Federal Employees' Group Life Insurance Act

Federal Employees’ Group Life Insurance Act
Long title	An act to authorize the Civil Service Commission to make available group life insurance for civilian officers and employees in the Federal service, and for other purposes.
Acronyms (colloquial)	FEGLIA
Enacted by	the 83rd United States Congress
Effective	August 17, 1954
Citations
Public law	83-598
Legislative history
	Introduced in the Senate as S. 3681 on January 6, 1954; Signed into law by President Dwight D. Eisenhower on August 17, 1954;
United States Supreme Court cases
	Hillman v. Maretta

Last updated November 10, 2023

The Federal Employees' Group Life Insurance Act (FEGLIA) 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.^[2] 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 (FEGLI) program, which covers over 4 million federal employees and is the largest group life insurance program in the world.^[3] Under the program, new federal employees are automatically enrolled in a basic insurance program (group term with no cash value) 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 (except for USPS employees whose coverage is fully paid by USPS), 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 ^[4] and Columbia.^[5]

FEGLI Coverage

For specific references to the below items, see the FEGLI booklet available on the OPM website.

Levels of Available Coverage

FEGLI offers four levels of coverage: Basic and three Options (A, B, and C). In order to enroll in any Option, the employee must be enrolled in Basic.

Basic--the amount of coverage ("Basic Insurance Amount" or BIA) equals the employee's salary (rounded up to the next $1,000) plus an additional $2,000 (e.g. an employee making $97,500 would have $100,000 of coverage: $97,500 rounded up to $98,000 + $2,000 additional = $100,000), 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 (rounded up to the next $1,000); the employee may choose a whole multiple of 1, 2, 3, 4, or 5 times salary (no fractional multiples allowed)
Option C--provides multiples for family members (the amounts per multiple are $5,000 for a spouse and $2,500 for each dependent child); the employee may choose a whole multiple of 1, 2, 3, 4, or 5 (no fractional multiples allowed)

Accidental death and dismemberment (AD&D) insurance is included under Basic and Option A ($10,000) at no additional charge, and is paid in addition to life insurance if applicable. There is no AD&D coverage under Options B or C. For accidental death, payment is 100% of the above amounts. For accidental dismemberment (defined as loss of a hand, foot, or sight in an eye) payment is 100% if two or more of the above are lost in the same accident, 50% if only one of the above is lost. In a specific accident no more than 100% of benefits can be paid and all injuries or death resulting from the same accident within one year of the accident are considered one event; however, in a subsequent accident benefits are paid separately.

Coverage during Employment

Employees are automatically enrolled in Basic upon appointment unless they choose to disenroll, 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 (unlike for Federal Employees Health Benefits insurance coverage, open seasons are not annual, and are in fact quite rare; there have been only nine open seasons in the program's history and none since 2016), by providing satisfactory medical information (after one year from the date of any prior waiver, but Option C cannot be selected on this basis), or a qualifying "life event" (marriage, divorce, acquisition of a child, or death of a spouse). 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 (except for United States Postal Service employees, whose coverage is paid fully by USPS). The rates for Basic coverage (per $1,000 of coverage) are the same for all employees regardless of age.

The employee pays all cost of Optional coverage. The rates for each Option (per $1,000 of coverage) are determined by age ranges in increments of five years and increase with each increment (the rates increase substantially for employees beginning at age 50, and every five years thereafter). The newer rates begin with the first full pay period following the employee's birthday when s/he would reach the beginning of the new range.

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 (or, if less than five years, coverage from the employee's earliest opportunity to enroll). 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 (not terminated) from the date of retirement until the date the annuity begins.

At retirement, the employee must (for whatever coverage s/he had prior to retirement) choose how much coverage to take into retirement, and (in some cases) 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, nor can it be renewed once discontinued.

After age 65 (or upon retirement, if the employee retires after then) the employee may choose coverage options with no cost to the employee (i.e. premiums fully paid by the government) but which reduce levels of coverage over time (as explained below), or may choose to continue higher levels of coverage for additional premiums paid. An employee cannot increase coverage in retirement (except under Options B and C), 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" (under this option, coverage will reduce by 2% per month 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), "50% Reduction" (coverage will thus reduce by 1% per month until reaching 50% 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) 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 ($2,500) 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" (coverage reduces 2% per month until reaching zero; the employee pays no premiums) or "No Reduction" (the employee must pay all premiums). Under each Option, an employee may "mix and match" multiples (reducing some multiples and leaving others intact), 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.

AD&D benefits cease upon the employee's retirement and do not continue into retirement.

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 (2/3 employee, 1/3 government except for USPS employees) at a rate which remains the same regardless of age, if the employee chooses the "75% Reduction" option (see below). 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 (e.g. beginning March 1 for an employee with a January 20 birthday), 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 (except for Option C) are paid as follows:^[6]

If an employee/retiree has assigned ownership of the insurance, then to the beneficiary(ies) designated by the assignee(s), but if none, then directly to the assignee(s). (Option C coverage cannot be assigned to a third party.)
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(ies) designated by the employee/retiree.
If no assignment, no court order, and no beneficiary(ies) designated, then the "statutory order of precedence"^[7] is used, as follows:
- To the widow or widower,
- To any surviving children (in equal shares) 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.

Upon the death of any insured under Option C, benefits are paid to the employee/retiree, but if the employee/retiree dies before payment, payment is then made to the beneficiaries who would be paid under Basic coverage, excluding any assignment of insurance.

In addition to the above, if an insured is diagnosed as terminally ill with a life expectancy of nine months or less, the insured can also elect a "living benefit", which is an accelerated payment of benefits. The benefits are paid directly to the insured, not to the beneficiaries. The benefit can either be a full benefit or a partial benefit (in multiples of $1,000); the amount paid will be less than the face value, the reduction being the interest the insurance company loses by paying early (it is believed that the amount, though, would still be more than if the policy was assigned to a third party). Premiums are reduced if the partial benefit is taken, and cease if the full benefit is taken. This option can only be taken one time and is irrevocable, but if the insured subsequently recovers, s/he is not required to repay FEGLI.

External links

Text of the bill from the United States Government Printing Office

Related Research Articles

Insurance is a means of protection from financial loss in which, in exchange for a fee, a party agrees to compensate another party in the event of a certain loss, damage, or injury. It is a form of risk management, primarily used to hedge against the risk of a contingent or uncertain loss.

A pension is a fund into which amounts are paid regularly during the individual's working career, and from which periodic payments are made to support the person's retirement from work. A pension may be:

Medicare is a government national health insurance program in the United States, begun in 1965 under the Social Security Administration (SSA) and now administered by the Centers for Medicare and Medicaid Services (CMS). It primarily provides health insurance for Americans aged 65 and older, but also for some younger people with disability status as determined by the SSA, including people with end stage renal disease and amyotrophic lateral sclerosis.

Life insurance is a contract between an insurance policy holder and an insurer or assurer, where the insurer promises to pay a designated beneficiary a sum of money upon the death of an insured person. Depending on the contract, other events such as terminal illness or critical illness can also trigger payment. The policyholder typically pays a premium, either regularly or as one lump sum. The benefits may include other expenses, such as funeral expenses.

The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) is a law passed by the U.S. Congress on a reconciliation basis and signed by President Ronald Reagan that, among other things, mandates an insurance program which gives some employees the ability to continue health insurance coverage after leaving employment. COBRA includes amendments to the Employee Retirement Income Security Act of 1974 (ERISA). The law deals with a great variety of subjects, such as tobacco price supports, railroads, private pension plans, emergency department treatment, disability insurance, and the postal service, but it is perhaps best known for Title X, which amends the Internal Revenue Code and the Public Health Service Act to deny income tax deductions to employers for contributions to a group health plan unless such plan meets certain continuing coverage requirements. The violation for failing to meet those criteria was subsequently changed to an excise tax.

Variable universal life insurance is a type of life insurance that builds a cash value. In a VUL, the cash value can be invested in a wide variety of separate accounts, similar to mutual funds, and the choice of which of the available separate accounts to use is entirely up to the contract owner. The 'variable' component in the name refers to this ability to invest in separate accounts whose values vary—they vary because they are invested in stock and/or bond markets. The 'universal' component in the name refers to the flexibility the owner has in making premium payments. The premiums can vary from nothing in a given month up to maximums defined by the Internal Revenue Code for life insurance. This flexibility is in contrast to whole life insurance that has fixed premium payments that typically cannot be missed without lapsing the policy.

Term life insurance or term assurance is life insurance that provides coverage at a fixed rate of payments for a limited period of time, the relevant term. After that period expires, coverage at the previous rate of premiums is no longer guaranteed and the client must either forgo coverage or potentially obtain further coverage with different payments or conditions. If the life insured dies during the term, the death benefit will be paid to the beneficiary. Term insurance is typically the least expensive way to purchase a substantial death benefit on a coverage amount per premium dollar basis over a specific period of time.

The Employee Retirement Income Security Act of 1974 (ERISA) is a U.S. federal tax and labor law that establishes minimum standards for pension plans in private industry. It contains rules on the federal income tax effects of transactions associated with employee benefit plans. ERISA was enacted to protect the interests of employee benefit plan participants and their beneficiaries by:

Universal life insurance is a type of cash value life insurance, sold primarily in the United States. Under the terms of the policy, the excess of premium payments above the current cost of insurance is credited to the cash value of the policy, which is credited each month with interest. The policy is debited each month by a cost of insurance (COI) charge as well as any other policy charges and fees drawn from the cash value, even if no premium payment is made that month. Interest credited to the account is determined by the insurer but has a contractual minimum rate. When an earnings rate is pegged to a financial index such as a stock, bond or other interest rate index, the policy is an "Indexed universal life" contract. Such policies offer the advantage of guaranteed level premiums throughout the insured's lifetime at a substantially lower premium cost than an equivalent whole life policy at first. The cost of insurance always increases, as is found on the cost index table. That not only allows for easy comparison of costs between carriers but also works well in irrevocable life insurance trusts (ILITs) since cash is of no consequence.

Long-term care insurance is an insurance product, sold in the United States, United Kingdom and Canada that helps pay for the costs associated with long-term care. Long-term care insurance covers care generally not covered by health insurance, Medicare, or Medicaid.

The Pension Benefit Guaranty Corporation (PBGC) is a United States federally chartered corporation created by the Employee Retirement Income Security Act of 1974 (ERISA) to encourage the continuation and maintenance of voluntary private defined benefit pension plans, provide timely and uninterrupted payment of pension benefits, and keep pension insurance premiums at the lowest level necessary to carry out its operations. Subject to other statutory limitations, PBGC's single-employer insurance program pays pension benefits up to the maximum guaranteed benefit set by law to participants who retire at 65. The benefits payable to insured retirees who start their benefits at ages other than 65 or elect survivor coverage are adjusted to be equivalent in value. The maximum monthly guarantee for the multiemployer program is far lower and more complicated.

The Federal Employees' Retirement System (FERS) is the retirement system for employees within the United States civil service. FERS became effective January 1, 1987, to replace the Civil Service Retirement System (CSRS) and to conform federal retirement plans in line with those in the private sector.

Whole life insurance, or whole of life assurance, sometimes called "straight life" or "ordinary life", is a life insurance policy which is guaranteed to remain in force for the insured's entire lifetime, provided required premiums are paid, or to the maturity date. As a life insurance policy it represents a contract between the insured and insurer that as long as the contract terms are met, the insurer will pay the death benefit of the policy to the policy's beneficiaries when the insured dies. Because whole life policies are guaranteed to remain in force as long as the required premiums are paid, the premiums are typically much higher than those of term life insurance where the premium is fixed only for a limited term. Whole life premiums are fixed, based on the age of issue, and usually do not increase with age. The insured party normally pays premiums until death, except for limited pay policies which may be paid up in 10 years, 20 years, or at age 65. Whole life insurance belongs to the cash value category of life insurance, which also includes universal life, variable life, and endowment policies.

Medicare Part D, also called the Medicare prescription drug benefit, is an optional United States federal-government program to help Medicare beneficiaries pay for self-administered prescription drugs. Part D was enacted as part of the Medicare Modernization Act of 2003 and went into effect on January 1, 2006. Under the program, drug benefits are provided by private insurance plans that receive premiums from both enrollees and the government. Part D plans typically pay most of the cost for prescriptions filled by their enrollees. However, plans are later reimbursed for much of this cost through rebates paid by manufacturers and pharmacies.

Tricare is a health care program of the United States Department of Defense Military Health System. Tricare provides civilian health benefits for U.S Armed Forces military personnel, military retirees, and their dependents, including some members of the Reserve Component. Tricare is the civilian care component of the Military Health System, although historically it also included health care delivered in military medical treatment facilities. Tricare functions similar to a single-payer healthcare system.

Retirement Insurance Benefits or old-age insurance benefits are a form of social insurance payments made by the U.S. Social Security Administration paid based upon the attainment of old age. Benefit payments are made on the 3rd of the month, or the 2nd, 3rd, or 4th Wednesday of the month, based upon the date of birth and entitlement to other benefits.

<span class="mw-page-title-main">Teacher Retirement System of Texas</span> Teacher retirement investment fund of Texas

Teacher Retirement System of Texas (TRS) is a public pension plan of the State of Texas. Established in 1937, TRS provides retirement and related benefits for those employed by the public schools, colleges, and universities supported by the State of Texas and manages a $180 billion trust fund established to finance member benefits. More than 1.6 million public education and higher education employees and retirees participate in the system. TRS is the largest public retirement system in Texas in both membership and assets and the sixth largest public pension fund in America. The agency is headquartered at 1000 Red River Street in the capital city of Austin.

Defined benefit (DB) pension plan is a type of pension plan in which an employer/sponsor promises a specified pension payment, lump-sum, or combination thereof on retirement that depends on an employee's earnings history, tenure of service and age, rather than depending directly on individual investment returns. Traditionally, many governmental and public entities, as well as a large number of corporations, provide defined benefit plans, sometimes as a means of compensating workers in lieu of increased pay.

The Empowering Patients First Act is legislation sponsored by Rep. Tom Price, first introduced as H.R. 3400 in the 111th Congress. The bill was initially intended to be a Republican alternative to the America's Affordable Health Choices Act of 2009, but has since been positioned as a potential replacement to the Patient Protection and Affordable Care Act (PPACA). The bill was introduced in the 112th Congress as H.R. 3000, and in the 113th Congress as H.R. 2300. As of October 2014, the bill has 58 cosponsors. An identical version of the bill has been introduced in the Senate by Senator John McCain as S. 1851.

The Swiss pension system rests on three pillars:

References

↑ "68 STAT. 736". U. S. Government Printing Office. Retrieved 4 June 2013.
↑ Van Eenam, Weltha. "Group Life Insurance for Federal Employees" (PDF). Social Security Administration. Retrieved 5 June 2013.
↑ "Life Insurance". United States Office of Personnel Management. Retrieved 5 June 2013.
↑ AP (February 2, 1986). "Astronauts waived liability, had insurance". Reading Eagle. Retrieved 5 June 2013.
↑ Associated Press (February 10, 2003). "NASA Had No Special Insurance for Astronauts". Los Angeles Times. Retrieved 5 June 2013.
↑ However, any beneficiary who intentionally causes the insured's death will not be paid, and will be considered to have predeceased the insured.
↑ The order of precedence is also used for payment of remaining balances under the Thrift Savings Plan, unused portions of a Federal Employees Retirement System (FERS) annuity, and unpaid compensation.

This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.

[gpo-1] "68 STAT. 736". U. S. Government Printing Office. Retrieved 4 June 2013.

[ssa-2] Van Eenam, Weltha. "Group Life Insurance for Federal Employees" (PDF). Social Security Administration. Retrieved 5 June 2013.

[opm-3] "Life Insurance". United States Office of Personnel Management. Retrieved 5 June 2013.

[challenger-4] AP (February 2, 1986). "Astronauts waived liability, had insurance". Reading Eagle. Retrieved 5 June 2013.

[columbia-5] Associated Press (February 10, 2003). "NASA Had No Special Insurance for Astronauts". Los Angeles Times. Retrieved 5 June 2013.

[6] However, any beneficiary who intentionally causes the insured's death will not be paid, and will be considered to have predeceased the insured.

[7] The order of precedence is also used for payment of remaining balances under the Thrift Savings Plan, unused portions of a Federal Employees Retirement System (FERS) annuity, and unpaid compensation.

[1]

[2]

[3]

[4]

[5]

[6]

[7]