Federal Register: December 30, 2002 (Volume 67, Number 250)
DOCID: FR Doc 02-32891
OFFICE OF PERSONNEL MANAGEMENT
Personnel Management Office
NOTICE: NOTICES
ACTION: Federal Employees’ Group Life Insurance Program:
DOCUMENT ACTION: Notice of new age bands and premiums for the Federal Employees' Group Life Insurance Program.
SUBJECT CATEGORY:
Federal Employees' Group Life Insurance Program: New Age Bands and New Premiums
EFFECTIVE DATES: January 1, 2003.
DOCUMENT SUMMARY:
The Office of Personnel Management (OPM) has completed a study of funding and claims experience within the Federal Employees' Group Life Insurance (FEGLI) Program. OPM is announcing additional age bands for Optional insurance and revised premiums throughout the Program. This information will be maintained on the FEGLI Web site at www.opm.gov/insure/life.
SUMMARY:
New age bands and premiums,
SUPPLEMENTAL INFORMATION
OPM is issuing interim regulations in a separate Federal Register publication removing the Federal Employees' Group Life Insurance (FEGLI) premiums and age bands from 5 CFR 870 to streamline the process OPM uses to announce premium changes. The premium rates for all coverage categories within the FEGLI Program are specific to the experience of the group and are not based on mortality rates within the general population. The rates represent actuarial estimates of premium income necessary to pay future expected benefits costs. In 1999, OPM made premium changes for all FEGLI options. Most premiums remained unchanged or were lowered. A few rates increased due to the experience of the group and were necessary to sufficiently fund the projected future increases.
The Federal Employees Life Insurance Improvement Act, Pub. L. 105 311, (112 Stat. 2950) provided expanded choices for employees, retirees, and compensationers under Option B and Option C coverage. Eligible employees upon retirement or entitlement to receipt of compensation, may elect unreduced Option B and Option C coverage by paying the full premium for unreduced coverage after age 65. Previously, the Option B and Option C coverage of annuitants began to reduce at age 65, and premiums stopped. Since most covered individuals over age 65 were annuitants whose coverage was reducing, there was not need for an upper age band beyond age 60 prior to the enactment of Public Law 105311. This change will necessitate a premium adjustment since former rates were based on coverage declaining 2 percent per month after age 65 for 50 months, at which point the coverage ended. The expanded coverage now available to retired enrollees has changed the demographic makeup of the 60+ age band.
Current premium levels for older enrollees in the Option B and Option C category are insufficient to meet the cost of the expanded coverage. The legislative structure of the FEGLI Program assumes that we set premiums for each age band independently of the other bands, so that each age band is financially selfsupporting. The additional Option C age bands (Ages 6569, and Ages 70 and Over) were implemented by OPM effective April 24, 2000. The addition of Option B and Option C new premium levels at older age bands will eliminate the need for younger enrollees to subsidize the cost of insuring older enrollees. Without them, younger FEGLI enrollees currently in the 60+ age band will disproportionately bear the premium costs for the increasing number of older Option B and Option C (those 65 and over) enrollees. This is required to ensure long term premium adequacy as the average age of Federal employees increases and there is a boom in Federal retirements in the coming years. The number of enrollees who are over age 65 is projected to grow by 400% within twenty years.
Premiums will be lower for Basic insurance, the post65 No Reduction election, and for the majority of enrollees in Option B. There are not changes to the Option A premiums. Annuitants with the post65 50% Reduction election will have a small increase in their premiums. Older enrollees (age 65 and above) in Option B will see their premiums increases. However, Option B enrollees between age 45 and 64 will have a decrease in premiums. The oldest enrollees (age 75 and above) in Option C will also experience a premium increase.
Premiums for the new Option B age bands (Ages 6569), (Ages s70 74), (Ages 7579) and Ages 80 & Over) are being phasedin over a 3year period. This Federal Register Notice reflects the premiums for phase one. Future Federal Register notices will be issued for both phase 2 and phase 3. We will issue guidance to all agencies for the purpose of counseling employees and we will notify affected annuitants directly. The FEGLI premium rates will be maintained on the FEGLI Web site www.opm.gov/insure/life.
The new FEGLI premium rates are as follows:
FEGLI Basic Premium for $1,000 of Insurance
Biweekly Monthly
Enrollee Premium.............................. $0.1500 $0.3250
Government Premium............................ 0.0750 0.1625
Total Premium............................. 0.2250 0.4875
The premiums for compensationers who are paid every four weeks are two times the biweekly premium.
Annuitant Basic Premium per $1,000 of Insurance
Monthly Monthly
withholding withholding
for each for each
Election $1,000 of your $1,000 of your
BIA before age BIA after age
65 65
75% Reduction........................... $0.3250 (\1\)
50% Reduction........................... 0.9250 $0.60 [[Page 79661]]
No Reduction............................ 2.155 1.83 \1\ NoneBasic insurance is free.
Compensationer Basic Premium per $1,000 of Insurance
Withholding Withholding
every four every four
weeks for each weeks for each
Election $1,000 of your $1,000 of your
BIA before age BIA after age
65 65
75% Reduction........................... $0.3000 (\1\)
50% Reduction........................... 0.8600 $0.5600
No Reduction............................ 1.9800 1.680 \1\ NoneBasic insurance is free.
Option A Premium per $10,000 of Insurance
Age band Biweekly Monthly
Under age 35.................................. $0.30 $0.65
Ages 3539.................................... 0.40 0.87
Ages 4044.................................... 0.60 1.30
Ages 4549.................................... 0.90 1.95
Ages 5054.................................... 1.40 3.03
Ages 5559.................................... 2.70 5.85
Age 60 & Over................................. 6.00 13.00
The premiums for compensationers who are paid every four weeks are two times the biweekly premium.
Option B Premium per $1,000 of Insurance
Age band Biweekly Monthly
Under age 35.................................. $0.03 $0.065
Ages 3539.................................... 0.04 0.087
Ages 4044.................................... 0.06 0.130
Ages 4549.................................... 0.09 0.195
Ages 5054.................................... 0.14 0.303
Ages 5559.................................... 0.28 0.607
Ages 6064.................................... 0.60 1.300
Ages 6569.................................... 0.71 1.538
Ages 7074.................................... 0.87 1.885
Ages 7579.................................... 1.07 2.318
Ages 80 & Over................................ 1.27 2.752
The premiums for compensationers who are paid every four weeks are two times the biweekly premium.
Option C Premium per Multiple of Insurance
Age band Biweekly Monthly
Under age 35.................................. $0.27 $0.59
Ages 3539.................................... 0.34 0.74
Ages 4044.................................... 0.46 1.00
Ages 4549.................................... 0.60 1.30
Ages 5054.................................... 0.90 1.95
Ages 5559.................................... 1.45 3.14
Ages 6064.................................... 2.60 5.63
Ages 6569.................................... 3.00 6.50
Ages 7074.................................... 3.40 7.37 [[Page 79662]]
Ages 7579.................................... 4.50 9.75
Ages 80 & Over................................ 6.00 13.00
The premiums for compensationers who are paid every four weeks are two times the biweekly premium.
U.S. Office of Personnel Management.
Kay Coles James,
Director.
[FR Doc. 0232891 Filed 122702; 8:45 am]
BILLING CODE 632550M
FOR FURTHER INFORMATION CONTACT
Kathleen Healy, (202) 606-0004.