Key Takeaways:

1. The Federal Employees Group Life Insurance (FEGLI) program offers various life insurance coverage options for federal employees and their families.
2. Understanding FEGLI’s coverage types, enrollment requirements, and premium costs is essential for making informed decisions about your life insurance needs.

Basics of FEGLI: What You Need to Know

The Federal Employees Group Life Insurance (FEGLI) program is a significant benefit offered to federal employees, providing essential life insurance coverage to protect employees and their families. This article covers the basics of FEGLI, including an overview of the program, types of coverage options available, enrollment and eligibility requirements, and understanding FEGLI premiums and costs.

Overview of the Federal Employees Group Life Insurance (FEGLI) Program

FEGLI was established in 1954 to provide group life insurance coverage for federal employees. It is the largest group life insurance program in the world, covering millions of federal employees, retirees, and their families.

Purpose of FEGLI

1. Financial Protection: FEGLI provides financial protection to beneficiaries in the event of the policyholder’s death, helping to cover funeral expenses, debts, and ongoing living expenses.
2. Affordable Coverage: By offering group rates, FEGLI provides life insurance at a lower cost compared to individual policies, making it an affordable option for federal employees.

Administration

1. Office of Personnel Management (OPM): The OPM administers FEGLI, overseeing the program’s operations, eligibility, and benefits.
2. Insurance Provider: MetLife is the current insurance provider for the FEGLI program, responsible for underwriting the policies and handling claims.

Types of Coverage Options Available Under FEGLI

FEGLI offers several coverage options to meet the diverse needs of federal employees and their families. The program includes Basic, Option A, Option B, and Option C coverage.

Basic Coverage

1. Coverage Amount: Basic coverage equals the employee’s annual basic pay rounded up to the next $1,000, plus an additional $2,000.
2. Automatic Enrollment: New federal employees are automatically enrolled in Basic coverage unless they opt out. This ensures that employees have some level of life insurance protection from the start of their federal service.
3. Government Contribution: The federal government pays one-third of the Basic coverage premium, making it a cost-effective option for employees.

Optional Coverage

Option A (Standard Optional Insurance)

1. Coverage Amount: Option A provides an additional $10,000 in life insurance coverage.
2. Eligibility: Employees can elect Option A during their initial enrollment period or during open seasons and qualifying life events.

Option B (Additional Optional Insurance)

1. Coverage Amount: Option B allows employees to choose coverage in multiples of their annual basic pay, ranging from one to five times their salary.
2. Flexibility: This option provides flexibility for employees to increase their coverage based on their financial responsibilities and needs.

Option C (Family Optional Insurance)

1. Coverage Amount: Option C provides coverage for the employee’s spouse and eligible dependent children. Employees can choose coverage in multiples of $5,000 for a spouse and $2,500 for each child, up to five multiples.
2. Family Protection: This option ensures that the employee’s family members are also financially protected in the event of their death.

Enrollment and Eligibility Requirements for FEGLI

Understanding the enrollment process and eligibility requirements for FEGLI is essential for federal employees to take full advantage of the program.

Eligibility

1. Federal Employees: Most federal employees are eligible for FEGLI coverage, including full-time, part-time, and some temporary employees.
2. Retirees: Federal retirees can continue their FEGLI coverage into retirement if they meet specific requirements, such as being enrolled in the program for at least five years immediately before retirement or since their first opportunity to enroll.

Enrollment Periods

1. Initial Enrollment: New federal employees are automatically enrolled in Basic coverage and have 60 days from their start date to elect optional coverage.
2. Open Seasons: FEGLI open seasons are rare but allow employees to enroll or make changes to their coverage without a qualifying life event.
3. Qualifying Life Events: Employees can enroll or increase their coverage outside of open seasons if they experience a qualifying life event, such as marriage, divorce, birth of a child, or death of a family member.

Waiving and Reducing Coverage

1. Waiving Coverage: Employees can waive Basic or optional coverage by completing the appropriate forms during their initial enrollment period or after experiencing a qualifying life event.
2. Reducing Coverage: Employees can reduce their FEGLI coverage at any time by submitting the necessary forms to their human resources office.

Understanding FEGLI Premiums and Costs

FEGLI premiums are determined by the level of coverage selected, the employee’s age, and the type of coverage. Understanding these costs is crucial for managing your life insurance expenses.

Basic Coverage Premiums

1. Cost-Sharing: The federal government pays one-third of the Basic coverage premium, and the employee pays the remaining two-thirds.
2. Age-Based Rates: Premium rates for Basic coverage are based on the employee’s age, with rates increasing as the employee gets older.

Optional Coverage Premiums

1. Option A Premiums: Premiums for Option A are based on the employee’s age and increase in five-year age brackets. As employees age, the cost of maintaining Option A coverage increases.
2. Option B Premiums: Option B premiums are also age-based and increase as the employee moves into higher age brackets. Employees can choose the number of multiples of their salary they wish to cover, impacting the overall premium cost.
3. Option C Premiums: Premiums for Option C are based on the employee’s age and the number of multiples selected. Coverage for family members can add to the overall cost but provides important financial protection.

Payment of Premiums

1. Payroll Deduction: FEGLI premiums are typically deducted from the employee’s biweekly paycheck, making it easy to manage and maintain coverage.
2. Post-Retirement Payments: Retirees who continue their FEGLI coverage will have their premiums deducted from their annuity payments.

Cost Considerations

1. Comparing Costs: Compare the cost of FEGLI with private life insurance policies to ensure you are getting the best value for your coverage needs. While FEGLI offers competitive rates, private policies might provide better options depending on your health and age.
2. Reviewing Coverage Needs: Periodically review your life insurance needs and coverage levels to ensure you are adequately protected without overpaying for unnecessary coverage. Life events such as marriage, the birth of a child, or nearing retirement might necessitate adjustments to your coverage.

Conclusion

The Federal Employees Group Life Insurance (FEGLI) program offers essential life insurance coverage options for federal employees and their families. Understanding the basics of FEGLI, including the types of coverage available, enrollment and eligibility requirements, and the associated premiums and costs, is crucial for making informed decisions about your life insurance needs. By carefully evaluating your coverage options and costs, you can ensure that you and your loved ones are financially protected.

Contact Information:
Email: [email protected]
Phone: 9143022300

Bio:
My name is Kevin Wirth and I have worked in the financial services industry for many years and I specialize in life insurance and retirement planning for individuals and small business owners, with a specialty in working with Federal Employees. I am also AHIP certified to work with individuals on their Medicare planning. You can contact me by e-mail or phone. I look forward to the opportunity of working with you on these most relevant areas of financial planning.

[email protected]
914-302-2300

Disclosure:
These articles are intended for educational purposes only. Please contact your advisors for legal, accounting or investment advice.