81 FR 26997 - Federal Employees' Group Life Insurance Program: Options B and C

OFFICE OF PERSONNEL MANAGEMENT

Federal Register Volume 81, Issue 87 (May 5, 2016)

The U.S. Office of Personnel Management (OPM) is issuing a final rule to amend the Federal Employees' Group Life Insurance (FEGLI) regulation to provide a second reduction election opportunity for annuitants and compensationers enrolled in FEGLI Option B and Option C. This new procedure replaces the procedure by which FEGLI enrollees elect the allowable multiples of coverage they wish to continue during retirement or while receiving compensation.

[Federal Register Volume 81, Number 87 (Thursday, May 5, 2016)]
[Rules and Regulations]
[Pages 26997-26998]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-10539]



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Federal Register / Vol. 81, No. 87 / Thursday, May 5, 2016 / Rules 
and Regulations

[[Page 26997]]



OFFICE OF PERSONNEL MANAGEMENT

5 CFR Part 870

RIN 3206-AM96


Federal Employees' Group Life Insurance Program: Options B and C

AGENCY: U.S. Office of Personnel Management.

ACTION: Final rule.

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SUMMARY: The U.S. Office of Personnel Management (OPM) is issuing a 
final rule to amend the Federal Employees' Group Life Insurance (FEGLI) 
regulation to provide a second reduction election opportunity for 
annuitants and compensationers enrolled in FEGLI Option B and Option C. 
This new procedure replaces the procedure by which FEGLI enrollees 
elect the allowable multiples of coverage they wish to continue during 
retirement or while receiving compensation.

DATES: Effective May 5, 2016.

ADDRESSES: Send written comments to Ronald Brown, Planning and Policy 
Analysis, U.S. Office of Personnel Management, Room 4312, 1900 E Street 
NW., Washington, DC 20415. You may also submit comments using the 
Federal eRulemaking Portal: http://www.regulations.gov. Follow the 
instructions for submitting comments.

FOR FURTHER INFORMATION CONTACT: Ronald Brown, Policy Analyst, (202) 
606-0004, or by email to [email protected].

SUPPLEMENTARY INFORMATION: On October 30, 1998, Public Law 105-311,112 
Stat. 2950, was signed into law. This law, the Federal Employees Life 
Insurance Improvement Act, changed many parts of the FEGLI Program. 
Before the enactment of Public Law 105-311, Option B and C coverage 
began to reduce for annuitants when they reached age 65. Both coverages 
reduced by 2% per month until there was no coverage left. This 
reduction was automatic, and annuitants had no choice.
    Public Law 105-311 allows annuitants and persons becoming insured 
as compensationers to make an election at retirement as to whether they 
want their Option B and Option C coverage to reduce.
    Previous FEGLI regulations provided that shortly before an 
individual's 65th birthday, he/she would receive a reminder notice, 
showing what reduction the annuitant/compensationer elected at the time 
of retirement and what the premiums would be for coverage beyond age 
65. The individual then had an opportunity to change his/her reduction 
election; including choosing to have some multiples of Optional 
insurance reduce and others not reduce. For persons who were already 
over age 65 at the time of retirement or becoming insured as a 
compensationer, the reminder notice was sent as soon as the retirement 
processing was completed.
    On October 1, 2010, OPM published FEGLI final regulations (75 FR 
60573) with miscellaneous changes, clarifications, and corrections, 
including a change made to 5 CFR 870.705(b) and 870.705(d) ending the 
reduction election opportunity at age 65.
    OPM published a FEGLI proposed rule in the Federal Register, 78 FR 
77365, December 23, 2013, proposing to reverse the changes to 5 CFR 
870.705(b) and 870.705(d) authorized on October 1, 2010, and inviting 
public comments. The December 23, 2013 rule proposed to restore the 
second election opportunity for annuitants and compensationers who 
attain age 65. OPM received no comments and will implement the rule as 
proposed.

Changes

    Public Law 105-311, the Federal Employees Life Insurance 
Improvement Act, 112 Stat. 2950, enacted October 30, 1998, amended 
chapter 87 of title 5, U.S. Code, to allow retiring employees to elect 
either No Reduction or Full Reduction for their Option B and Option C 
coverage. This election was to be made at the time of retirement, the 
same as the election for Basic insurance. Implementing this provision 
required programming changes to the electronic records system for 
annuitants to allow for ``mixed'' elections, i.e., electing reductions 
for some coverage, but not for other coverage. While these system 
changes were being made, annuitants were required to elect either No 
Reduction or Full Reduction for all Option B and Option C multiples at 
the time of retirement. Then, shortly before the annuitant's 65th 
birthday, the insured was given a second opportunity to make a 
reduction election, this time being allowed to choose No Reduction for 
some multiples and Full Reduction for others. While the law states that 
the reduction election must be made at the time of retirement, 
enrollees affected by this provision have expressed interest in having 
a second reduction election opportunity. Thus, we are restoring the 
opportunity for a second election at age 65. This change can be found 
in Sec.  870.705(b) and Sec.  870.705(d).

Regulatory Impact Analysis

    OPM has examined the impact of this rule as required by Executive 
Order 12866 and Executive Order 13563, which directs agencies to assess 
all costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public, 
health, and safety effects, distributive impacts, and equity). A 
regulatory impact analysis must be prepared for major rules with 
economically significant effects of $100 million or more in any one 
year. This rule is not considered a major rule because there will be a 
minimal impact on costs to Federal agencies.

Regulatory Flexibility Act

    I certify that this regulation will not have a significant economic 
impact on a substantial number of small entities because the regulation 
only affects life insurance benefits of Federal employees and retirees.

Executive Order 12866, Regulatory Review

    This rule has been reviewed by the Office of Management and Budget 
in accordance with Executive Order 12866.

Federalism

    We have examined this rule in accordance with Executive Order 
13132, Federalism, and have determined that this rule will not have any 
negative impact on the rights, roles and

[[Page 26998]]

responsibilities of State, local, or tribal governments.

List of Subjects in 5 CFR Part 870

    Administrative practice and procedure, Government employees, Life 
insurance, Retirement.

U.S. Office of Personnel Management.
Beth F. Cobert,
Acting Director.

    Accordingly, OPM is amending 5 CFR part 870 as follows:

PART 870--FEDERAL EMPLOYEES' GROUP LIFE INSURANCE PROGRAM

0
1. The authority citation for 5 CFR part 870 is revised to read as 
follows:

    Authority:  5 U.S.C. 8716; Subpart J also issued under section 
599C of Pub. L. 101-513, 104 Stat. 2064, as amended; Sec. 
870.302(a)(3)(ii) also issued under section 153 of Pub. L. 104-134, 
110 Stat. 1321; Sec. 870.302(a)(3) also issued under sections 
11202(f), 11232(e), and 11246(b) and (c) of Pub. L. 105-33, 111 
Stat. 251, and section 7(e) of Pub. L. 105-274, 112 Stat. 2419; Sec. 
870.302(a)(3) also issued under section 145 of Pub. L. 106-522, 114 
Stat. 2472; Secs. 870.302(b)(8), 870.601(a), and 870.602(b) also 
issued under Pub. L. 110-279, 122 Stat. 2604; Subpart E also issued 
under 5 U.S.C. 8702(c); Sec. 870.601(d)(3) also issued under 5 
U.S.C. 8706(d); Sec. 870.703(e)(1) also issued under section 502 of 
Pub. L. 110-177, 121 Stat. 2542; Sec. 870.705 also issued under 5 
U.S.C. 8714b(c) and 8714c(c); Public Law 104-106, 110 Stat. 521.

Subpart G--Annuitants and Compensationers

0
2. Amend Sec.  870.705 by revising paragraph (b)(3)(ii), adding 
paragraph (b)(4), and revising paragraph (d)(1)(i) to read as follows:


Sec.  870.705  Amount and election of Option B and Option C.

* * * * *
    (b) * * *
    (3) * * *
    (ii) Except as provided in paragraph (b)(4) of this section, after 
reaching age 65, an annuitant or compensationer cannot change from Full 
Reduction to No Reduction.
    (4)(i) Shortly before an annuitant or compensationer's 65th 
birthday, an annuitant's retirement system will send a reminder about 
the post-age-65 reduction election he/she made and will offer the 
individual a chance to change the initial election made at the time of 
retirement.
    (ii) If the individual is already 65 or older at the time of 
retirement or becoming insured as a compensationer, the retirement 
system will process the retirement using the current Continuation of 
Life Insurance Coverage (SF 2818) on file, send the reminder, and give 
the opportunity to change the election as soon as the retirement 
processing or compensation transfer is complete.
    (iii) If the individual assigned his/her insurance as provided in 
subpart I of this part, and if the employee elected No Reduction for 
Option B coverage at the time of retirement or becoming insured as a 
compensationer, the retirement system will send the reminder notice for 
Option B coverage to the assignee.
    (iv) An annuitant or compensationer who wishes to change his/her 
reduction election must return the notice by the end of the month 
following the month in which the individual turns 65, or if already 
over age 65, by the end of the 4th month after the date of the letter. 
An annuitant or compensationer who does not return the election notice 
will keep his/her initial election or the default election, as 
applicable.
* * * * *
    (d)(1) * * *
    (i) Annuitants and compensationers who were under age 65 were 
notified of the option to elect No Reduction. The retirement system 
will send these individuals an actual election notice before their 65th 
birthday, as provided in paragraph (b)(4) of this section.
* * * * *
[FR Doc. 2016-10539 Filed 5-4-16; 8:45 am]
 BILLING CODE 6325-63-P