Unlike Basic insurance, enrollment in Option A isn’t automatic. Image: Red Vector/Shutterstock.com
By: Reg JonesLast week, I wrote about the Basic Insurance coverage you automatically get under the Federal Employees’ Group Life Insurance program, unless you decline that benefit. This time I want to explain the first of three optional insurance offerings: Option A (Standard Optional Insurance).
While the federal government has secured group rates for all the insurance options provided under the FEGLI program, there’s one big difference between the cost to you of Basic insurance and the cost of optional insurance. The government pays for one-third of the cost of your Basic insurance. However, you’ll pay 100 percent of the cost if you elect any optional insurance coverage.
Under Option A, any employee who is covered by Basic Insurance may buy an additional $10,000 of coverage. The premiums for Option A vary by age. They start at $0.20 bi-weekly for each $1,000 of coverage and ends at $6.00 for each $1,000 if you are 60 or older.
The monthly rates are $0.43 for every $1,000 up to $13.00. If you are retired and 65 or older, you don’t have to pay any further premiums; however, your coverage will decline by 2 percent per month until it reaches 25 percent of its original face value.
Note: Electing Option A coverage might have been a way to address substantial financial needs for survivors back in 1968 when the $10,000 figure was set. At the time, that was more than the salaries of many federal employees. Today, it would function more to cover a defined need—for example, funeral costs.
Unlike Basic insurance, enrollment in Option A isn’t automatic. If you want that, you’ll have to submit a completed Standard Form 2817, Life Insurance Election, to your personnel office within 31 days of your appointment to a position that provides FEGLI coverage. You can get a copy from your personnel office or download a copy at www.opm.gov/forms/pdf_fill/sf2817.pdf.
If you are enrolled in Option A, you can always cancel it, unless you have assigned that benefit to someone else. I’ll fill you in on the assignment of benefits in a future article.
Next week I’ll fill you in on the coverage and cost of Option B coverage.
Former head of retirement and insurance policy at the Office of Personnel Management, and longtime FEDweek contributor, Reg Jones is known throughout the federal workforce community as an authority on pay and benefits.
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See also
Alternative Federal Retirement Options; With Chart
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