Come January, you might see your Federal Employees’ Group Life Insurance deduction on your paycheck rise or fall depending on the plan you are enrolled in. Older workers and retirees will be the hardest hit.
The U.S. Office of Personnel Management recently issued a notice in the Federal Register informing federal workers and federal retirees that they are hiking rates on some FEGLI plans while decreasing rates on other plans.
According to the notice, the following premiums will be altered: Option A, Option B, Option C and Post-Retirement Basic Insurance premiums.
These premium revisions were made because of “updated mortality and claims rates from actual program experience within each FEGLI category,” the notice states. In other words, they are revising premiums based on different mortality and claims projections (the frequency of life insurance claims made by individuals or families).
“The premium rates in the FEGLI program represent estimates of premium income necessary to pay future expected benefits costs. The rates for all coverage categories are specific to the experience of the FEGLI group and are not based on mortality rates within the general population. Actuarial analysis of changing mortality rates makes periodic premium adjustments necessary,” the Federal Register notice states.
According to OPM, the rate changes will become effective on or after January 1, 2016. The notice also offers charts breaking down the new premium rates.
If you’re new to FEGLI, it is a government-sponsored life insurance program that was established in 1954. OPM claims it is the “largest group life insurance program in the world, covering over four million federal employees and retirees, as well as many of their family members.”
Most federal workers are eligible to enroll. However, some workers are excluded by law or regulation. OPM published eligibility criteria on their website. You can also find enrollment information on their website
However keep in mind that FEGLI rates are subject to frequent revisions. According to Federal Soup, this most recent rate revision will entail premium decreases, increases, or no changes, to the following plans come January 2016: “There will be no changes to premium rates for Basic Insurance for employees. OPM also said most premium rates for Option A, Option B, and Option C FEGLI coverage will decrease. However, premium rates for Post-Retirement Basic Insurance with 50 percent Reduction and No Reduction will increase, as will rates for older age bands of Options B and C.”
As you can see, it can be quite complex. Rates go up and down, across plans, all the time. Also keep in mind, FEGLI coverage may be inexpensive when you’re young, but as you age, your FEGLI premium may increase — a lot, cutting into your bottom line and your ability to secure a distinguished retirement. These premiums are often not fixed. They can increase significantly over time.
Ultimately, FEGLI may not be your most cost effective option for life insurance. Please contact one of our benefit specialists for a free consultation. There may be better life insurance options for you than what the government offers more suited to your particular situation and needs — as a federal employee and as a retired federal worker.
We’ll guide you through the process. We’ll help you cut through the FEGLI complexity to make it simple and easy to understand.