OPM lifts feds' lifeinsurance limitations

There has been a change made to the federal employee life insurance program that could be beneficial to many federal workers and their families. The change applies to holders of Option C family life insurance under the Federal Employees Group Life Insurance (FEGLI) program, which provides coverage for employees' spouses and eligible dependent children.

When you elect Option C, all of your eligible family members are covered automatically. This includes your spouse and unmarried dependent children under age 22. It also covers children over 22 who are incapable of self-support because of a mental or physical disability that began before the child reached that age. Eligible dependent children include natural children, adopted children, stepchildren and foster children (if they live with the family as part of a parent/child relationship).

Most federal employees with families elect Option C when they enter the federal work force and decide to participate in FEGLI. Employees can elect up to five multiples of coverage, with each multiple representing a unit equal to $5,000 for the employee's spouse and $2,500 for each eligible dependent child. If you elect two multiples, you have two multiples of coverage on your spouse and two multiples on each of your eligible dependent children. You cannot elect a different number of multiples for your spouse and eligible dependent children.

The cost for Option C benefits depends on employee age. Federal employees under 35 pay 27 cents per pay period. Premiums are 34 cents per pay period for employees between 35 and 39. The rates keep going up as employees grow older.

If you have basic insurance already, you may elect Option C or increase your multiples based on what the Office of Personnel Management calls a "life event." Life events are marriage, divorce, death of a spouse and having children (through natural birth, adoption or foster care). If you changed your Option C family coverage under FEGLI between Oct. 30, 1998, and April 23, 1999, because of a life event, you now can re-evaluate your coverage needs and modify your choices. That's because OPM recently announced that coverage limitations that were in effect during that time period have been lifted.

OPM has not said why these limitations have been lifted. But the bottom line is that if you changed your Option C coverage during this period, you can rethink your decision. During that period, if you elected or increased Option C coverage because of marriage, you were permitted to elect additional multiples of coverage that corresponded to the number of eligible family members added as a result of the marriage.

For example, if your family size increased by three because you married someone with two children, you were allowed to purchase up to only three additional multiples of option C coverage, corresponding to the spouse and two children added to your family. You now can retroactively choose Option C insurance for any number of multiples, up to the maximum of five. The amount of insurance you can buy is no longer tied to the number of new family members.

If you elected Option C coverage during this period, you now can choose more, less or the same amount of coverage. The increased Option C coverage is retroactive to April 24, 1999, but there will be no free lunch. If you elect additional coverage, you will pay the back premiums.

If you were presented with the same restrictions after April 24, 1999, you also will be given the opportunity to retroactively elect additional coverage. But the change in coverage will be retroactive to the date of your current Option C coverage election after April 24, 1999.

If you are affected by this change, you should review your insurance requirements carefully. Anyone with a spouse or dependent child whose health has deteriorated since electing Option C coverage obviously should elect whatever additional coverage he or she can get. If your spouse and children are healthy, electing additional Option C coverage still may be a good idea, but you should shop around carefully and see what kind of deal you can get from a private insurance company for similar coverage.

Another possibility is considering permanent life insurance. Many parents like to buy permanent life insurance for their children when they are young and when policies are relatively inexpensive.

--Bureaucratus is a retired federal employee who contributes regularly to Federal Computer Week.

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