Federal Employees' Group Life Insurance Program: Merger of Life Insurance Regulations

Federal RegisterMay 3, 1995

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SUMMARY: The Office of Personnel Management (OPM) is issuing proposed

regulations to combine the five parts of title 5 of the Code of Federal

Regulations relating to the Federal Employees' Group Life Insurance

(FEGLI) Program. This will ease administration and aid in understanding

the Program. We are also simplifying the language and incorporating

policy information from FPM Supplement 870-1, which is being abolished

as of December 31, 1994.

DATES: We must receive comments on or before July 3, 1995.

ADDRESSES: Send your comments to Lucretia F. Myers, Assistant Director

for Insurance Programs, Retirement and Insurance Group, Office of

Personnel Management, P.O. Box 57, Washington, DC 20044; deliver them

to OPM, Room 3451, 1900 E Street NW., Washington, DC; or FAX them to

202-606-0633.

FOR FURTHER INFORMATION CONTACT: Karen Leibach, 202-606-0004.

SUPPLEMENTARY INFORMATION: The FEGLI Act of 1980 made sweeping changes

in the Program, including establishing two new forms of optional

coverage. At that time, we decided to pattern the regulations after the

law by setting up separate parts of the Code for each of the types of

insurance (basic, standard optional, additional optional, and family

optional coverages). Although we recognized that this method of

translating the law into regulations would result in a lot of

duplication, we believed that the format helped OPM and agencies put

the new provisions in place. We believe that the regulations can now be

merged to eliminate the duplication, without losing clearness or

content.

The proposed merger involves deleting parts 871, 872, 873, and 874

and combining the information now contained in those parts into an

expanded part 870. This results in a complete presentation of material

in one place.

In addition to merging the regulations, we have reorganized the

material; incorporated some material formerly found in FPM Supplement

870-1, which is being abolished as of December 31, 1994; and simplified

the language to make the regulations easier to understand.

Regulatory Flexibility Act

I certify that these regulations will not have a significant

economic impact on a substantial number of small entities, because the

regulations will affect only Federal employees and annuitants.

List of Subjects in 5 CFR Parts 870, 871, 872, 873, and 874

Administrative practice and procedure, Government employees,

Hostages, Iraq, Kuwait, Lebanon, Reporting and recordkeeping

requirements, Life insurance, Retirement.

Office of Personnel Management.

James B. King,

Director.

Accordingly, OPM proposes to amend title 5, Code of Federal

Regulations, as follows:

Part 870 is revised to read as follows:

PART 870--FEDERAL EMPLOYEES' GROUP LIFE INSURANCE PROGRAM

Subpart A--Administration and General Provisions

Sec.

870.101 Definitions.

870.102 The policy.

870.103 Correction of errors.

870.104 Initial decision and reconsideration.

Subpart B--Types and Amount of Insurance

870.201 Types of insurance.

870.202 Basic insurance amount (BIA).

870.203 Annual rates of pay.

870.204 Amount of optional insurance.

870.205 Accidental death and dismemberment.

Subpart C--Eligibility

870.301 Eligibility for life insurance.

870.302 Exclusions.

Subpart D--Cost of Insurance

870.401 Withholdings and contributions for basic insurance.

870.402 Withholdings for optional insurance.

870.403 Withholdings and contributions provisions that apply to

both basic and optional insurance.

870.404 Direct premium payments under 5 U.S.C. chapter 84 (Federal

Employees' Retirement System--FERS).

Subpart E--Coverage

870.501 Basic insurance: effective dates of automatic coverage.

870.502 Basic insurance: waiver/cancellation of insurance.

870.503 Basic insurance: cancelling a waiver.

870.504 Optional insurance: election.

870.505 Optional insurance: waiver/cancellation of insurance.

870.506 Optional insurance: cancelling a waiver.

870.507 Open enrollment periods.

870.508 Nonpay status.

870.509 Transfers to international organizations.

Subpart F--Termination and Conversion

870.601 Termination of basic insurance.

870.602 Termination of optional insurance.

870.603 Conversion of basic and optional insurance.

Subpart G--Annuitants and Compensationers

870.701 Eligibility for life insurance.

870.702 Election of basic insurance.

870.703 Amount of life insurance.

870.704 Reinstatement of life insurance.

870.705 Waiver or suspension of annuity or compensation.

870.706 Reemployed annuitants.

870.707 MRA-plus-10 annuitants.

Subpart H--Order of Precedence and Designation of Beneficiary

870.801 Order of precedence and payment of benefits.

870.802 Designation of beneficiary.

870.803 Child incapable of self-support.

Subpart I--Assignments of Life Insurance

870.901 Assignments permitted.

870.902 Making an assignment.

870.903 Effective date of assignment.

870.904 Amount of insurance.

870.905 Withholdings.

870.906 Cancellation of insurance.

870.907 Termination and conversion.

870.908 Annuitants and compensationers.

870.909 Designations and changes of beneficiary.

870.910 Notification of current addresses. [[Page 21760]]

Subpart J--Benefits for United States Hostages in Iraq and Kuwait and

United States Hostages Captured in Lebanon

870.1001 Purpose.

870.1002 Definitions.

870.1003 Coverage and amount of insurance.

870.1004 Effective date of insurance.

870.1005 Premiums.

870.1006 Cancellation of insurance.

870.1007 Termination and conversion.

870.1008 Order of precedence and designation of beneficiary.

870.1009 Responsibilities of the U.S. Department of State.

Authority: 5 U.S.C. 8716.

Subpart A--Administration and General Provisions

Sec. 870.101 Definitions.

Annuitant means a former employee entitled to an annuity under a

retirement system established for employees. This includes the

retirement system of a nonappropriated fund instrumentality of the

Department of Defense or the Coast Guard.

Assign and assignment refer to a judge's irreversible transfer to

another individual, corporation, or trustee all ownership of FEGLI

coverage (except Option C).

Assignee means the individual, corporation, or trustee to which a

judge irreversibly transfers ownership of FEGLI coverage (except Option

C).

Child, as used in the definition of family member, means a

legitimate child, an adopted child, a stepchild who lives with the

employee or former employee in a regular parent-child relationship, or

a recognized natural child. It does not include a stillborn child, a

grandchild, or a foster child. The child must be under age 22, or if

over age 22, must be incapable of self-support because of a mental or

physical disability which existed before the child reached age 22.

Child, as used in the order of precedence, means a legitimate

child, an adopted child, or a recognized natural child. It does not

include a stillborn child, a stepchild, a grandchild, or a foster

child. An individual who has reached age 18 is considered an adult.

However, if the age of adulthood where the individual has his/her legal

residence is set at a lower age, the individual is considered an adult

upon reaching that lower age. Adopted children do not inherit under the

order of precedence stated in 5 U.S.C. 8705 from their birth parents,

other than as designated beneficiaries, but inherit from their adoptive

parents. However, a child who is adopted by the spouse of a birth

parent inherits from that birth parent.

Compensation means compensation under subchapter I of chapter 81 of

title 5, United States Code, which is payable because of an on-the-job

injury or disease.

Compensationer means an employee or former employee who is entitled

to compensation and whom the Department of Labor determines is unable

to return to duty.

Date of retirement, as used in 5 U.S.C. 8706(b)(1)(A), means the

starting date of annuity.

Dependent means living with or receiving support from the insured

individual.

Duly appointed representative of the insured's estate means an

individual named in a court order granting the individual the authority

to receive, or the right to possess, the insured's property; the order

must be issued by a court having jurisdiction over the insured's

estate. Where the law of the insured's legal residence provides for the

administration of estates through alternative procedures which do away

with the need for a court order, this term also means an individual who

shows that he/she is entitled to receive, or possess, the insured's

property under the terms of those alternative procedures.

Employee means an individual defined by section 8701(a) of title 5,

United States Code.

Employing office means the agency office or retirement system

office that has responsibility for life insurance actions.

(a) The Administrative Office of the United States Courts is the

employing office for judges of the following courts:

(1) All United States Courts of Appeals;

(2) All United States District Courts;

(3) The Court of International Trade;

(4) The Claims Court; and

(5) The District Courts of Guam, the Northern Mariana Islands, and

the Virgin Islands.

(b) The Washington Headquarters Services is the employing office

for judges of the United States Court of Military Appeals.

of the United States Tax Court.

(d) The United States Court of Veterans Appeals is the employing

office for judges of the United States Court of Veterans Appeals.

Family member means a spouse (including a valid common law

marriage) and unmarried dependent child(ren).

Immediate annuity means (1) an annuity that begins no later than 1

month after the date the insurance would otherwise stop, and (2) an

annuity under Sec. 842.204(a)(1) of this title for which the starting

date has been postponed under Sec. 842.204(c) of this title.

Judge means an individual appointed as a Federal justice or judge

under Article I or Article III of the Constitution. Administrative law

judges, bankruptcy judges, and magistrates are not judges for purposes

of assignment of FEGLI coverage.

OFEGLI means the Office of Federal Employees' Group Life Insurance,

which makes payments to beneficiaries under the policy.

OPM means the Office of Personnel Management.

OWCP means the Office of Workers' Compensation Programs, U.S.

Department of Labor, which administers subchapter I of chapter 81 of

title 5, United States Code.

Parent means the mother or father of a legitimate child or an

adopted child. The term parent includes the mother of a recognized

natural child; it also includes the father of a recognized natural

child if the recognized natural child meets the definition provided

below.

Recognized natural child, with respect to paternity, is one for

whom the father meets one of the following:

(a) (1) Has acknowledged paternity in writing;

(2) Was ordered by a court to provide support;

(3) Before his death, was pronounced by a court to be the father;

(4) Was established as the father by a certified copy of the public

record of birth or church record of baptism, if the insured was the

informant and named himself as the father of the child; or

(5) Established paternity on public records, such as records of

schools or social welfare agencies, which show that with his knowledge

the insured was named as the father of the child.

(b) If paternity is not established by paragraph (a) of this

definition, such evidence as the child's eligibility as a recognized

natural child under other State or Federal programs or proof that the

insured included the child as a recognized natural child on his income

tax returns may be considered to establish paternity.

Reconsideration means the final level of administrative review of

an agency's initial decision to determine if the employing office

followed the law and regulations correctly in making the initial

decision.

Service means civilian service which is creditable under subchapter

III of chapter 83 or chapter 84 of title 5, United States Code. This

includes [[Page 21761]] service under a nonappropriated fund

instrumentality of the Department of Defense or the Coast Guard for an

individual who elected to remain under a retirement system established

for employees described in section 2105(c) of title 5.

Underdeduction means a failure to withhold the required amount of

life insurance deductions from an individual's pay, annuity, or

compensation. This includes nondeductions (when none of the required

amount was withheld) and partial deductions (when only part of the

required amount was withheld).

Sec. 870.102 The policy.

Basic, Option A, Option B, and Option C benefits are payable

according to a contract with the company or companies that issue a

policy under section 8709 of title 5, United States Code. Any court

action to obtain money due from an insurance policy must be taken

against the company that issues the policy.

Sec. 870.103 Correction of errors.

(a) The employing office may make corrections of administrative

errors regarding coverage or changes in coverage. Retroactive

corrections are subject to the provisions of Sec. 870.401(f).

(b) OPM may order correction of an error after reviewing evidence

that it would be against equity and good conscience not to do so.

Sec. 870.104 Initial decision and reconsideration.

(a) (1) An employee may ask his/her agency to reconsider its

initial decision denying life insurance coverage or the opportunity to

change coverage.

(2) An annuitant may ask his/her retirement system to reconsider

its initial decision affecting life insurance coverage.

(3) A judge may ask his/her agency, or retirement system if

applicable, to reconsider its initial decision denying an entitlement

related to assignments under 5 U.S.C. 8706(e) or subpart I of this

part.

(4) An individual insured under subpart J of this part may ask the

U.S. Department of State to reconsider its initial decision affecting

life insurance coverage.

(b) An employing office's decision is an initial decision when the

employing office gives it in writing and informs the individual of the

right to an independent level of review (reconsideration) by the

appropriate agency or retirement system.

include the employee's (or annuitant's) name, address, date of birth,

Social Security number, reason(s) for the request, and, if applicable,

retirement claim number.

(d) A request for reconsideration must be made within 30 calendar

days from the date of the initial decision. This time limit may be

extended when the individual shows that he/she was not notified of the

time limit and was not otherwise aware of it or that he/she was unable,

due to reasons beyond his/her control, to make the request within the

time limit.

(e) The reconsideration must take place at or above the level at

which the initial decision was made.

(f) After reconsideration, the agency or retirement system must

issue a final decision. This decision must be in writing and must fully

state the findings.

Subpart B--Types and Amount of Insurance

Sec. 870.201 Types of insurance.

(a) There are two types of life insurance under the FEGLI Program:

Basic and optional.

(b) There are three types of optional insurance: Option A (standard

optional insurance), Option B (additional optional insurance), and

Option C (family optional insurance).

Sec. 870.202 Basic insurance amount (BIA).

(a) (1) An employee's basic insurance amount (BIA) is either: (i)

His/her annual rate of basic pay, rounded to the next higher thousand,

plus $2,000; or

(ii) $10,000; whichever is higher. However, the BIA can never be

more than the annual rate of pay for Level II Executive Schedule

positions under section 5313 of title 5, U.S.C., rounded to the next

higher thousand, plus $2,000.

(2) The BIA of an individual who is eligible to continue basic life

insurance coverage as an annuitant or compensationer is the BIA in

effect at the time his/her insurance as an employee would stop under

Sec. 870.601.

(b) An employee's BIA automatically changes whenever annual pay is

increased or decreased by an amount sufficient to raise or lower pay to

a different $1,000 bracket.

equal to his/her BIA multiplied by the appropriate factor based on the

employee's age, as follows:

------------------------------------------------------------------------

Age Factor

------------------------------------------------------------------------

35 or under................................................... 2.0

36............................................................ 1.9

37............................................................ 1.8

38............................................................ 1.7

39............................................................ 1.6

40............................................................ 1.5

41............................................................ 1.4

42............................................................ 1.3

43............................................................ 1.2

44............................................................ 1.1

45 or over.................................................... 1.0

------------------------------------------------------------------------

Sec. 870.203 Annual rates of pay.

(a) (1) An insured employee's annual pay is his/her annual rate of

basic pay as fixed by law or regulation.

(2) Annual pay for this purpose includes the following:

(i) Interim geographic adjustments and locality-based comparability

payments as provided by Pub. L. 101-509;

(ii) Premium pay under 5 U.S.C. 5545(c)(1);

(iii) For a law enforcement officer as defined under 5 U.S.C.

8331(20) and Sec. 831.903 of this title, premium pay under 5 U.S.C.

5545(c)(2);

(iv) Night differential pay for wage employees;

(v) Environmental differential pay for employees exposed to danger

or physical hardship;

(vi) Tropical differential pay for citizen employees in Panama; and

(vii) Special pay adjustments for law enforcement officers.

(b) To convert a pay rate of other than annual salary to an annual

rate, multiply the pay rate by the number of pay periods in a 52-week

work year.

applied to his/her tour of duty in a 52-week work year.

(d) The annual pay for an employee on piecework rates is the total

basic earnings for the previous calendar year, not counting premium pay

for overtime or holidays.

(e) The annual pay for an employee with a regular schedule who

works at different pay rates is the weighted average of the rates at

which the employee is paid, projected to an annual basis.

(f) The annual pay for a non-Postal intermittent employee or an

employee who works at different pay rates without a regular schedule is

the annual rate which he/she is receiving at the end of the pay period.

(g) If an employee legally serves in more than 1 position at the

same time, and at least 1 of those positions entitles him/her to life

insurance coverage, the annual pay is the sum of the annual basic pay

fixed by law or regulation for each position. Exception: This doesn't

apply to part-time flexible schedule employees in the Postal Service.

[[Page 21762]]

Sec. 870.204 Amount of optional insurance.

(a) Option A coverage is $10,000. However, if an employee's annual

rate of pay is more than the sum of the annual rate of basic pay for

Level II Executive Schedule positions under 5 U.S.C. 5313 plus $10,000,

Option A coverage automatically increases. The amount of Option A

coverage in this case is the difference between the employee's annual

rate of pay, (rounded to the next higher thousand if not already an

even thousand) and the BIA.

(b) (1) Option B coverage comes in 1, 2, 3, 4, or 5 multiples of an

employee's annual pay (after the pay has been rounded to the next

higher thousand, if not already an even thousand). A multiple can not

be more than the annual rate of basic pay for Level II Executive

Schedule positions under 5 U.S.C. 5313, rounded to the next higher

thousand.

(2) The amount of Option B coverage automatically changes whenever

annual pay is increased or decreased by an amount sufficient to raise

or lower pay to a different $1,000 bracket.

and $2,500 payable upon the death of a child. Payments are made to the

insured individual.

Sec. 870.205 Accidental death and dismemberment.

(a) (1) Accidental death and dismemberment coverage is an automatic

part of basic and Option A insurance for employees.

(2) There is no accidental death and dismemberment coverage with

Options B and C.

(3) Individuals who are insured as annuitants or compensationers do

not have accidental death and dismemberment coverage.

(b) Under basic insurance, accidental death benefits are equal to

the BIA, but without the age factor described in Sec. 870.202(c).

for the loss of a hand, foot, or eye are equal to one-half the BIA. For

loss of 2 of these, benefits are equal to the BIA.

(2) For more than one type of loss in a single accident, total

benefits cannot be more than the BIA.

(3) Accidental dismemberment benefits are paid to the employee.

(d) Under Option A, accidental death and dismemberment benefits are

equal to the amount of Option A.

Subpart C--Eligibility

Sec. 870.301 Eligibility for life insurance.

(a) Each nonexcluded employee is automatically insured for basic

insurance unless he/she waives it.

(b) (1) Optional insurance must be specifically elected; it is not

automatic.

(2) An employee may elect optional insurance if:

(i) He/she has basic insurance;

(ii) He/she doesn't have a waiver of that type of optional

insurance still in effect; and

(iii) His/her periodic pay, after all other deductions, is enough

to cover the full cost.

Sec. 870.302 Exclusions.

(a) The following employees are excluded from life insurance

coverage by law:

(1) An employee of a corporation supervised by the Farm Credit

Administration, if private interests elect or appoint a member of the

board of directors.

(2) An individual who is not a citizen or national of the United

States and whose permanent duty station is outside the United States.

Exception: An individual who met the definition of employee on

September 30, 1979, by service in an Executive agency, the United

States Postal Service, or the Smithsonian Institution in the area which

was then known as the Canal Zone.

(3) An individual first employed by the Government of the District

of Columbia on or after October 1, 1987. Exception: An employee of St.

Elizabeths Hospital, who accepts employment with the District of

Columbia Government following Federal employment without a break in

service, as provided in section 6 of Pub. L. 98-621.

(4) Teachers in Department of Defense dependents schools overseas,

if employed by the Federal Government in a nonteaching position during

the recess period between school years.

(b) The following employees are also excluded from life insurance

coverage:

(1) An employee serving under an appointment limited to 1 year or

less. Exceptions:

(i) An employee whose full-time or part-time temporary appointment

has a regular tour of duty and follows a position in which he/she was

insured, with a break in service of no more than 3 days;

(ii) An acting postmaster;

(iii) A Presidential appointee appointed to fill an unexpired term;

and

(iv) Certain temporary employees who receive provisional

appointments as defined in Secs. 316.401 and 316.403 of this title.

(2) An employee who is employed for an uncertain or purely

temporary period, who is employed for brief periods at intervals, or

who is expected to work less than 6 months in each year. Exception: An

employee who is employed under an OPM-approved career-related work-

study program under Schedule B lasting at least 1 year and who is in

pay status for at least one-third of the total period of time from the

date of the first appointment to the completion of the work-study

program.

(3) An intermittent employee (a non-full-time employee without a

regularly scheduled tour of duty). Exception: An employee whose

intermittent appointment follows, with a break in service of no more

than 3 days, a position in which he/she was insured and to which he/she

is expected to return.

(4) An employee whose pay, on an annual basis, is $12 a year or

less.

(5) A beneficiary or patient employee in a Government hospital or

home.

(6) An employee paid on a contract or fee basis. Exception: An

employee who is a United States citizen, who is appointed by a contract

between the employee and the Federal employing authority which requires

his/her personal service, and who is paid on the basis of units of

time.

(7) An employee paid on a piecework basis. Exception: An employee

whose work schedule provides for full-time or part-time service with a

regularly scheduled tour of duty.

categories apply to a specific employee or group of employees.

Subpart D--Cost of Insurance

Sec. 870.401 Withholdings and contributions for basic insurance.

(a) The cost of basic insurance is shared between the insured

individual and the Government. The employee pays two-thirds of the

cost, and the Government pays one-third.

(b) (1) During each pay period in which an insured employee is in

pay status for any part of the period, $0.165 must be withheld from the

employee's biweekly pay for each $1,000 of the employee's BIA. The

amount withheld from the pay of an employee who is paid on other than a

biweekly basis must be prorated and adjusted to the nearest one-tenth

of 1 cent.

(2) The amount withheld from the pay of an insured employee whose

annual pay is paid during a period shorter than 52 workweeks is the

amount obtained [[Page 21763]] by converting the biweekly rate to an

annual rate and prorating the annual rate over the number of

installments of pay regularly paid during the year.

(3) The amount withheld from the pay of an insured employee whose

BIA changes during a pay period is based on the BIA in force at the end

of the pay period.

(4) No payment is required while an insured employee is in nonpay

status for up to 12 months.

employing agency must contribute an amount equal to one-half the amount

withheld from the employee's pay. This agency contribution must come

from the appropriation or fund that is used for the payment of the

employee's pay. For an elected official, the contribution must come

from the appropriation or fund that is available for payment of other

salaries in the same office.

(d) (1) For an annuitant who elects to continue basic insurance and

chooses the maximum reduction of 75 percent after age 65 under

Sec. 870.702(a)(2), the amount withheld monthly is $0.3575 for each

$1,000 of the BIA. For a compensationer who makes this election, the

amount withheld weekly is $0.0825 for each $1,000. These withholdings

stop the month after the month in which the individual reaches age 65.

There are no withholdings from individuals who retired or began

receiving compensation before January 1, 1990, and who elected the 75

percent reduction. For the purpose of this paragraph, an individual who

separates from service after meeting the requirements for an immediate

annuity under 5 U.S.C. 8412(g) is considered to retire on the day

before the annuity begins.

(2) For an annuitant who elects to continue basic insurance and

chooses the maximum reduction of 50 percent after age 65 under

Sec. 870.702(a)(3), the amount withheld monthly is $0.8775 for each

$1,000 of the BIA until the annuitant reaches age 65; the amount is

then reduced to $0.52 for each $1,000. For a compensationer who makes

this election, the amount withheld weekly is $0.2025 for each $1,000 of

the BIA until age 65; the amount is then reduced to $0.12 for each

$1,000.

(3) For an annuitant who elects to continue basic insurance and

chooses no reduction after age 65 under Sec. 870.702(a)(4), the amount

withheld monthly is $2.0475 for each $1,000 of the BIA until the

annuitant reaches age 65; the amount is then reduced to $1.69 for each

$1,000. For a compensationer who makes this election, the amount

withheld weekly is $0.4725 for each $1,000 of the BIA until age 65; the

amount is then reduced to $0.39 for each $1,000.

(e) (1) For each period in which an annuitant or compensationer is

insured, OPM must contribute an amount equal to one-half the amount

that would be withheld under paragraph (d)(1) of this section.

Exception: For USPS employees who become annuitants or compensationers

after December 31, 1989, the Postal Service pays the Government

contributions.

(2) The Government contribution is the same amount whether the

individual elects a maximum 75 percent reduction, a maximum 50 percent

reduction, or no reduction.

(3) The Government contribution stops the month after the month in

which the individual reaches age 65.

(f) When an agency withholds less than or none of the proper amount

of basic life insurance deductions from an individual's pay, annuity,

or compensation, the agency must submit an amount equal to the sum of

the uncollected deductions and any applicable agency contributions

required under 5 U.S.C. 8708 to OPM for deposit in the Employees' Life

Insurance Fund.

Sec. 870.402 Withholdings for optional insurance.

(a) The insured individual pays the full cost of all optional

insurance. There is no Government contribution toward the cost of any

optional insurance. Exception: The United States Postal Service may

make a contribution toward the cost of optional insurance for USPS

employees in some situations.

(b) During each pay period in any part of which an insured employee

is in pay status, the employing agency must withhold the full cost of

optional insurance from his/her pay.

Sec. 870.706(d), the full cost of optional insurance must be withheld

from the annuity of an annuitant and from the compensation of a

compensationer. These withholdings stop after the end of the month in

which an annuitant or compensationer reaches age 65.

(d) (1) The biweekly cost per $10,000 of Option A coverage is:

For persons under age 35

$0.40

For persons ages 35 through 39

.50

For persons ages 40 through 44

.70

For persons ages 45 through 49

1.10

For persons ages 50 through 54

1.80

For persons ages 55 through 59

3.00

For persons ages 60 and over

7.00

(2) The amount withheld from pay, annuity, or compensation paid on

other than a biweekly basis must be prorated and adjusted to the

nearest cent.

(e) (1) The biweekly cost per $1,000 of Option B coverage is:

For persons under age 35

$0.04

For persons ages 35 through 39

.05

For persons ages 40 through 44

.07

For persons ages 45 through 49

.11

For persons ages 50 through 54

.18

For persons ages 55 through 59

.30

For persons ages 60 and over

.70

(2) The amount withheld from pay, annuity, or compensation paid on

other than a biweekly basis must be prorated and adjusted to the

nearest one-tenth of 1 cent.

(f) (1) The biweekly cost of Option C coverage is based on the age

of the employee, annuitant, or compensationer. The cost is:

For persons under age 35

$0.30

For persons ages 35 through 39

.31

For persons ages 40 through 44

.52

For persons ages 45 through 49

.70

For persons ages 50 through 54

1.00

For persons ages 55 through 59

1.50

For persons ages 60 and over

2.60

(2) The amount withheld from pay, annuity, or compensation paid on

other than a biweekly basis must be prorated and adjusted to the

nearest cent.

(g) For the purpose of this subpart, an individual is considered to

reach age 35, 40, 45, 50, 55, or 60 on the first day of the first pay

period beginning on or after the January 1 following his/her

corresponding birthday.

(h) The amount withheld from the pay of an insured employee whose

annual pay is paid during a period shorter than 52 workweeks is the

amount obtained by converting the biweekly rate for his/her age group

to an annual rate and prorating the annual rate over the number of

installments of pay regularly paid during the year.

(i) When an agency withholds less than or none of the proper amount

of optional life insurance deductions from an individual's pay,

annuity, or compensation, the agency must submit an amount equal to the

uncollected deductions required under 5 U.S.C. 8714a to OPM for deposit

in the Employees' Life Insurance Fund.

Sec. 870.403 Withholdings and contributions provisions that apply to

both basic and optional insurance.

(a) Withholdings (and Government contributions, when applicable)

are based on the amount of insurance in force at the end of the pay

period.

(b) Withholdings are not required for the period between the end of

the pay period in which an employee separates from service and the date

his/her annuity or compensation begins. [[Page 21764]]

be made no later than 60 calendar days after the date the employing

office determines the amount of the underdeduction that has occurred,

regardless of whether or when the underdeduction is recovered by the

agency. The agency must determine whether to waive collection of the

overpayment of pay, in accordance with 5 U.S.C. 5584, as implemented by

4 CFR ch. I, subchapter G. However, if the agency involved is excluded

from the provisions of 5 U.S.C. 5584, it may use any applicable

authority to waive the collection.

(d) Effective October 21, 1972, when an employee returns to work

after being suspended or fired erroneously, no withholdings are made

from the back pay.

(e) If an individual's periodic pay, compensation, or annuity isn't

sufficient to cover the full withholdings, any amount available for

life insurance withholding must be applied first to basic insurance,

with any remainder applied to optional insurance.

Sec. 870.404 Direct premium payments under 5 U.S.C. chapter 84

(Federal Employees' Retirement System--FERS).

(a) If the FERS annuity, excluding subchapter III of 5 U.S.C.

chapter 84 (Thrift Savings Plan), is too low to cover any of the

insurance premiums, the retirement system must notify the annuitant of

the opportunity to pay his/her share of the basic premium and the

optional premium(s) directly to the retirement system.

(b) The retirement system must establish a method for accepting

these direct premium payments. The retirement system must provide the

annuitant with a premium payment schedule and the requirements for

continued enrollment.

premium(s) for every pay period during which the coverage(s) continue,

excluding the 31-day temporary extension of coverage provided in

Sec. 870.601. The annuitant must make payment after the pay period in

which he/she is covered, according to the schedule established by the

retirement system. If it does not receive payment by the due date, the

retirement system must notify the annuitant that coverage(s) will be

continued only if he/she makes payment within 15 days after receiving

the notice. The basic and optional insurance coverage(s) of an

annuitant who does not pay within the specified time limit terminate.

An individual whose coverage(s) terminate because of nonpayment of

premium cannot reelect or reinstate coverage, except as provided in

paragraph (d) of this section.

(d) If, for reasons beyond his/her control, an annuitant is unable

to pay within 15 days after receiving the notice, he/she may request

reinstatement of coverage by writing to the retirement system. Such a

request must be made within 30 calendar days from the date of

termination and must be accompanied by proof that the annuitant was

prevented from paying within the time limit for reasons beyond his/her

control. The retirement system will decide if the individual is

eligible for reinstatement of coverage. If the decision is yes, the

coverage is reinstated back to the date of termination.

(e) Termination of coverage for failure to pay premiums within the

time limit established according to paragraph (c) of this section is

effective at the end of the last pay period for which payment has been

received on time.

(f) The retirement system must submit all direct premium payments,

along with its regular life insurance premiums, to OPM according to

procedures set by OPM.

Subpart E--Coverage

Sec. 870.501 Basic insurance: Effective dates of automatic coverage.

(a)(1) When an employee is appointed or transferred to a position

in which he/she is eligible for insurance, the employee is

automatically insured for basic insurance on the day he/she enters on

duty in pay status, unless, before the end of the first pay period, the

employee files a waiver of basic insurance with the employing office or

had previously filed a waiver which remains in effect.

(2) An insured employee who moves to another covered position is

automatically insured on the effective date of the move, unless the

employee files a waiver of basic insurance with the new employing

office before the end of the first pay period in the new position.

(b) An employee who returns to pay and duty status after a period

of more than 12 months of nonpay status is automatically insured at the

time he/she actually enters on duty in pay status, unless, before the

end of the first pay period, the employee files a waiver of basic

insurance coverage with the employing office or had previously filed a

waiver which remains in effect.

agency and who is paid in whole or in part from non-Federal funds, OPM

sets the effective date. This date must be part of an agreement between

OPM and the non-Federal agency. The agreement must provide either:

(1) That the required withholdings and contributions be made from

federally controlled funds and deposited into the Employees' Life

Insurance Fund on a timely basis, or

(2) That the cooperating non-Federal agency, by written agreement

with the Federal agency, make the required withholdings and

contributions from non-Federal funds and transmit that amount to the

Federal agency for deposit into the Employees' Life Insurance Fund on a

timely basis.

(d) If an employee waived basic insurance on or before February 28,

1981, the waiver was automatically cancelled effective on the 1st day

the employee entered on duty in pay status on or after April 1, 1981.

Basic insurance coverage was automatically effective on the date of the

waiver's cancellation, unless the employee filed a new waiver of basic

insurance with the employing office before the end of the pay period

during which the coverage became effective.

Sec. 870.502 Basic insurance: Waiver/cancellation of insurance.

(a) An insured individual may cancel his/her basic insurance at any

time by filing a waiver of basic insurance coverage. An employee files

with the employing office. An annuitant files with OPM or other office

that administers his/her retirement system. If still employed, a

compensationer files with the employing office, and if not still

employed, with OWCP. The waiver is effective, and the insurance stops,

at the end of the pay period in which the waiver is properly filed.

(b) An individual who cancels his/her basic insurance automatically

cancels all forms of optional insurance.

Sec. 870.503 Basic insurance: Cancelling a waiver.

(a) An annuitant who has filed a waiver of basic insurance cannot

cancel the waiver.

(b) An employee who has filed a waiver of basic insurance may

cancel the waiver and become insured if:

(1) At least 1 year has passed since the effective date of the

waiver, and

(2) He/she provides satisfactory medical evidence of insurability.

who has complied with paragraph (b) of this section and decides whether

to approve it. The insurance is effective when, after OFEGLI's

approval, the employee actually enters on duty in pay status in

[[Page 21765]] a position in which he/she is eligible for insurance. If

the employee doesn't enter on duty in pay status within 31 days

following the date of OFEGLI's approval, the approval is automatically

revoked and the employee is not insured.

(d) When an employee who has been separated from service for at

least 180 days is reinstated on or after April 1, 1981, a previous

waiver of basic insurance is automatically cancelled. Unless the

employee files a new waiver, basic insurance becomes effective on the

1st day he/she actually enters on duty in pay status in a position in

which he/she is eligible for coverage. Exception: For employees who

waived basic insurance after February 28, 1981, separated, and returned

to Federal service before December 9, 1983, the waiver remained in

effect; these employees were permitted to elect basic insurance by

applying to their employing office before March 7, 1984.

Sec. 870.504 Optional insurance: Election.

(a)(1) Each employee must, on the form entitled Life Insurance

Election, elect or waive Option A, Option B, and Option C coverage

within 31 days after becoming eligible, unless during earlier

employment he/she filed an election or waiver which remains in effect.

The 31-day time limit for Option B or Option C begins on the 1st day

after February 28, 1981, on which an individual meets the definition of

an employee.

(2) Within 6 months after an employee becomes eligible, an

employing office may determine that the employee was unable, for

reasons beyond his/her control, to elect any type of optional insurance

within the time limit. In this case, the employee must elect or waive

that type of optional insurance within 31 days after he/she is notified

of the determination. The insurance is retroactive to the 1st day of

the first pay period beginning after the date the individual became

eligible or after April 1, 1981, whichever is later. The individual

must pay the full cost of the insurance from that date for the time

that he/she is in pay status, retired, or receiving compensation and

under age 65.

(b) An employee who doesn't file a Life Insurance Election form

with his/her employing office specifically electing any type of

optional insurance is considered to have waived it and does not have

that type of optional insurance.

of this insurance filed on or before February 28, 1981, is considered

to have been cancelled effective at the end of the pay period which

included March 31, 1981, unless the employee didn't actually enter on

duty in pay status during the 1st pay period which began on or after

April 1, 1981. In that case the election is considered to have been

cancelled on the 1st day after the end of the next pay period in which

the employee actually entered on duty in pay status. In order to have

Option A as an employee after the date of this cancellation, an

employee must specifically elect the coverage by filing the Life

Insurance Election form with his/her employing office, subject to the

provisions of Sec. 870.504(a) or 870.506.

(d) Optional insurance is effective the 1st day an employee

actually enters on duty in pay status on or after the day the employing

office receives the election.

(e) For an employee whose optional insurance stopped for a reason

other than a waiver, the insurance is reinstated on the 1st day he/she

actually enters on duty in pay status in a position in which he/she

again becomes eligible.

Sec. 870.505 Optional insurance: Waiver/cancellation of insurance.

(a) An insured individual may cancel entirely any type of optional

insurance, or reduce the number of multiples of his/her Option B

insurance, at any time by filing a waiver of optional insurance

coverage. An employee files with the employing office. An annuitant

files with OPM or other office that administers his/her retirement

system. If still employed, a compensationer files with the employing

office, and if not still employed, with OWCP.

(b) A cancellation of optional insurance becomes effective, and

optional insurance stops, at the end of the pay period in which the

waiver is properly filed. Exception: If Option C is cancelled because

there are no eligible family members, the effective date is retroactive

to the end of the pay period in which there stopped being any eligible

family members.

cancelled as provided in Sec. 870.506.

Sec. 870.506 Optional insurance: Cancelling a waiver.

(a)(1) An employee who has waived Option B coverage may elect it,

and an employee who has Option B of fewer than five multiples of annual

pay may increase the number of multiples, upon his/her marriage or

divorce, upon a spouse's death, or upon acquiring an eligible child.

(2) The number of multiples of Option B coverage that an employee

can obtain or add (which can't exceed a total of five) is limited to

the following:

(i) For marriage, the number of additional family members (spouse

and eligible children) acquired with the marriage;

(ii) For acquisition of children, the number of eligible children

acquired; and

(iii) For divorce or death of a spouse, the total number of

eligible children of the enrollee.

(3) An employee who has waived Option C coverage may elect it upon

his/her marriage or upon acquiring an eligible child. An employee may

also elect Option C coverage upon divorce or death of a spouse, if the

employee has any eligible children.

(4)(i) The employee must file the election on the Life Insurance

Election form, along with proof of the event, with the employing office

no later than 60 days following the date of the event that permits the

election.

(ii) This 60-day time limit may be extended if the individual isn't

serving in a covered position on the date of the event or if the

individual separates from covered service prior to the end of the 60-

day time limit. This extension cannot exceed the 31-day time limit for

electing insurance following employment in a covered position or the

31-day period following the 1st day on which the individual becomes

eligible to cancel a waiver of basic insurance.

(5)(i) The effective date of Option B insurance elected under this

paragraph is the 1st day the employee actually enters on duty in pay

status on or after the day the employing office receives the election.

(ii) The effective date of Option C insurance elected under this

paragraph is the day the employing office receives the election.

(b)(1) An employee who has waived Option A or Option B coverage may

elect it if:

(i) At least 1 year has passed since the effective date of the

waiver, and

(ii) He/she provides satisfactory medical evidence of insurability.

(2) An employee who has Option B coverage of fewer than five

multiples of annual pay may increase the number of multiples if:

(i) At least 1 year has passed since the effective date of his/her

last election of fewer than five multiples (including a reduction in

the number of multiples), and

(ii) He/she provides satisfactory medical evidence of insurability.

(iii) The requirement for at least 1 year to have passed since the

effective date of the last election doesn't apply when an employee

elected fewer than five multiples because of the limitation under

paragraph (a)(2) of this section. [[Page 21766]]

complied with paragraph (b) of this section and decides whether to

approve it. The optional insurance is effective when, after OFEGLI's

approval, the employee actually enters on duty in pay status in a

position in which he/she is eligible for insurance. If the employee

doesn't enter on duty in pay status within 31 days following the date

of OFEGLI's approval, the approval is automatically revoked and the

employee does not have the optional insurance requested.

(d)(1) If an employee waived Option A insurance on or before

February 28, 1981, the waiver was automatically cancelled effective on

the 1st day the employee entered on duty in pay status on or after

April 1, 1981. Option A was effective on the date of the waiver's

cancellation, if the employee filed an election of Option A during the

March 1, 1981 through March 31, 1981 open enrollment period. If the

employee didn't file the election form with his/her employing office

during the March, 1981 open enrollment period, the employee will be

considered to have waived Option A on March 31, 1981.

(2) When an employee who has been separated from service for at

least 180 days is reinstated on or after April 1, 1981, a previous

waiver of optional insurance is automatically cancelled, as follows:

(i) An employee who returned to service between April 1, 1981 and

December 8, 1983, after a 180-day break in service was permitted to

elect any form of optional insurance by applying to his/her employing

office before March 7, 1984.

(ii) An employee who returns to service after December 8, 1983,

following a 180-day break in service may elect any form of optional

insurance by applying to his/her employing office within 31 days after

reinstatement. Coverage is effective on the 1st day the employee

actually enters on duty in pay status in a position in which he/she is

eligible for insurance on or after the date the employing office

receives the election. If the employee doesn't file a Life Insurance

Election form within the 31-day period, the employee is considered to

have waived optional insurance. However, an employee who fails to file

during the 31-day period due to reasons beyond his/her control may

enroll belatedly under the conditions stated in Sec. 870.504(a)(2).

(e) An annuitant or compensationer is not eligible to cancel a

waiver or to increase multiples of Option B under this section.

(f) The United States Postal Service may have less limiting

requirements for cancelling waivers for USPS employees in some

situations.

Sec. 870.507 Open enrollment periods.

(a) There are no regularly scheduled open enrollment periods for

life insurance. Open enrollment periods are held only when specifically

scheduled by OPM.

(b) During an OPM-scheduled open enrollment period, eligible

employees may cancel their existing waivers of basic and/or optional

insurance by electing the insurance on an OPM-designated form.

(c)(1) OPM sets the effective date for all insurance elected during

an open enrollment period. The newly elected insurance is effective on

the 1st day of the first pay period which begins on or after the OPM-

established date and which follows a pay period during which the

employee was in pay and duty status for at least 32 hours.

(2) A part-time employee must be in pay and duty status for one-

half the regularly scheduled tour of duty shown on his/her current

Standard Form 50 for newly elected coverage to become effective.

(3) An employee who has no regularly scheduled tour of duty or who

is employed on an intermittent basis must be in pay and duty status for

one-half the hours customarily worked before newly elected coverage can

become effective. For the purpose of this paragraph, employing offices

can determine the number of hours customarily worked by averaging the

number of hours worked in the most recent calendar year quarter prior

to the start of the open enrollment period.

(d) Within 6 months after an open enrollment period ends, an

employing office may determine that an employee was unable, for reasons

beyond his/her control, to cancel an existing waiver by electing to be

insured during the open enrollment period. In this case, if the

employee wants coverage, he/she must submit an election within 31 days

after being notified of the determination. Coverage is retroactive to

the first pay period which begins on or after the effective date set by

OPM and which follows a pay period during which the employee was in pay

and duty status for at least 32 hours. If the employee doesn't file an

election within this 31-day time limit, he/she will be considered to

have waived coverage.

Sec. 870.508 Nonpay status.

(a) An employee who is on leave without pay is entitled to continue

life insurance for up to 12 months. No premium payments are required.

(b) If an insured employee who is entitled to free insurance while

in nonpay status accepts a temporary appointment to a position in which

he/she would normally be excluded from insurance, the insurance

continues. The amount of basic insurance is based on whichever

position's salary is higher. Withholdings are made from the employee's

pay in the temporary position.

full-time officer or employee of certain employee organizations, within

60 days of the start of the leave-without-pay he/she may elect to

continue life insurance. The insurance continues for the length of the

appointment, even if the leave-without-pay lasts longer than 12 months.

The employee must pay to the employing office the full cost of basic

and optional insurance. There is no Government contribution for these

employees.

(d) If an insured employee goes on leave without pay while assigned

to a State government, local government, or institution of higher

education, life insurance continues for the length of the assignment,

even if the leave-without-pay lasts longer than 12 months. The employee

must pay his/her premiums to the Federal agency on a current basis. The

agency must continue to pay its contribution as long as the employee

makes his/her payments.

Sec. 870.509 Transfers to international organizations.

An employee transferred to an international organization as

provided in 5 U.S.C. 3582 may continue life insurance coverage.

Regulations governing these transfers are in part 352 of this title.

Subpart F--Termination and Conversion

Sec. 870.601 Termination of basic insurance.

(a) Except as provided in Sec. 870.701, the basic insurance of an

insured employee stops on the date he/she separates from service,

subject to a 31-day extension of coverage.

(b) The basic insurance of an employee who separates from service

after meeting the requirement for an immediate annuity under

Sec. 842.204(a)(1) of this title and who postpones receiving the

annuity, as provided by Sec. 842.204(c) of this title, stops on the

date he/she separates from service, subject to a 31-day extension of

coverage.

break in service to a position in which he/she is

[[Page 21767]] excluded from life insurance stops on his/her last day

in the former position, subject to a 31-day extension of coverage.

(d)(1) Except as provided in Sec. 870.701, the basic insurance of

an insured employee who is in nonpay status stops on the date the

employee completes 12 months in nonpay status, subject to a 31-day

extension of coverage. The 12 months' nonpay status may be broken by

periods of less than 4 consecutive months in pay status. If an employee

has at least 4 consecutive months in pay status after a period of

nonpay status, he/she is entitled to begin the 12 months' continuation

of basic insurance again. If an employee has used up his/her 12 months'

continuation in nonpay status and returns to duty for less than 4

consecutive months, his/her basic insurance stops on the 32nd day after

the last day of the last pay period in pay status.

(2) For the purpose of this paragraph, 4 consecutive months in pay

status means any 4-month period during which the employee is in pay

status for at least part of each pay period.

Sec. 870.602 Termination of optional insurance.

(a) The optional insurance of an insured employee stops when his/

her basic insurance stops, subject to the same 31-day extension of

coverage.

(b) The optional insurance of an employee who separates from

service after meeting the requirement for an immediate annuity under

Sec. 842.204(a)(1) of this title and who postpones receiving the

annuity, as provided by Sec. 842.204(c) of this title, stops on the

date he/she separates from service, subject to a 31-day extension of

coverage.

continue optional coverage as an annuitant or compensationer (see

Sec. 870.701), the optional insurance stops on the date that his/her

basic insurance is continued or reinstated under the provisions of

Sec. 870.701, subject to a 31-day extension of coverage.

(d) If, at the time of an individual's election of basic insurance

during receipt of annuity or compensation (see Sec. 870.701), he/she

elects no basic life insurance, the optional insurance stops at the end

of the month in which the election is received in OPM, subject to a 31-

day extension of coverage.

(e) Except as provided in Sec. 870.404, optional insurance stops,

subject to a 31-day extension of coverage, at the end of the pay period

in which it's determined that an individual's periodic pay,

compensation, or annuity, after all other deductions, isn't enough to

cover the full cost of the optional insurance. If an individual has

more than one type of optional insurance, and his/her pay,

compensation, or annuity is sufficient to cover some but not all of the

insurance, Option C terminates first, followed by Option A and then

Option B.

Sec. 870.603 Conversion of basic and optional insurance.

(a)(1) When group coverage terminates for any reason other than

voluntary cancellation, an employee may apply to convert all or any

part of his/her basic and optional insurance to an individual policy;

no medical examination is required. The premiums for the individual

policy are based on the employee's age and class of risk. An employee

is eligible to convert the policy only if he/she doesn't return, within

3 calendar days from the terminating event, to a position allowing

coverage under the group plan.

(2) The employing agency must notify the employee of the loss of

coverage and the right to convert to an individual policy either before

or immediately after the event causing the loss of coverage.

(3) The employee must submit the request for conversion information

to OFEGLI. It must be postmarked within 31 days following the date of

the terminating event or within 31 days of the date the employee

received the notice of loss of group coverage and right to convert,

whichever is later.

(4) An employee who fails to use his/her conversion right within 31

days after receiving notice of the right to convert or within 31 days

of the terminating event, whichever is later, is considered to have

refused coverage, unless OFEGLI determines the failure was for reasons

beyond the employee's control, as described in paragraph (a)(5) of this

section.

(5) When the employee fails to request conversion information

within the time limit set in paragraph (a)(3) of this section for

reasons beyond his/her control, he/she may make a belated request by

writing to OFEGLI. The employee must make the request within 6 months

after becoming eligible to convert the insurance. The employee must

show that he/she wasn't notified of the loss of coverage and the right

to convert and was not otherwise aware of it or that he/she was unable

to convert to an individual policy for reasons beyond his/her control.

OFEGLI will determine if the employee is eligible to convert. When the

request is approved, the employee must convert within 31 days of that

determination.

(b) The individual conversion policy is effective the day after the

group coverage ends. The employee must pay the premiums for any period

retroactive to that date.

does not depend upon timely notification of the right to convert to an

individual policy. The extension cannot be continued beyond 31 days.

Subpart G--Annuitants and Compensationers

Sec. 870.701 Eligibility for life insurance.

(a) When an insured employee retires, basic life insurance (but not

accidental death and dismemberment) continues or is reinstated if he/

she:

(1) Is entitled to retire on an immediate annuity under a

retirement system for civilian employees, including the retirement

system of a nonappropriated fund instrumentality of the Department of

Defense or the Coast Guard;

(2) Was insured for the 5 years of service immediately before the

date the annuity starts, or for the full period(s) of service during

which he/she was eligible to be insured if less than 5 years; and

(3) Has not converted to an individual policy as described in

Sec. 870.603. If it is not determined that an individual is eligible to

continue the group coverage as an annuitant until after he/she has

converted, the group enrollment must be reinstated. The conversion

policy must be voided, and the premiums already paid on the policy must

be refunded to the individual.

(b) A compensationer's basic life insurance (but not accidental

death and dismemberment) continues or is reinstated if he/she:

(1) Has been insured for the 5 years of service immediately before

the date of entitlement to compensation, or for the full period(s) of

service during which he/she was eligible to be insured if less than 5

years; and

(2) Has not converted to an individual policy as described in

Sec. 870.603. If it is not determined that an individual is eligible to

continue the group coverage as a compensationer until after he/she has

converted, the group enrollment must be reinstated. The conversion

policy must be voided, and the premiums already paid on the policy must

be refunded to the individual.

or (b) of this section or Sec. 870.707 for continuation or

reinstatement of life insurance must complete a written election on the

appropriate form at the time entitlement is established. For the

election to be valid, OPM must receive [[Page 21768]] the election form

before it has made a final decision on the individual's application for

annuity or supplemental annuity or an individual's request to continue

life insurance as a compensationer. If there is no valid election, OPM

considers the individual to have chosen the option described in

paragraph (a)(2) of Sec. 870.702.

(d) If the annuity or compensation of an insured individual is

terminated, or if the Department of Labor finds that an insured

compensationer is able to return to duty, his/her basic life insurance

held as an annuitant or compensationer stops on the date of the

termination or finding. There is no 31-day extension of coverage or

conversion right.

(e)(1) An annuitant or compensationer who is eligible to continue

or have reinstated basic insurance is also eligible to continue or have

reinstated optional insurance if he/she meets the same coverage

requirements for optional insurance as those stated in paragraph (a) or

(b) of this section for basic insurance.

(2) For the purpose of continuing insurance as an annuitant or

compensationer, an employee is not considered to have been eligible for

Option C during any period when the employee had no eligible family

member.

Sec. 870.702 Election of basic insurance.

(a) An individual who makes an election under Sec. 870.701(c) must

select one of the following options:

(1) Termination of the insurance. The individual's insurance stops

upon conversion to an individual policy as provided under Sec. 870.603.

If the individual doesn't convert to an individual policy, insurance

stops at the end of the month in which OPM or the employing office

receives the election;

(2) Continuation or reinstatement of basic insurance with a maximum

reduction of 75 percent during retirement. Premiums are withheld from

annuity or compensation (except as provided under Sec. 870.401(d)(1)).

The amount of basic life insurance in force reduces by 2 percent a

month until the maximum reduction is reached. This reduction starts at

the beginning of the 2nd month after the date the insurance would

otherwise have stopped or the date of the insured's 65th birthday,

whichever is later;

(3) Continuation or reinstatement of basic insurance with a maximum

reduction of 50 percent during retirement. Premiums are withheld from

annuity or compensation. The amount of basic insurance in force reduces

by 1 percent a month until the maximum reduction is reached. This

reduction starts at the beginning of the 2nd month after the date the

insurance would otherwise have stopped or the date of the insured's

65th birthday, whichever is later; or

(4) Continuation or reinstatement of basic insurance with no

reduction after age 65. Premiums are withheld from annuity or

compensation.

(b)(1) An insured individual may cancel an election under paragraph

(a)(3) or (a)(4) of this section at any time. The amount of basic

insurance automatically switches to the amount that would have been in

force if the individual had originally elected the 75 percent

reduction. This revised amount is effective at the end of the month in

which OPM receives the request to cancel the previous election.

(2) If the individual files a waiver of insurance, the coverage

stops without a 31-day extension of coverage or conversion right. This

is effective at the end of the month in which OPM receives the waiver.

Sec. 870.703 Amount of life insurance.

(a)(1) The amount of an annuitant's or compensationer's basic

insurance is his/her BIA on the date insurance would otherwise have

stopped because of separation from service or completion of 12 months

in nonpay status, minus any reductions applicable under

Sec. 870.702(a).

(2) For the purpose of paying benefits upon the death of a retired

insured individual under age 45, the BIA is multiplied by the

appropriate age factor shown in Sec. 870.202(c). Exception: If the

insured individual retired before October 10, 1980.

(b) The amount of an annuitant's or compensationer's Option A

coverage reduces by 2 percent a month up to a maximum reduction of 75

percent. This reduction starts at the beginning of the 2nd month after

the date the insurance would otherwise have stopped or the date of the

insured's 65th birthday, whichever is later.

or compensationer can continue is the smallest number of multiples in

force during the applicable period of service required to continue

Option B.

(2) Each multiple of an annuitant's or compensationer's Option B

coverage reduces by 2 percent a month. This reduction starts at the

beginning of the 2nd month after the date the insurance would otherwise

have stopped or the insured's 65 birthday, whichever is later. At 12

noon on the day before the 50th reduction, the insurance stops, with no

extension of coverage or conversion right.

(d) The amount of an annuitant's or compensationer's Option C

coverage on each family member reduces by 2 percent a month. This

reduction starts at the beginning of the 2nd month after the date the

insurance would otherwise have stopped or the annuitant's or

compensationer's 65th birthday, whichever is later. At 12 noon on the

day before the 50th reduction, the insurance stops, with no extension

of coverage or conversion right.

(e)(1) Judges retiring under 28 U.S.C. 371 (a) and (b), 28 U.S.C.

372(a), and 26 U.S.C. 7447 are considered employees under the FEGLI

law. Basic and optional insurance for these judges continues without

interruption or reduction upon retirement.

(2) If a judge chooses to receive compensation instead of an

annuity, his/her optional insurance reduces as stated in paragraphs

(b), (c), and (d) of this section.

Sec. 870.704 Reinstatement of life insurance.

(a) An annuitant whose disability annuity terminates because he/she

recovers from the disability or because his/her earning capacity

returns, and whose disability annuity is later restored under 5 U.S.C.

8337(e) (after December 31, 1983), may elect to resume the basic

insurance held immediately before his/her disability annuity

terminated. OPM must receive the election within 60 days after OPM

mails a notice of insurance eligibility and election form.

(b) An annuitant described in paragraph (a) of this section may

elect to resume any optional insurance held immediately before the

annuity terminated if:

(1) He/she has made an election under paragraph (a) of this

section; and

(2) OPM receives the election within 60 days after OPM mails a

notice of insurance eligibility and election form.

and (b) of this section are effective on the 1st day of the month after

the date OPM receives the election form. Any applicable annuity

withholdings are also reinstated on the 1st day of the month after OPM

receives the election form.

(d) The amounts of basic and optional insurance reinstated under

paragraphs (a) and (b) of this section are the amounts that would have

been in force if the individual's annuity hadn't terminated.

Sec. 870.705 Waiver or suspension of annuity or compensation.

(a) Except as provided in paragraph (b) of this section, when

annuity or [[Page 21769]] compensation is waived or suspended, optional

life insurance continues. When the annuity or compensation is resumed,

back payments must be withheld for the full cost of the optional

insurance for the period of waiver or suspension during which the

person is under age 65.

(b) If suspension of annuity or compensation is because of

reemployment, the reemploying office must withhold the full cost of the

insurance during each pay period of reemployment.

Sec. 870.706 Reemployed annuitants.

(a) (1) If an insured annuitant is appointed to a position in which

he/she is eligible for insurance, the amount of his/her basic life

insurance as an annuitant (and any applicable annuity withholdings) is

suspended on the day before the 1st day in pay status under the

appointment, unless the reemployed annuitant waives all insurance

coverage. The benefit payable upon the death of a reemployed annuitant

who has basic insurance in force as an employee cannot be less than the

benefit which would have been payable if the individual hadn't been

reemployed.

(2) Except as provided in paragraph (b) of this section, the basic

insurance obtained as an employee stops, with no 31-day extension of

coverage or conversion right, on the date reemployment terminates. Any

suspended basic insurance (and any applicable annuity withholdings) is

reinstated on the day following termination of the reemployment.

(b) Basic insurance obtained during reemployment can be continued

after the reemployment terminates if:

(1) The annuitant qualifies for a supplemental annuity or receives

a new retirement right;

(2) He/she has had basic insurance as an employee for at least 5

years of service immediately before separation from reemployment or for

the full period(s) during which such coverage was available to him/her,

whichever is less; and

(3) He/she doesn't convert to nongroup insurance when basic

insurance as an employee would otherwise terminate.

continued as provided in paragraph (b) of this section, any suspended

basic life insurance stops, with no 31-day extension of coverage or

conversion right.

(d)(1) An annuitant appointed to a position in which he/she is

eligible for basic insurance, is also eligible for optional insurance

as an employee, unless he/she has on file an uncanceled waiver of basic

or optional insurance.

(2) If the individual has Option A or C as an annuitant, that

insurance (and applicable annuity withholdings) is suspended on the day

before his/her 1st day in pay status under the appointment. Unless he/

she waives Option A or C (or waives basic insurance), he/she obtains

Option A or C as an employee.

(3) If the individual has Option B as an annuitant, that insurance

(and applicable annuity withholdings) continues as if the individual

weren't reemployed, unless:

(i) The individual files with his/her employing office an election

of Option B on the Life Insurance Election form within 31 days after

the date of reemployment. In this case Option B (and applicable annuity

withholdings) as an annuitant is suspended on the date that Option B as

an employee becomes effective; or

(ii) The individual waives basic insurance.

(4) Except as provided in paragraph (e) of this section, the

optional insurance obtained as an employee stops, with no 31-day

extension or conversion right, on the date reemployment terminates. The

amount of suspended optional insurance which remains in force after

applicable monthly reductions after age 65 (and corresponding

withholdings) is reinstated on the day after reemployment terminates.

(e) Optional life insurance obtained during reemployment may be

continued after the reemployment terminates if the annuitant:

(1) Qualifies for a supplemental annuity or receives a new

retirement right;

(2) Continues his/her basic life insurance under paragraph (d)(2),

(3), or (4) of Sec. 870.701; and

(3) Has had optional insurance in force for the 5 years of service

immediately before separation from reemployment or for the full

period(s) of service during which it was available to him/her,

whichever is less.

(f) If optional insurance obtained during reemployment is continued

as provided in paragraph (e) of this section, any suspended optional

insurance stops, with no 31-day extension of coverage or conversion

right.

(g) If a reemployed annuitant waives life insurance as an employee,

the waiver also cancels his/her life insurance as an annuitant.

Sec. 870.707 MRA-plus-10 annuitants.

(a) The basic insurance of an individual whose coverage terminates

under Sec. 870.601(a), and who meets the requirements for continuing

basic insurance after retirement as stated in Sec. 870.601(b), resumes

on the starting date of annuity or on the date OPM receives the

application for annuity, whichever is later. The individual must file

an election as provided in Sec. 870.701(c) so that OPM receives it

within 60 days after OPM mails a notice of insurance eligibility and

election form.

(b) Optional insurance of an individual whose coverage terminates

under Sec. 870.602(a), and who meets the requirements for continuing

optional insurance after retirement under Sec. 870.602(b), resumes on

the starting date of annuity or on the date OPM receives the

application for annuity, whichever is later.

Subpart H--Order of Precedence and Designation of Beneficiary

Sec. 870.801 Order of precedence and payment of benefits.

(a) Benefits are paid according to the order of precedence stated

in 5 U.S.C. 8705, as follows:

(1) To the designated beneficiary (or beneficiaries);

(2) If none, to the widow(er);

(3) If none, to the child, or children in equal shares, with the

share of any deceased child going to his/her children;

(4) If none, to the parents in equal shares or the entire amount to

the surviving parent;

(5) If none, to the executor or administrator of the estate;

(6) If none, to the next of kin according to the laws of the State

in which the insured individual legally resided.

(b) If an insured individual provided in a valid designation of

beneficiary for insurance benefits to be payable to the insured's

estate, or to the Executor, Administrator, or other representative of

the insured's estate, or if the benefits would otherwise be payable to

the duly appointed representative of the insured's estate under the

order of precedence specified in 5 U.S.C. 8705(a), payment of the

benefits to the duly appointed representative of the insured's estate

bars recovery by any other person.

his/her death is paid, on receipt of a valid claim, in the same order

of precedence and under the same conditions as basic insurance. A

designation of beneficiary for basic [[Page 21770]] insurance is also a

designation of beneficiary for Option A or B, unless the insured

individual states otherwise in his/her designation.

(d) Upon the death of an insured family member, Option C benefits

are paid to the employee, annuitant, or compensationer responsible for

withholdings under Sec. 870.402(f), except as provided in paragraph (e)

of this section.

(e) In spite of an assignment of life insurance under subpart I of

this part, if an employee, annuitant, or compensationer entitled to

receive Option C benefits dies before the benefits are paid, the Option

C benefits are paid to the individual(s) entitled to receive basic life

insurance benefits.

Sec. 870.802 Designation of beneficiary.

(a) If an insured individual wants benefits paid differently from

the order of precedence, he/she may file a designation of beneficiary.

A designation of beneficiary cannot be filed by anyone other than the

insured individual.

(b) A designation of beneficiary must be in writing, signed, and

witnessed by two people. The employing office (or OPM, in the case of

an individual receiving an annuity or compensation must receive the

designation before the death of the insured.

or any other document not witnessed and filed as required by this

section has no legal effect with respect to benefits under this

chapter.

(d) A witness to a designation of beneficiary cannot be named as a

beneficiary.

(e) Any individual, firm, corporation, or legal entity can be named

as a beneficiary, except an agency of the Federal or District of

Columbia Government.

(f) An insured individual may change his/her beneficiary at any

time without the knowledge or consent of the previous beneficiary. This

right cannot be waived or restricted.

(g) A designation of beneficiary is automatically cancelled 31 days

after the individual stops being insured.

(h) An insured individual may provide that a designated beneficiary

is entitled to the insurance benefits only if the beneficiary survives

him/her for a specified period of time (not more than 30 days). If the

beneficiary doesn't survive for the specified period, insurance

benefits will be paid as if the beneficiary had died before the

insured.

Sec. 870.803 Child incapable of self-support.

(a) When it receives a claim for Option C benefits because of the

death of a child over age 21, OFEGLI determines, based on whatever

evidence it considers necessary, whether the deceased child was

incapable of self-support because of a mental or physical disability

which existed before the child reached age 22.

(b) If an employee elects Option C under Sec. 870.506(a)(3), and

the opportunity to elect is based solely on the acquisition of a child

over age 21, the employee must submit to the employing office at the

time of making the election a doctor's certificate stating that the

child is incapable of self-support because of a physical or mental

disability which existed before the child reached age 22 and which is

expected to continue for more than 1 year. The certificate must include

the name of the child, the type of disability, how long it has existed,

and its expected future course and duration. The certificate must be

signed by the doctor and show his/her office address.

Subpart I--Assignments of Life Insurance

Sec. 870.901 Assignments permitted.

(a) Section 208 of the Bankruptcy Amendments and Federal Judgeship

Act of 1984, Pub. L. 98-353, effective July 10, 1984, permits Federal

judges to irreversibly assign their FEGLI coverage to one or more

individuals, corporations, or trustees. A judge may assign ownership of

all life insurance under this part, except Option C. If a judge owns

more than one type of coverage, he/she must assign all the insurance; a

judge cannot assign only a portion of the coverage. Option C cannot be

assigned.

(b) A judge cannot name conditional assignees in case the primary

assignee dies before the insured judge.

corporations, or trustees, the judge must specify percentage shares,

rather than dollar amounts or types of insurance, to go to each

assignee.

(d) If a judge who has made an assignment later elects increased

insurance coverage under Sec. 870.506 or during an open enrollment

period, the increased coverage is considered included in the already-

existing assignment. The right to increase coverage remains with the

judge, rather than transferring to the assignee.

(e) A judge who assigns ownership of insurance continues to be the

insured individual, but the assignee receives those rights of an

insured employee that are specified in this part.

(f) Once assigned, the value of the insurance increases or

decreases automatically as provided by this part.

Sec. 870.902 Making an assignment.

To assign insurance, a judge must make a written request for an

approved assignment form. The judge must complete and submit to the

employing office the signed and witnessed form indicating the intent to

irreversibly assign all ownership of the insurance. (Assignments

submitted prior to November 28, 1986, were accepted without an approved

assignment form.)

Sec. 870.903 Effective date of assignment.

An assignment under this section is effective on the date the

employing office receives the properly completed, signed, and witnessed

assignment form.

Sec. 870.904 Amount of insurance.

The amount of insurance is based on the judge's basic pay as stated

in subpart B of this part.

Sec. 870.905 Withholdings.

Premium withholdings for assigned insurance are withheld from the

salary, annuity, or compensation of the judge, as provided in subpart D

of this part.

Sec. 870.906 Cancellation of insurance.

The assignee has the right to cancel insurance according to the

provisions of Secs. 870.502 and 870.505. When there is more than 1

assignee, all assignees must agree to the cancellation. A cancellation

of basic insurance also cancels all optional insurance.

Sec. 870.907 Termination and conversion.

(a) Assigned insurance terminates under the conditions stated in

subpart F of this part.

(b) (1) When a judge's insurance terminates, an assignee has the

right to convert all or part of the group insurance to an individual

policy on the judge. The conditions stated in subpart F of this part

apply to assignees who elect to convert.

(2) When there is more than 1 assignee, each assignee has the right

to convert all or part of his/her share of the insurance. Any assignee

who doesn't convert loses all ownership of the insurance.

(3) When there is more than 1 assignee and they wish to convert the

assigned insurance to individual policies on the judge, the maximum

amount of insurance each assignee will be able to convert is determined

by the dollar amount corresponding to the assignee's share of the total

insurance. This amount will be rounded up to the next higher thousand,

if it's not already an even thousand dollar amount. [[Page 21771]]

(4) Premiums for converted life insurance are based on the insured

judge's age and class of risk at the time the conversion policy is

issued.

(5) The employing office must notify each assignee of the

conversion right at the time the assigned group insurance terminates.

Sec. 870.908 Annuitants and compensationers.

(a) If a judge assigns basic insurance and later becomes eligible

to continue such insurance coverage while receiving annuity or

compensation as provided in Sec. 870.701:

(1) At the time he/she retires or becomes eligible to receive

compensation, the judge may elect unreduced or partially reduced

insurance coverage as provided in Sec. 870.702(a).

(2) After the judge has made the election described in paragraph

(a)(1) of this section, the assignee (or, if more than one, all of the

assignees acting together) may, at any time, elect to cancel all or

part of the basic insurance coverage as provided in Sec. 870.702(b).

(b) Judges retiring under 28 U.S.C. 371 (a) and (b), 28 U.S.C.

372(a), and 26 U.S.C. 7747 are considered employees under the FEGLI

law. Insurance for these judges continues without interruption or

reduction upon retirement. The amount of basic insurance for a judge

who elects to receive compensation in lieu of annuity will be computed

according to Sec. 870.703(e)(2).

Sec. 870.909 Designations and changes of beneficiary.

(a) Each assignee (or the legally appointed guardian of an

assignee) may designate a beneficiary or beneficiaries to receive

insurance benefits upon the death of the insured judge and may also

later change the beneficiaries. Assignees may designate themselves the

primary beneficiaries and name other conditional beneficiaries to

receive insurance benefits if the assignees die before the insured

judge.

(b) Benefits for assigned insurance are paid to an assignee's

estate if the assignee dies before the insured judge and:

(1) The assignee did not designate a beneficiary; or

(2) The assignee's designated beneficiary dies before the insured

judge.

of beneficiary.

(d) The provisions of Sec. 870.802 apply to designations of

beneficiary made by assignees.

Sec. 870.910 Notification of current addresses.

Each assignee and each beneficiary of an assignee must keep the

office where the assignment is filed informed of his/her current

address.

Subpart J--Benefits for United States Hostages in Iraq and Kuwait

and United States Hostages Captured in Lebanon

Sec. 870.1001 Purpose.

This subpart sets forth the conditions for life insurance coverage

according to the provisions of section 599C of Pub. L. 101-513.

Sec. 870.1002 Definitions.

In this subpart:

Hostage and hostage status have the meaning set forth in section

599C of Pub. L. 101-513.

Pay period for individuals insured under this subpart means the pay

period set by the U.S. Department of State.

Period of eligibility means the period beginning on the effective

date set forth in Sec. 870.1004 and ending 12 months after hostage

status ends.

Sec. 870.1003 Coverage and amount of insurance.

(a) An individual is covered under this subpart when the U.S.

Department of State determines that the individual is eligible under

section 599C of Pub. L. 101-513.

(b) (1) The amount of basic life insurance for these individuals is

the amount specified in Sec. 870.202, subject to the applicable

conditions stated in this subpart.

(2) The BIA under Sec. 870.202 is the amount of the payment

specified in section 599C(b)(2) of Pub. L. 101-513, rounded to the next

higher $1,000, plus $2,000.

have group accidental death and dismemberment insurance.

(d) Individuals insured by this subpart are not eligible for

optional insurance.

(e) Individuals insured by this subpart are not considered

employees for the purpose of this part.

(f) Eligibility for insurance under this subpart depends on the

availability of funds under section 599C(e) of Pub. L. 101-513.

Sec. 870.1004 Effective date of insurance.

Insurance under this subpart was effective on August 2, 1990, for

hostages in Iraq and Kuwait and on January 1, 1990, for hostages

captured in Lebanon, unless the U.S. Department of State sets a later

date.

Sec. 870.1005 Premiums.

(a) Government contributions and employee withholdings required

under subpart D of this part are paid from the funds provided under

section 599C(e) of Pub. L. 101-513.

(b) If an individual isn't insured for the full pay period,

premiums are paid only for the days he/she is actually insured. The

daily premium is the monthly premium multiplied by 12 and divided by

365.

from a State Department appropriation, if necessary to fund the 12-

month period of coverage beginning the earlier of:

(1) The day after sanctions or hostilities end; or

(2) The day after the individual's hostage status ends.

(d) OPM will place any funds received under paragraph (c) of this

section in an account set up for that purpose. OPM will make the

deposit required under 5 U.S.C. 8714 from the account when the

appropriate pay period occurs.

Sec. 870.1006 Cancellation of insurance.

(a) An individual who is insured under this subpart may cancel his/

her insurance at any time by written request. The cancellation is

effective on the 1st day of the pay period after the pay period in

which the U.S. Department of State receives the request.

(b) Cancellation must be requested by the insured individual and

cannot be requested by a representative acting on the individual's

behalf.

cannot obtain the insurance again, unless the U.S. Department of State

determines that it would be against equity and good conscience not to

allow the individual to be insured.

Sec. 870.1007 Termination and conversion.

(a) Insurance under this subpart terminates 12 months after hostage

status ends, unless the individual cancels the insurance earlier.

(b) Insured individuals whose coverage terminates are eligible for

the 31-day extension of coverage and conversion as set forth in subpart

F of this part, unless the individual cancelled the coverage.

Sec. 870.1008 Order of precedence and designation of beneficiary.

Insurance benefits are paid under the order of precedence set forth

in 5 U.S.C. 8705 and under the provisions of subpart H of this part.

[[Page 21772]]

Sec. 870.1009 Responsibilities of the U.S. Department of State.

(a) The U.S. Department of State functions as the ``employing

office'' for individuals insured under this subpart.

(b) The U.S. Department of State must determine the eligibility of

individuals under Pub. L. 101-513 for insurance under this subpart.

This includes determining whether an individual is barred from

insurance under chapter 87 of title 5 U.S.C. because of other life

insurance, as provided in section 599C of Pub. L. 101-513.

PART 871--[REMOVED]

2. Part 871 is removed.

PART 872--[REMOVED]

3. Part 872 is removed.

PART 873--[REMOVED]

4. Part 873 is removed.

PART 874--[REMOVED]

5. Part 874 is removed.

[FR Doc. 95-10778 Filed 5-2-95; 8:45 am]

BILLING CODE 6325-01-P

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.