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Federal HR Policies Affecting Schedule A Appointment

Federal Employees' Group Life Insurance

Introduction

The Federal Government established the Federal Employees' Group Life Insurance (FEGLI) program in 1954. It is the largest group life insurance program in the world covering over 4 million employees, retirees and many of their family members.

FEGLI provides group term life insurance. It consists of Basic life and three levels of Optional life insurance coverage.

Resources

FEGLI Handbook - For Employees, Annuitants, Compensationers, and Employing Offices
Title 5 U.S. Code, Chapter 87, Life Insurance
Section 7220 of Public Law No 107-171, Dated May 13, 2002, Termination of Certain Schedule A Appointments

Eligibility

FEGLI is a benefit for a Schedule A appointee in a Cooperative Extension organization which has entered into a cooperative agreement with USDA as provided in the Federal Employees' Group Life Insurance Act (Title 5 U.S. Code Chapter 87).

The CES employees Schedule A appointments were terminated effective January 31, 2003. Section 7220 of Public Law 107-171, dated 5/13/2002, terminated the Federal Schedule A appointments for CES employees with the companion Federal appointment and Federal benefits. However, the legislation included a stipulation which allowed the affected CES employees to continue to participate in the Federal benefits programs without having the Federal appointment. The legislation stated that the former Federal appointees could continue to participate in the programs that they were eligible to participate in prior to the enactment of the new law except for the Federal Workers' Compensation Program. For additional information, see the section in this guidance on Schedule A appointments.

Purpose

The purpose is to provide immediate protection against financial hardship or loss in the event of death. The overall responsibility for administration of the plan rests with the Office of Personnel Management (OPM). The USDA Office of Human Resources Management (OHRM) and the USDA HRD MSB, in conjunction with Directors and Administrators of Cooperative Extension organizations, are responsible for the proper administration of the FEGLI program. The OPM handbook for FEGLI provides the process and procedures for the FEGLI program.

Coverage

All Cooperative Extension employees eligible to participate in the FEGLI program are automatically enrolled in Basic insurance unless they have a valid waiver on file. Cooperative Extension Human Resource Offices will complete a Standard Form (SF) 2817, electing basic coverage for all employees that do not return their completed form within the 31 day time period. An employee who wants Optional coverage must complete an SF 2817 within 31 days of becoming eligible, electing their choice of optional insurance coverage in the FEGLI program. An employee that does not want Basic coverage must waive or cancel it by completing the SF 2817.

Effective Date of Insurance Coverage/Changes

Basic insurance coverage is effective on the day the eligible individual enters on duty and is in pay status. Optional insurance is effective on the first day the individual enters on duty in pay status on or after the day their employing office receives the election form. Cancellations of insurance coverage are effective at the end of the pay period in which the cancellation is filed with the employing office.

Individuals that request "Cancellation of Waivers" which are approved by the Office of Federal Employees' Group Life Insurance (OFEGLI) have Basic insurance coverage effective on the first day they enter on duty in pay status after OFEGLI' s approval. These individuals are allowed 31 days from the date of OFEGLI's approval to cancel their waiver of Option A and/or Option B, and the coverage is effective the first day they enter on duty in pay status on or after the day the employing office receives the Life Insurance election form after OFEGLI approves the request

Amount and Cost of Insurance

Basic Coverage - Basic coverage is based on the employees annual basic rate of pay rounded up to the nearest $1,000, plus $2,000. The Federal Government pays one-third of the cost and the employee pays two-thirds of the cost. Participants are also covered by Accidental Death and Dismemberment Coverage as part of their Basic coverage.

Optional Coverage - There are three options for Optional coverage:

  • Option A (Standard Optional Insurance) - Option A Coverage is $10,000.
  • Option B (Additional Optional Insurance) - Option B coverage comes in 1, 2, 3, 4, or 5 multiples of a participants annual pay (after pay has been rounded to the next higher thousand). It does not include the extra $2,000 added for Basic Insurance.
  • Option C (Family Optional Insurance) - Option C provides coverage for the participants' spouse and eligible dependent children. When a participant elects Option C, all eligible family members are automatically covered. A participant may elect either 1, 2, 3, 4, or 5 multiples of coverage. Each multiple is equal to $5,000 for a participants' spouse and $2,500 for each eligible dependent child.

The cost of Optional insurance is provided at a group rate and is paid in whole by the participant. The cost of Optional insurance increases with age.

Waiver/Cancellation of Insurance

Employees are automatically covered under Basic insurance coverage unless they file a waiver. Basic and/or Optional insurance coverage may be canceled at any time. When Basic insurance is waived/canceled so is Optional coverage. However, Optional coverage may be canceled without canceling Basic coverage.

Cancellation of Waiver

An eligible employee may re-enroll in Basic and/or Optional coverage if at least one year since the effective date of the waiver/cancellation has passed and satisfactory medical evidence of insurability is provided. Employees must complete the Request for Insurance form (SF 2822) which is a combination of: 1) request to cancel a waiver; 2) medical certification; and 3) authorization for insurance. The SF 2822 form includes the instructions necessary to request a waiver and information on the waiver processes.

Cancellation of Waiver due to Family Status

The following changes in family status may cancel a waiver of Option B and/or Option C and the employee has 60 days after the date of the event to make an election (proof of the change in family status must accompany the election form):

  • marriage
  • divorce
  • death of a spouse
  • acquiring an eligible child

Effect of Separation from Service on Waiver

Former CES Schedule A appointees, and other Federal employees, that are re-appointed after a break in service of at least 180 days from Federal employment, who previously waived their insurance coverage, are eligible for life insurance. Their waiver is automatically canceled and they are automatically enrolled in Basic insurance and have 31 days to elect Optional insurance coverage. If the employee fails to complete a new SF 2817 they will get whatever Optional insurance they had before they separated and all other Optional insurance will be considered waived. A new waiver is required to cancel the Basic insurance coverage and any other Optional insurance coverage.

If an employee was off the roles for less than 180 days any previous waiver of coverage remains in effect. They automatically get whatever life insurance coverage they had before leaving Government service.

Effect of Nonpay Status on Insurance Coverage

FEGLI coverages continues during the first 365 days in nonpay status, i.e., Leave Without Pay (LWOP), and no premiums are required, unless the participant is receiving Workers' Compensation. The insurance coverage terminates at the end of the 365 day period, with a 31 day extension of coverage and the right to convert to an individual policy.

Conversion of Insurance Coverage

When Basic and/or Optional insurance terminates, except by waiver or declination, the employee continues to have life insurance protection for 31 days thereafter. An employee is entitled to convert to an individual life insurance policy when the group life insurance policy terminates.

Employees must be notified of the loss of group coverage and the right to convert whenever their insurance terminates. The SF 2819, Notice of Conversion Privilege, form must be provided to the employee either immediately before or immediately after the event causing loss of coverage. Note: This form must be given to the employee when they are retiring, even if they choose to continue life insurance coverage into retirement.

When employees separate and choose not to convert their Option C coverage, the family members are eligible to convert their coverage to an individual policy and CES organizations must send the family members the SF 2819 if they request information on converting to individual policies. Spouses and eligible children may convert their coverage up to the amount of Option C coverage (maximum $25,000 for your spouse and $12,500 for each eligible child) when the insurance was terminated. Family members do not have the right to convert coverage under other circumstances in which coverage ends, such as divorce, a child's marriage, or the child reaches age 22.

When an employee dies, family members covered under Option C are eligible to convert their coverage to an individual policy and CES organizations must send the family members the SF 2819 notifying them of the opportunity to convert.

Employing offices are to submit the SF 2819's to the Office of Federal Employees' Group Life Insurance, P.O. Box 8149,Long Island City, NY 11101-8149. Overnight deliveries only (such as express mail): OFEGLI, FEGLI Conversion Team, 5th Floor, 27-01 Queens Plaza North, Queens, NY 11101. The duplicate copy of the SF 2819 must be filed in the Official Personnel Folder (OPF); however, the copy should be forwarded to OPM with the CES employee's retirement papers.

Continuation of Coverage after Retirement

In order to carry coverage into retirement, the participant must have had that coverage for the 5 years immediately preceding retirement, or for all periods of service during which that coverage was available to the participant.

If the participant is qualified and carries Basic into retirement, they will have a choice of what will happen to Basic insurance once they retire and reach age 65. The participant can choose 75% reduction, 50% reduction, or no reduction. If they choose 75% reduction they will pay the same premium that active employees pay up until age 65. Then Basic coverage will be free, but it will be reduced by 2% of the amount they had when they retired, until coverage reaches 25% of the original amount. If the participant chooses 50% reduction, they will pay the same premium active employees pay, plus an extra premium to pay for the 50% reduction. At 65, they will stop paying the regular premium and keep paying the extra premium. Coverage will reduce by 1% of the original amount for 50 months, leaving 50% of the coverage remaining. If they choose no reduction, they will pay the same premium active employees pay, plus an extra premium to pay for the no reduction. At 65, they will stop paying the regular premium and keep paying the extra premium. The coverage will not be reduced.

When a participant retires, they will also have a choice of no reduction or full reduction for Option B and Option C coverage (if they qualify to carry these coverages into retirement). They will pay the same premiums that active employees pay (based on age). If they choose full reduction, they will stop paying premiums at age 65, but then coverage will be reduced by 2% each month for 50 months until coverage reaches zero. If they choose no reduction, they will continue to pay the same premiums active employees pay (based on age) and coverage will not be reduced.

Open Enrollment Periods

Open enrollment periods are held at the discretion of OPM and there are no regularly scheduled open enrollment periods to join or increase coverage under the FEGLI program. To date, there have been five FEGLI open enrollment periods that have allowed individuals that waived or canceled their FEGLI coverage to elect the desired insurance coverage and options without having to cancel their prior waiver of insurance. An additional Open season was held in the fall of 2004.

The open enrollment period held in 1981 is the only open enrollment period that required all eligible employees to complete another FEGLI enrollment form designating their choice of options under the FEGLI program. All waivers of Basic insurance coverage before February 28, 1981, were automatically canceled effective on the 1st day the employee entered on duty in pay status on or after April 1, 1981.

Beneficiary

A participant may change their beneficiary at any time by completing and filing a SF 2823. If a beneficiary is not identified, the benefit will be paid by Order of Precedence.

Death Benefit

The death benefit is payable regardless of the cause of death and is always the amount for which the participant is insured in the date the death occurs. Benefits are payable when a participant sustains an injury; by accidental means, and within 90 days after the injury, the participant dies or loses a limb or eyesight. The accidental dismemberment benefit is based on the amount of insurance on the date the accident occurs and the extent of the loss of the dismemberment.

Claims

All claims for benefits will be adjudicated and paid by the Office of FEGLI. Benefits are payable upon submission of a claim, satisfactory proof of loss and the completion and filing of the appropriate forms.

Records and Forms

There are many records and forms for the FEGLI program. FEGLI insurance forms must be filed in the OPF and kept as a permanent record, unless a form contains specific instructions to do something different.

Back to CES HR Guidance Index

 


01/03/2012