Federal Employees' Group Life Insurance Act
The Federal Employees' Group Life Insurance Act is a United States federal statute passed by the 83rd U.S. Congress and signed into law by President Dwight D. Eisenhower on August 17, 1954. The act provided for a group life insurance policy for most federal employees, similar to those provided for employees of most large industries.
The act established the Federal Employee Group Life Insurance program, which covers over 4 million federal employees and is the largest group life insurance program in the world. Under the program, new federal employees are automatically enrolled in a basic insurance program with the option of waiving enrollment, and may also obtain additional coverage for themselves and their families. Insurance premiums are deducted from the employees' payroll checks. The cost of the plan is shared between the employee and the federal government in a 2:1 ratio for Basic coverage only, any Optional coverage is paid fully by the employee.
The FEGLI program also covers NASA astronauts, in particular, those astronauts who died on board the space shuttles Challenger and Columbia.
FEGLI Coverage
For specific references to the below items, see .Levels of Available Coverage
FEGLI offers four levels of coverage: Basic and three Options. In order to enroll in any Option, the employee must be enrolled in Basic.- Basic--the amount of coverage equals the employee's salary plus an additional $2,000, but the minimum level of coverage is $10,000
- *The Basic coverage also provides an "Extra Benefit" for employees who die before age 45; total Basic and Extra Benefit coverage is the BIA multiplied by an "age multiplication factor", which starts at 2.0 for employees 35 and younger and decreases by 0.1 for each year until age 45 when the Extra Benefit is no longer available.
- Option A--provides an additional $10,000 of coverage, regardless of salary
- Option B--provides a multiple of the employee's salary ; the employee may choose a whole multiple of 1, 2, 3, 4, or 5 times salary
- Option C--provides multiples for family members ; the employee may choose a whole multiple of 1, 2, 3, 4, or 5
Coverage during Employment
Employees are automatically enrolled in Basic upon appointment unless they choose not to enroll, while Optional coverage must be selected within 60 days of appointment, and in both cases enrollment and coverage are guaranteed regardless of the employee's prior medical history. Otherwise, coverage can only be obtained during an open season, by providing satisfactory medical information, or a qualifying "life event". If an employee leaves government service with no coverage and subsequently returns, the break must be at least 180 days in order to become eligible once again barring either a rare open season, proof of satisfactory medical information, or life event.Premiums during Employment
The employee pays 2/3 and the government pays 1/3 of Basic coverage premiums. The rates for Basic coverage are the same for all employees regardless of age.The employee pays all cost of Optional coverage. The rates for each Option are determined by age ranges in increments of five years.
Premiums are paid either bi-weekly or monthly, depending on the frequency of employee's pay, and are automatically deducted from pay.
Coverage at Retirement
In order to maintain continuous coverage at retirement, the employee must take an immediate annuity and must have maintained coverage for five years preceding. Unlike with the Federal Employees Health Benefits system, the five year rule cannot be waived by the employee's agency. If a deferred annuity is taken, coverage is suspended from the date of retirement until the date the annuity begins.At retirement, the employee must choose how much coverage to take into retirement, and how much coverage will be reduced beginning at age 65 or, if still working at age 65, at retirement. An employee cannot increase coverage at retirement or at any time thereafter.
After age 65 the employee may choose coverage options with no cost to the employee but which reduce levels of coverage over time, or may choose to continue higher levels of coverage for additional premiums paid. An employee cannot increase coverage in retirement, only to reduce or discontinue it. If no choices are made, coverage is discontinued and cannot be reinstated.
- For Basic, the employee must choose one of three options: "75% Reduction", "50% Reduction" or "No Reduction". The employee pays no premiums for the 75% Reduction option, but must pay all premiums for either the 50% Reduction or No Reduction options. For employees choosing either No Reduction or 50% Reduction, only the 75% Reduction can be later chosen, outside of discontinuing coverage.
- For Option A, coverage will reduce by 2% per month beginning the second month after age 65 until reaching 25% of pre-retirement coverage after which no further reductions are made and coverage remains at that level for the remainder of the retiree's life; the employee pays no premiums. There are no alternative reduction choices under Option A; the only other option is discontinuance.
- For Options B and C, an employee may choose either "Full Reduction" or "No Reduction". Under each Option, an employee may "mix and match" multiples, and if retiring before age 65 may have a second chance to change how multiples are covered at that time. Once Full Reduction is chosen for any multiple after age 65 it is irrevocable outside of discontinuing coverage.
Premiums at Retirement
For retirees under age 65, the employee and government will continue to pay the same ratio of cost for Basic coverage as during employment at a rate which remains the same regardless of age, if the employee chooses the "75% Reduction" option. Payments for lesser Basic coverage reductions and for Optional coverage are paid fully by the employee.Beginning the second full month after the retiree turns age 65, Basic coverage with 75% Reduction, Option A, and Options B/C with Full Reduction is free; Basic coverage and Options B/C coverage with lesser or no reduction requires a premium which increases with age.
Payment at Death
Upon the death of an employee/retiree, death benefits are paid as follows:- If an employee/retiree has assigned ownership of the insurance, then to the beneficiary designated by the assignee, but if none, then directly to the assignee.
- If an employee/retiree has not assigned ownership, and a valid court order is on file directing payment, then in accordance with the terms of the order.
- If no assignment and no court order, then to the beneficiary designated by the employee/retiree.
- If no assignment, no court order, and no beneficiary designated, then the "statutory order of precedence" is used, as follows:
- *To the widow or widower,
- *To any surviving children or their descendants,
- *To any surviving parent or parents,
- *To the court-appointed executor or administrator of the estate,
- *To the next of kin as determined by the laws of the state where the employee/retiree lived at death.