Some Feds Will See Life Insurance Rate Hikes in January

Some federal employees and retirees who have life insurance will see their premium rates change as of Jan. 1, 2016.

The Office of Personnel Management announced that some premiums under the Federal Employees’ Group Life Insurance Program (FEGLI) will increase, others will decrease, and some rates will stay the same.

Here are the highlights from OPM’s announcement:

• No changes to premium rates for Basic Insurance for employees.
• Most premium rates for Option A, Option B, and Option C will decrease.
• Rates under Post-Retirement Basic Insurance with a 50 percent reduction and no reduction will increase.
• Rates under the older age bands of Option B and Option C will increase.

“The legislative structure of the FEGLI program assumes that we set premium rates for each age band independently of the other bands so that each age band is financially self-supporting,” said an Aug. 7 notice from OPM published in the Federal Register.

Click here for the FEGLI rates as of Jan. 1, 2016. And check out OPM’s FEGLI handbook as of April 2014.

OPM also announced there will be a FEGLI Open Season from Sept. 1, 2016, through Sept. 30, 2016, but the effective dates for any changes to coverage will be delayed about a year – to the beginning of the first full pay period on or after Oct. 1, 2017. FEGLI Open Seasons are rare: The last one was in 2004. Retirees can never increase their FEGLI coverage, but employees and retirees can reduce or cancel FEGLI at any time regardless of Open Season.

Federal employees are automatically enrolled in basic life insurance when they are hired, and can choose to add other options, based on different factors, including dependents. The government pays one-third of the premium cost for basic insurance, and the employee pays two-thirds. (The Postal Service pays the whole tab for basic insurance for its employees.) Employees who choose other options outside of basic insurance foot the entire bill. According to OPM, 73 percent of federal employees in 2013 were enrolled in the FEGLI program.

For an analysis of FEGLI, check out this 2012 Retirement Planning column from Government Executive columnist Tammy Flanagan.

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