: Option A premiums will decrease at ages below 60. There is no change to premiums at age 60 and above.

Option B: (Coverage provided is based on 1X, 2X, 3X, 4X, or 5X the employee’s salary.)
For employees: Option B bi-weekly premiums will decrease beginning at the 40-44 age band through the 70-74 age band. Rates above and below these age bands remain the same.
For retirees: These premium changes are mirrored in the monthly rates for retirees. Decreases start in the 40-44 age band and end after the 70-74 age band. Rates above and below these age bands remain the same.

Option C: (Coverage provided is 1 to 5 multiples for spouse and children. $5,000 multiples for spouse. $2,500 for children)
For employees: Option C premiums will decrease slightly starting with the 35-39 age band. The decrease in premiums continue through the 55-59 age band. There is no change for premiums between ages 60 - 69, however, rates increase significantly for family coverage at the employee’s age 70 and above.
For retirees: Option C monthly premiums will also decrease slightly starting with the 35-39 age band. The decrease in premiums continue through the 55-59 age band. There is no change for premiums between ages 60 - 69, however, rates increase significantly for family coverage at the retiree’s age 70 and above.

You can download a copy of our FEGLI Rates for 2016 here (PDF). Be aware of the premium changes as the next Open Season approaches. Circumstances change, and so should life coverage. It’s important to review it regularly -- don't wait until the next blue moon.