[Federal Register Volume 60, Number 85 (Wednesday, May 3, 1995)]
[Proposed Rules]
[Pages 21759-21772]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-10778]



 ========================================================================
 Proposed Rules
                                                 Federal Register
 ________________________________________________________________________
 
 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
 
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 

  Federal Register / Vol. 60, No. 85 / Wednesday, May 3, 1995 / 
Proposed Rules  
[[Page 21759]]

OFFICE OF PERSONNEL MANAGEMENT

5 CFR Parts 870, 871, 872, 873, and 874

RIN 3206-AF32


Federal Employees' Group Life Insurance Program: Merger of Life 
Insurance Regulations

AGENCY: Office of Personnel Management.

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: The Office of Personnel Management (OPM) is issuing proposed 
regulations to combine the five parts of title 5 of the Code of Federal 
Regulations relating to the Federal Employees' Group Life Insurance 
(FEGLI) Program. This will ease administration and aid in understanding 
the Program. We are also simplifying the language and incorporating 
policy information from FPM Supplement 870-1, which is being abolished 
as of December 31, 1994.

DATES: We must receive comments on or before July 3, 1995.

ADDRESSES: Send your comments to Lucretia F. Myers, Assistant Director 
for Insurance Programs, Retirement and Insurance Group, Office of 
Personnel Management, P.O. Box 57, Washington, DC 20044; deliver them 
to OPM, Room 3451, 1900 E Street NW., Washington, DC; or FAX them to 
202-606-0633.

FOR FURTHER INFORMATION CONTACT: Karen Leibach, 202-606-0004.

SUPPLEMENTARY INFORMATION: The FEGLI Act of 1980 made sweeping changes 
in the Program, including establishing two new forms of optional 
coverage. At that time, we decided to pattern the regulations after the 
law by setting up separate parts of the Code for each of the types of 
insurance (basic, standard optional, additional optional, and family 
optional coverages). Although we recognized that this method of 
translating the law into regulations would result in a lot of 
duplication, we believed that the format helped OPM and agencies put 
the new provisions in place. We believe that the regulations can now be 
merged to eliminate the duplication, without losing clearness or 
content.
    The proposed merger involves deleting parts 871, 872, 873, and 874 
and combining the information now contained in those parts into an 
expanded part 870. This results in a complete presentation of material 
in one place.
    In addition to merging the regulations, we have reorganized the 
material; incorporated some material formerly found in FPM Supplement 
870-1, which is being abolished as of December 31, 1994; and simplified 
the language to make the regulations easier to understand.

Regulatory Flexibility Act

    I certify that these regulations will not have a significant 
economic impact on a substantial number of small entities, because the 
regulations will affect only Federal employees and annuitants.

List of Subjects in 5 CFR Parts 870, 871, 872, 873, and 874

    Administrative practice and procedure, Government employees, 
Hostages, Iraq, Kuwait, Lebanon, Reporting and recordkeeping 
requirements, Life insurance, Retirement.

Office of Personnel Management.
James B. King,
Director.

    Accordingly, OPM proposes to amend title 5, Code of Federal 
Regulations, as follows:
    Part 870 is revised to read as follows:

PART 870--FEDERAL EMPLOYEES' GROUP LIFE INSURANCE PROGRAM

Subpart A--Administration and General Provisions

Sec.
870.101  Definitions.
870.102  The policy.
870.103  Correction of errors.
870.104  Initial decision and reconsideration.

Subpart B--Types and Amount of Insurance

870.201  Types of insurance.
870.202  Basic insurance amount (BIA).
870.203  Annual rates of pay.
870.204  Amount of optional insurance.
870.205  Accidental death and dismemberment.

Subpart C--Eligibility

870.301  Eligibility for life insurance.
870.302  Exclusions.

Subpart D--Cost of Insurance

870.401  Withholdings and contributions for basic insurance.
870.402  Withholdings for optional insurance.
870.403  Withholdings and contributions provisions that apply to 
both basic and optional insurance.
870.404  Direct premium payments under 5 U.S.C. chapter 84 (Federal 
Employees' Retirement System--FERS).

Subpart E--Coverage

870.501  Basic insurance: effective dates of automatic coverage.
870.502  Basic insurance: waiver/cancellation of insurance.
870.503  Basic insurance: cancelling a waiver.
870.504  Optional insurance: election.
870.505  Optional insurance: waiver/cancellation of insurance.
870.506  Optional insurance: cancelling a waiver.
870.507  Open enrollment periods.
870.508  Nonpay status.
870.509  Transfers to international organizations.

Subpart F--Termination and Conversion

870.601  Termination of basic insurance.
870.602  Termination of optional insurance.
870.603  Conversion of basic and optional insurance.

Subpart G--Annuitants and Compensationers

870.701  Eligibility for life insurance.
870.702  Election of basic insurance.
870.703  Amount of life insurance.
870.704  Reinstatement of life insurance.
870.705  Waiver or suspension of annuity or compensation.
870.706  Reemployed annuitants.
870.707  MRA-plus-10 annuitants.

Subpart H--Order of Precedence and Designation of Beneficiary

870.801  Order of precedence and payment of benefits.
870.802  Designation of beneficiary.
870.803  Child incapable of self-support.

Subpart I--Assignments of Life Insurance

870.901  Assignments permitted.
870.902  Making an assignment.
870.903  Effective date of assignment.
870.904  Amount of insurance.
870.905  Withholdings.
870.906  Cancellation of insurance.
870.907  Termination and conversion.
870.908  Annuitants and compensationers.
870.909  Designations and changes of beneficiary.
870.910  Notification of current addresses. [[Page 21760]] 

Subpart J--Benefits for United States Hostages in Iraq and Kuwait and 
United States Hostages Captured in Lebanon

870.1001  Purpose.
870.1002  Definitions.
870.1003  Coverage and amount of insurance.
870.1004  Effective date of insurance.
870.1005  Premiums.
870.1006  Cancellation of insurance.
870.1007  Termination and conversion.
870.1008  Order of precedence and designation of beneficiary.
870.1009  Responsibilities of the U.S. Department of State.

    Authority: 5 U.S.C. 8716.

Subpart A--Administration and General Provisions


Sec. 870.101  Definitions.

    Annuitant means a former employee entitled to an annuity under a 
retirement system established for employees. This includes the 
retirement system of a nonappropriated fund instrumentality of the 
Department of Defense or the Coast Guard.
    Assign and assignment refer to a judge's irreversible transfer to 
another individual, corporation, or trustee all ownership of FEGLI 
coverage (except Option C).
    Assignee means the individual, corporation, or trustee to which a 
judge irreversibly transfers ownership of FEGLI coverage (except Option 
C).
    Child, as used in the definition of family member, means a 
legitimate child, an adopted child, a stepchild who lives with the 
employee or former employee in a regular parent-child relationship, or 
a recognized natural child. It does not include a stillborn child, a 
grandchild, or a foster child. The child must be under age 22, or if 
over age 22, must be incapable of self-support because of a mental or 
physical disability which existed before the child reached age 22.
    Child, as used in the order of precedence, means a legitimate 
child, an adopted child, or a recognized natural child. It does not 
include a stillborn child, a stepchild, a grandchild, or a foster 
child. An individual who has reached age 18 is considered an adult. 
However, if the age of adulthood where the individual has his/her legal 
residence is set at a lower age, the individual is considered an adult 
upon reaching that lower age. Adopted children do not inherit under the 
order of precedence stated in 5 U.S.C. 8705 from their birth parents, 
other than as designated beneficiaries, but inherit from their adoptive 
parents. However, a child who is adopted by the spouse of a birth 
parent inherits from that birth parent.
    Compensation means compensation under subchapter I of chapter 81 of 
title 5, United States Code, which is payable because of an on-the-job 
injury or disease.
    Compensationer means an employee or former employee who is entitled 
to compensation and whom the Department of Labor determines is unable 
to return to duty.
    Date of retirement, as used in 5 U.S.C. 8706(b)(1)(A), means the 
starting date of annuity.
    Dependent means living with or receiving support from the insured 
individual.
    Duly appointed representative of the insured's estate means an 
individual named in a court order granting the individual the authority 
to receive, or the right to possess, the insured's property; the order 
must be issued by a court having jurisdiction over the insured's 
estate. Where the law of the insured's legal residence provides for the 
administration of estates through alternative procedures which do away 
with the need for a court order, this term also means an individual who 
shows that he/she is entitled to receive, or possess, the insured's 
property under the terms of those alternative procedures.
    Employee means an individual defined by section 8701(a) of title 5, 
United States Code.
    Employing office means the agency office or retirement system 
office that has responsibility for life insurance actions.
    (a) The Administrative Office of the United States Courts is the 
employing office for judges of the following courts:
    (1) All United States Courts of Appeals;
    (2) All United States District Courts;
    (3) The Court of International Trade;
    (4) The Claims Court; and
    (5) The District Courts of Guam, the Northern Mariana Islands, and 
the Virgin Islands.
    (b) The Washington Headquarters Services is the employing office 
for judges of the United States Court of Military Appeals.
    (c) The United States Tax Court is the employing office for judges 
of the United States Tax Court.
    (d) The United States Court of Veterans Appeals is the employing 
office for judges of the United States Court of Veterans Appeals.
    Family member means a spouse (including a valid common law 
marriage) and unmarried dependent child(ren).
    Immediate annuity means (1) an annuity that begins no later than 1 
month after the date the insurance would otherwise stop, and (2) an 
annuity under Sec. 842.204(a)(1) of this title for which the starting 
date has been postponed under Sec. 842.204(c) of this title.
    Judge means an individual appointed as a Federal justice or judge 
under Article I or Article III of the Constitution. Administrative law 
judges, bankruptcy judges, and magistrates are not judges for purposes 
of assignment of FEGLI coverage.
    OFEGLI means the Office of Federal Employees' Group Life Insurance, 
which makes payments to beneficiaries under the policy.
    OPM means the Office of Personnel Management.
    OWCP means the Office of Workers' Compensation Programs, U.S. 
Department of Labor, which administers subchapter I of chapter 81 of 
title 5, United States Code.
    Parent means the mother or father of a legitimate child or an 
adopted child. The term parent includes the mother of a recognized 
natural child; it also includes the father of a recognized natural 
child if the recognized natural child meets the definition provided 
below.
    Recognized natural child, with respect to paternity, is one for 
whom the father meets one of the following:
    (a) (1) Has acknowledged paternity in writing;
    (2) Was ordered by a court to provide support;
    (3) Before his death, was pronounced by a court to be the father;
    (4) Was established as the father by a certified copy of the public 
record of birth or church record of baptism, if the insured was the 
informant and named himself as the father of the child; or
    (5) Established paternity on public records, such as records of 
schools or social welfare agencies, which show that with his knowledge 
the insured was named as the father of the child.
    (b) If paternity is not established by paragraph (a) of this 
definition, such evidence as the child's eligibility as a recognized 
natural child under other State or Federal programs or proof that the 
insured included the child as a recognized natural child on his income 
tax returns may be considered to establish paternity.
    Reconsideration means the final level of administrative review of 
an agency's initial decision to determine if the employing office 
followed the law and regulations correctly in making the initial 
decision.
    Service means civilian service which is creditable under subchapter 
III of chapter 83 or chapter 84 of title 5, United States Code. This 
includes [[Page 21761]] service under a nonappropriated fund 
instrumentality of the Department of Defense or the Coast Guard for an 
individual who elected to remain under a retirement system established 
for employees described in section 2105(c) of title 5.
    Underdeduction means a failure to withhold the required amount of 
life insurance deductions from an individual's pay, annuity, or 
compensation. This includes nondeductions (when none of the required 
amount was withheld) and partial deductions (when only part of the 
required amount was withheld).


Sec. 870.102  The policy.

    Basic, Option A, Option B, and Option C benefits are payable 
according to a contract with the company or companies that issue a 
policy under section 8709 of title 5, United States Code. Any court 
action to obtain money due from an insurance policy must be taken 
against the company that issues the policy.


Sec. 870.103  Correction of errors.

    (a) The employing office may make corrections of administrative 
errors regarding coverage or changes in coverage. Retroactive 
corrections are subject to the provisions of Sec. 870.401(f).
    (b) OPM may order correction of an error after reviewing evidence 
that it would be against equity and good conscience not to do so.


Sec. 870.104  Initial decision and reconsideration.

    (a) (1) An employee may ask his/her agency to reconsider its 
initial decision denying life insurance coverage or the opportunity to 
change coverage.
    (2) An annuitant may ask his/her retirement system to reconsider 
its initial decision affecting life insurance coverage.
    (3) A judge may ask his/her agency, or retirement system if 
applicable, to reconsider its initial decision denying an entitlement 
related to assignments under 5 U.S.C. 8706(e) or subpart I of this 
part.
    (4) An individual insured under subpart J of this part may ask the 
U.S. Department of State to reconsider its initial decision affecting 
life insurance coverage.
    (b) An employing office's decision is an initial decision when the 
employing office gives it in writing and informs the individual of the 
right to an independent level of review (reconsideration) by the 
appropriate agency or retirement system.
    (c) A request for reconsideration must be made in writing and must 
include the employee's (or annuitant's) name, address, date of birth, 
Social Security number, reason(s) for the request, and, if applicable, 
retirement claim number.
    (d) A request for reconsideration must be made within 30 calendar 
days from the date of the initial decision. This time limit may be 
extended when the individual shows that he/she was not notified of the 
time limit and was not otherwise aware of it or that he/she was unable, 
due to reasons beyond his/her control, to make the request within the 
time limit.
    (e) The reconsideration must take place at or above the level at 
which the initial decision was made.
    (f) After reconsideration, the agency or retirement system must 
issue a final decision. This decision must be in writing and must fully 
state the findings.

Subpart B--Types and Amount of Insurance


Sec. 870.201  Types of insurance.

    (a) There are two types of life insurance under the FEGLI Program: 
Basic and optional.
    (b) There are three types of optional insurance: Option A (standard 
optional insurance), Option B (additional optional insurance), and 
Option C (family optional insurance).


Sec. 870.202  Basic insurance amount (BIA).

    (a) (1) An employee's basic insurance amount (BIA) is either: (i) 
His/her annual rate of basic pay, rounded to the next higher thousand, 
plus $2,000; or
    (ii) $10,000; whichever is higher. However, the BIA can never be 
more than the annual rate of pay for Level II Executive Schedule 
positions under section 5313 of title 5, U.S.C., rounded to the next 
higher thousand, plus $2,000.
    (2) The BIA of an individual who is eligible to continue basic life 
insurance coverage as an annuitant or compensationer is the BIA in 
effect at the time his/her insurance as an employee would stop under 
Sec. 870.601.
    (b) An employee's BIA automatically changes whenever annual pay is 
increased or decreased by an amount sufficient to raise or lower pay to 
a different $1,000 bracket.
    (c) The amount of an employee's basic life insurance coverage is 
equal to his/her BIA multiplied by the appropriate factor based on the 
employee's age, as follows:

------------------------------------------------------------------------
                              Age                                Factor 
------------------------------------------------------------------------
35 or under...................................................       2.0
36............................................................       1.9
37............................................................       1.8
38............................................................       1.7
39............................................................       1.6
40............................................................       1.5
41............................................................       1.4
42............................................................       1.3
43............................................................       1.2
44............................................................       1.1
45 or over....................................................       1.0
------------------------------------------------------------------------

Sec. 870.203  Annual rates of pay.

    (a) (1) An insured employee's annual pay is his/her annual rate of 
basic pay as fixed by law or regulation.
    (2) Annual pay for this purpose includes the following:
    (i) Interim geographic adjustments and locality-based comparability 
payments as provided by Pub. L. 101-509;
    (ii) Premium pay under 5 U.S.C. 5545(c)(1);
    (iii) For a law enforcement officer as defined under 5 U.S.C. 
8331(20) and Sec. 831.903 of this title, premium pay under 5 U.S.C. 
5545(c)(2);
    (iv) Night differential pay for wage employees;
    (v) Environmental differential pay for employees exposed to danger 
or physical hardship;
    (vi) Tropical differential pay for citizen employees in Panama; and
    (vii) Special pay adjustments for law enforcement officers.
    (b) To convert a pay rate of other than annual salary to an annual 
rate, multiply the pay rate by the number of pay periods in a 52-week 
work year.
    (c) The annual pay for a part-time employee is his/her basic pay 
applied to his/her tour of duty in a 52-week work year.
    (d) The annual pay for an employee on piecework rates is the total 
basic earnings for the previous calendar year, not counting premium pay 
for overtime or holidays.
    (e) The annual pay for an employee with a regular schedule who 
works at different pay rates is the weighted average of the rates at 
which the employee is paid, projected to an annual basis.
    (f) The annual pay for a non-Postal intermittent employee or an 
employee who works at different pay rates without a regular schedule is 
the annual rate which he/she is receiving at the end of the pay period.
    (g) If an employee legally serves in more than 1 position at the 
same time, and at least 1 of those positions entitles him/her to life 
insurance coverage, the annual pay is the sum of the annual basic pay 
fixed by law or regulation for each position. Exception: This doesn't 
apply to part-time flexible schedule employees in the Postal Service. 
[[Page 21762]] 


Sec. 870.204  Amount of optional insurance.

    (a) Option A coverage is $10,000. However, if an employee's annual 
rate of pay is more than the sum of the annual rate of basic pay for 
Level II Executive Schedule positions under 5 U.S.C. 5313 plus $10,000, 
Option A coverage automatically increases. The amount of Option A 
coverage in this case is the difference between the employee's annual 
rate of pay, (rounded to the next higher thousand if not already an 
even thousand) and the BIA.
    (b) (1) Option B coverage comes in 1, 2, 3, 4, or 5 multiples of an 
employee's annual pay (after the pay has been rounded to the next 
higher thousand, if not already an even thousand). A multiple can not 
be more than the annual rate of basic pay for Level II Executive 
Schedule positions under 5 U.S.C. 5313, rounded to the next higher 
thousand.
    (2) The amount of Option B coverage automatically changes whenever 
annual pay is increased or decreased by an amount sufficient to raise 
or lower pay to a different $1,000 bracket.
    (c) Option C coverage is $5,000 payable upon the death of a spouse 
and $2,500 payable upon the death of a child. Payments are made to the 
insured individual.


Sec. 870.205  Accidental death and dismemberment.

    (a) (1) Accidental death and dismemberment coverage is an automatic 
part of basic and Option A insurance for employees.
    (2) There is no accidental death and dismemberment coverage with 
Options B and C.
    (3) Individuals who are insured as annuitants or compensationers do 
not have accidental death and dismemberment coverage.
    (b) Under basic insurance, accidental death benefits are equal to 
the BIA, but without the age factor described in Sec. 870.202(c).
    (c) (1) Under basic insurance, accidental dismemberment benefits 
for the loss of a hand, foot, or eye are equal to one-half the BIA. For 
loss of 2 of these, benefits are equal to the BIA.
    (2) For more than one type of loss in a single accident, total 
benefits cannot be more than the BIA.
    (3) Accidental dismemberment benefits are paid to the employee.
    (d) Under Option A, accidental death and dismemberment benefits are 
equal to the amount of Option A.

Subpart C--Eligibility


Sec. 870.301  Eligibility for life insurance.

    (a) Each nonexcluded employee is automatically insured for basic 
insurance unless he/she waives it.
    (b) (1) Optional insurance must be specifically elected; it is not 
automatic.
    (2) An employee may elect optional insurance if:
    (i) He/she has basic insurance;
    (ii) He/she doesn't have a waiver of that type of optional 
insurance still in effect; and
    (iii) His/her periodic pay, after all other deductions, is enough 
to cover the full cost.


Sec. 870.302  Exclusions.

    (a) The following employees are excluded from life insurance 
coverage by law:
    (1) An employee of a corporation supervised by the Farm Credit 
Administration, if private interests elect or appoint a member of the 
board of directors.
    (2) An individual who is not a citizen or national of the United 
States and whose permanent duty station is outside the United States. 
Exception: An individual who met the definition of employee on 
September 30, 1979, by service in an Executive agency, the United 
States Postal Service, or the Smithsonian Institution in the area which 
was then known as the Canal Zone.
    (3) An individual first employed by the Government of the District 
of Columbia on or after October 1, 1987. Exception: An employee of St. 
Elizabeths Hospital, who accepts employment with the District of 
Columbia Government following Federal employment without a break in 
service, as provided in section 6 of Pub. L. 98-621.
    (4) Teachers in Department of Defense dependents schools overseas, 
if employed by the Federal Government in a nonteaching position during 
the recess period between school years.
    (b) The following employees are also excluded from life insurance 
coverage:
    (1) An employee serving under an appointment limited to 1 year or 
less. Exceptions:
    (i) An employee whose full-time or part-time temporary appointment 
has a regular tour of duty and follows a position in which he/she was 
insured, with a break in service of no more than 3 days;
    (ii) An acting postmaster;
    (iii) A Presidential appointee appointed to fill an unexpired term; 
and
    (iv) Certain temporary employees who receive provisional 
appointments as defined in Secs. 316.401 and 316.403 of this title.
    (2) An employee who is employed for an uncertain or purely 
temporary period, who is employed for brief periods at intervals, or 
who is expected to work less than 6 months in each year. Exception: An 
employee who is employed under an OPM-approved career-related work-
study program under Schedule B lasting at least 1 year and who is in 
pay status for at least one-third of the total period of time from the 
date of the first appointment to the completion of the work-study 
program.
    (3) An intermittent employee (a non-full-time employee without a 
regularly scheduled tour of duty). Exception: An employee whose 
intermittent appointment follows, with a break in service of no more 
than 3 days, a position in which he/she was insured and to which he/she 
is expected to return.
    (4) An employee whose pay, on an annual basis, is $12 a year or 
less.
    (5) A beneficiary or patient employee in a Government hospital or 
home.
    (6) An employee paid on a contract or fee basis. Exception: An 
employee who is a United States citizen, who is appointed by a contract 
between the employee and the Federal employing authority which requires 
his/her personal service, and who is paid on the basis of units of 
time.
    (7) An employee paid on a piecework basis. Exception: An employee 
whose work schedule provides for full-time or part-time service with a 
regularly scheduled tour of duty.
    (c) OPM makes the final determination about whether the above 
categories apply to a specific employee or group of employees.

Subpart D--Cost of Insurance


Sec. 870.401  Withholdings and contributions for basic insurance.

    (a) The cost of basic insurance is shared between the insured 
individual and the Government. The employee pays two-thirds of the 
cost, and the Government pays one-third.
    (b) (1) During each pay period in which an insured employee is in 
pay status for any part of the period, $0.165 must be withheld from the 
employee's biweekly pay for each $1,000 of the employee's BIA. The 
amount withheld from the pay of an employee who is paid on other than a 
biweekly basis must be prorated and adjusted to the nearest one-tenth 
of 1 cent.
    (2) The amount withheld from the pay of an insured employee whose 
annual pay is paid during a period shorter than 52 workweeks is the 
amount obtained [[Page 21763]] by converting the biweekly rate to an 
annual rate and prorating the annual rate over the number of 
installments of pay regularly paid during the year.
    (3) The amount withheld from the pay of an insured employee whose 
BIA changes during a pay period is based on the BIA in force at the end 
of the pay period.
    (4) No payment is required while an insured employee is in nonpay 
status for up to 12 months.
    (c) For each pay period in which an employee is insured, the 
employing agency must contribute an amount equal to one-half the amount 
withheld from the employee's pay. This agency contribution must come 
from the appropriation or fund that is used for the payment of the 
employee's pay. For an elected official, the contribution must come 
from the appropriation or fund that is available for payment of other 
salaries in the same office.
    (d) (1) For an annuitant who elects to continue basic insurance and 
chooses the maximum reduction of 75 percent after age 65 under 
Sec. 870.702(a)(2), the amount withheld monthly is $0.3575 for each 
$1,000 of the BIA. For a compensationer who makes this election, the 
amount withheld weekly is $0.0825 for each $1,000. These withholdings 
stop the month after the month in which the individual reaches age 65. 
There are no withholdings from individuals who retired or began 
receiving compensation before January 1, 1990, and who elected the 75 
percent reduction. For the purpose of this paragraph, an individual who 
separates from service after meeting the requirements for an immediate 
annuity under 5 U.S.C. 8412(g) is considered to retire on the day 
before the annuity begins.
    (2) For an annuitant who elects to continue basic insurance and 
chooses the maximum reduction of 50 percent after age 65 under 
Sec. 870.702(a)(3), the amount withheld monthly is $0.8775 for each 
$1,000 of the BIA until the annuitant reaches age 65; the amount is 
then reduced to $0.52 for each $1,000. For a compensationer who makes 
this election, the amount withheld weekly is $0.2025 for each $1,000 of 
the BIA until age 65; the amount is then reduced to $0.12 for each 
$1,000.
    (3) For an annuitant who elects to continue basic insurance and 
chooses no reduction after age 65 under Sec. 870.702(a)(4), the amount 
withheld monthly is $2.0475 for each $1,000 of the BIA until the 
annuitant reaches age 65; the amount is then reduced to $1.69 for each 
$1,000. For a compensationer who makes this election, the amount 
withheld weekly is $0.4725 for each $1,000 of the BIA until age 65; the 
amount is then reduced to $0.39 for each $1,000.
    (e) (1) For each period in which an annuitant or compensationer is 
insured, OPM must contribute an amount equal to one-half the amount 
that would be withheld under paragraph (d)(1) of this section. 
Exception: For USPS employees who become annuitants or compensationers 
after December 31, 1989, the Postal Service pays the Government 
contributions.
    (2) The Government contribution is the same amount whether the 
individual elects a maximum 75 percent reduction, a maximum 50 percent 
reduction, or no reduction.
    (3) The Government contribution stops the month after the month in 
which the individual reaches age 65.
    (f) When an agency withholds less than or none of the proper amount 
of basic life insurance deductions from an individual's pay, annuity, 
or compensation, the agency must submit an amount equal to the sum of 
the uncollected deductions and any applicable agency contributions 
required under 5 U.S.C. 8708 to OPM for deposit in the Employees' Life 
Insurance Fund.


Sec. 870.402  Withholdings for optional insurance.

    (a) The insured individual pays the full cost of all optional 
insurance. There is no Government contribution toward the cost of any 
optional insurance. Exception: The United States Postal Service may 
make a contribution toward the cost of optional insurance for USPS 
employees in some situations.
    (b) During each pay period in any part of which an insured employee 
is in pay status, the employing agency must withhold the full cost of 
optional insurance from his/her pay.
    (c) Subject to the provisions for reemployed annuitants in 
Sec. 870.706(d), the full cost of optional insurance must be withheld 
from the annuity of an annuitant and from the compensation of a 
compensationer. These withholdings stop after the end of the month in 
which an annuitant or compensationer reaches age 65.
    (d) (1) The biweekly cost per $10,000 of Option A coverage is:

For persons under age 35
 $0.40
For persons ages 35 through 39
 .50
For persons ages 40 through 44
 .70
For persons ages 45 through 49
 1.10
For persons ages 50 through 54
 1.80
For persons ages 55 through 59
 3.00
For persons ages 60 and over
 7.00

    (2) The amount withheld from pay, annuity, or compensation paid on 
other than a biweekly basis must be prorated and adjusted to the 
nearest cent.
    (e) (1) The biweekly cost per $1,000 of Option B coverage is:

For persons under age 35
 $0.04
For persons ages 35 through 39
 .05
For persons ages 40 through 44
 .07
For persons ages 45 through 49
 .11
For persons ages 50 through 54
 .18
For persons ages 55 through 59
 .30
For persons ages 60 and over
 .70

    (2) The amount withheld from pay, annuity, or compensation paid on 
other than a biweekly basis must be prorated and adjusted to the 
nearest one-tenth of 1 cent.
    (f) (1) The biweekly cost of Option C coverage is based on the age 
of the employee, annuitant, or compensationer. The cost is:

For persons under age 35
 $0.30
For persons ages 35 through 39
 .31
For persons ages 40 through 44
 .52
For persons ages 45 through 49
 .70
For persons ages 50 through 54
 1.00
For persons ages 55 through 59
 1.50
For persons ages 60 and over
 2.60

    (2) The amount withheld from pay, annuity, or compensation paid on 
other than a biweekly basis must be prorated and adjusted to the 
nearest cent.
    (g) For the purpose of this subpart, an individual is considered to 
reach age 35, 40, 45, 50, 55, or 60 on the first day of the first pay 
period beginning on or after the January 1 following his/her 
corresponding birthday.
    (h) The amount withheld from the pay of an insured employee whose 
annual pay is paid during a period shorter than 52 workweeks is the 
amount obtained by converting the biweekly rate for his/her age group 
to an annual rate and prorating the annual rate over the number of 
installments of pay regularly paid during the year.
    (i) When an agency withholds less than or none of the proper amount 
of optional life insurance deductions from an individual's pay, 
annuity, or compensation, the agency must submit an amount equal to the 
uncollected deductions required under 5 U.S.C. 8714a to OPM for deposit 
in the Employees' Life Insurance Fund.


Sec. 870.403  Withholdings and contributions provisions that apply to 
both basic and optional insurance.

    (a) Withholdings (and Government contributions, when applicable) 
are based on the amount of insurance in force at the end of the pay 
period.
    (b) Withholdings are not required for the period between the end of 
the pay period in which an employee separates from service and the date 
his/her annuity or compensation begins. [[Page 21764]] 
    (c) The deposit described in Secs. 870.401(f) and 870.402(i) must 
be made no later than 60 calendar days after the date the employing 
office determines the amount of the underdeduction that has occurred, 
regardless of whether or when the underdeduction is recovered by the 
agency. The agency must determine whether to waive collection of the 
overpayment of pay, in accordance with 5 U.S.C. 5584, as implemented by 
4 CFR ch. I, subchapter G. However, if the agency involved is excluded 
from the provisions of 5 U.S.C. 5584, it may use any applicable 
authority to waive the collection.
    (d) Effective October 21, 1972, when an employee returns to work 
after being suspended or fired erroneously, no withholdings are made 
from the back pay.
    (e) If an individual's periodic pay, compensation, or annuity isn't 
sufficient to cover the full withholdings, any amount available for 
life insurance withholding must be applied first to basic insurance, 
with any remainder applied to optional insurance.


Sec. 870.404  Direct premium payments under 5 U.S.C. chapter 84 
(Federal Employees' Retirement System--FERS).

    (a) If the FERS annuity, excluding subchapter III of 5 U.S.C. 
chapter 84 (Thrift Savings Plan), is too low to cover any of the 
insurance premiums, the retirement system must notify the annuitant of 
the opportunity to pay his/her share of the basic premium and the 
optional premium(s) directly to the retirement system.
    (b) The retirement system must establish a method for accepting 
these direct premium payments. The retirement system must provide the 
annuitant with a premium payment schedule and the requirements for 
continued enrollment.
    (c) The annuitant must send the retirement system the required 
premium(s) for every pay period during which the coverage(s) continue, 
excluding the 31-day temporary extension of coverage provided in 
Sec. 870.601. The annuitant must make payment after the pay period in 
which he/she is covered, according to the schedule established by the 
retirement system. If it does not receive payment by the due date, the 
retirement system must notify the annuitant that coverage(s) will be 
continued only if he/she makes payment within 15 days after receiving 
the notice. The basic and optional insurance coverage(s) of an 
annuitant who does not pay within the specified time limit terminate. 
An individual whose coverage(s) terminate because of nonpayment of 
premium cannot reelect or reinstate coverage, except as provided in 
paragraph (d) of this section.
    (d) If, for reasons beyond his/her control, an annuitant is unable 
to pay within 15 days after receiving the notice, he/she may request 
reinstatement of coverage by writing to the retirement system. Such a 
request must be made within 30 calendar days from the date of 
termination and must be accompanied by proof that the annuitant was 
prevented from paying within the time limit for reasons beyond his/her 
control. The retirement system will decide if the individual is 
eligible for reinstatement of coverage. If the decision is yes, the 
coverage is reinstated back to the date of termination.
    (e) Termination of coverage for failure to pay premiums within the 
time limit established according to paragraph (c) of this section is 
effective at the end of the last pay period for which payment has been 
received on time.
    (f) The retirement system must submit all direct premium payments, 
along with its regular life insurance premiums, to OPM according to 
procedures set by OPM.

Subpart E--Coverage


Sec. 870.501  Basic insurance: Effective dates of automatic coverage.

    (a)(1) When an employee is appointed or transferred to a position 
in which he/she is eligible for insurance, the employee is 
automatically insured for basic insurance on the day he/she enters on 
duty in pay status, unless, before the end of the first pay period, the 
employee files a waiver of basic insurance with the employing office or 
had previously filed a waiver which remains in effect.
    (2) An insured employee who moves to another covered position is 
automatically insured on the effective date of the move, unless the 
employee files a waiver of basic insurance with the new employing 
office before the end of the first pay period in the new position.
    (b) An employee who returns to pay and duty status after a period 
of more than 12 months of nonpay status is automatically insured at the 
time he/she actually enters on duty in pay status, unless, before the 
end of the first pay period, the employee files a waiver of basic 
insurance coverage with the employing office or had previously filed a 
waiver which remains in effect.
    (c) For an employee who serves in cooperation with a non-Federal 
agency and who is paid in whole or in part from non-Federal funds, OPM 
sets the effective date. This date must be part of an agreement between 
OPM and the non-Federal agency. The agreement must provide either:
    (1) That the required withholdings and contributions be made from 
federally controlled funds and deposited into the Employees' Life 
Insurance Fund on a timely basis, or
    (2) That the cooperating non-Federal agency, by written agreement 
with the Federal agency, make the required withholdings and 
contributions from non-Federal funds and transmit that amount to the 
Federal agency for deposit into the Employees' Life Insurance Fund on a 
timely basis.
    (d) If an employee waived basic insurance on or before February 28, 
1981, the waiver was automatically cancelled effective on the 1st day 
the employee entered on duty in pay status on or after April 1, 1981. 
Basic insurance coverage was automatically effective on the date of the 
waiver's cancellation, unless the employee filed a new waiver of basic 
insurance with the employing office before the end of the pay period 
during which the coverage became effective.


Sec. 870.502  Basic insurance: Waiver/cancellation of insurance.

    (a) An insured individual may cancel his/her basic insurance at any 
time by filing a waiver of basic insurance coverage. An employee files 
with the employing office. An annuitant files with OPM or other office 
that administers his/her retirement system. If still employed, a 
compensationer files with the employing office, and if not still 
employed, with OWCP. The waiver is effective, and the insurance stops, 
at the end of the pay period in which the waiver is properly filed.
    (b) An individual who cancels his/her basic insurance automatically 
cancels all forms of optional insurance.


Sec. 870.503  Basic insurance: Cancelling a waiver.

    (a) An annuitant who has filed a waiver of basic insurance cannot 
cancel the waiver.
    (b) An employee who has filed a waiver of basic insurance may 
cancel the waiver and become insured if:
    (1) At least 1 year has passed since the effective date of the 
waiver, and
    (2) He/she provides satisfactory medical evidence of insurability.
    (c) OFEGLI reviews the Request for Insurance filed by an employee 
who has complied with paragraph (b) of this section and decides whether 
to approve it. The insurance is effective when, after OFEGLI's 
approval, the employee actually enters on duty in pay status in 
[[Page 21765]] a position in which he/she is eligible for insurance. If 
the employee doesn't enter on duty in pay status within 31 days 
following the date of OFEGLI's approval, the approval is automatically 
revoked and the employee is not insured.
    (d) When an employee who has been separated from service for at 
least 180 days is reinstated on or after April 1, 1981, a previous 
waiver of basic insurance is automatically cancelled. Unless the 
employee files a new waiver, basic insurance becomes effective on the 
1st day he/she actually enters on duty in pay status in a position in 
which he/she is eligible for coverage. Exception: For employees who 
waived basic insurance after February 28, 1981, separated, and returned 
to Federal service before December 9, 1983, the waiver remained in 
effect; these employees were permitted to elect basic insurance by 
applying to their employing office before March 7, 1984.


Sec. 870.504  Optional insurance: Election.

    (a)(1) Each employee must, on the form entitled Life Insurance 
Election, elect or waive Option A, Option B, and Option C coverage 
within 31 days after becoming eligible, unless during earlier 
employment he/she filed an election or waiver which remains in effect. 
The 31-day time limit for Option B or Option C begins on the 1st day 
after February 28, 1981, on which an individual meets the definition of 
an employee.
    (2) Within 6 months after an employee becomes eligible, an 
employing office may determine that the employee was unable, for 
reasons beyond his/her control, to elect any type of optional insurance 
within the time limit. In this case, the employee must elect or waive 
that type of optional insurance within 31 days after he/she is notified 
of the determination. The insurance is retroactive to the 1st day of 
the first pay period beginning after the date the individual became 
eligible or after April 1, 1981, whichever is later. The individual 
must pay the full cost of the insurance from that date for the time 
that he/she is in pay status, retired, or receiving compensation and 
under age 65.
    (b) An employee who doesn't file a Life Insurance Election form 
with his/her employing office specifically electing any type of 
optional insurance is considered to have waived it and does not have 
that type of optional insurance.
    (c) For the purpose of having Option A as an employee, an election 
of this insurance filed on or before February 28, 1981, is considered 
to have been cancelled effective at the end of the pay period which 
included March 31, 1981, unless the employee didn't actually enter on 
duty in pay status during the 1st pay period which began on or after 
April 1, 1981. In that case the election is considered to have been 
cancelled on the 1st day after the end of the next pay period in which 
the employee actually entered on duty in pay status. In order to have 
Option A as an employee after the date of this cancellation, an 
employee must specifically elect the coverage by filing the Life 
Insurance Election form with his/her employing office, subject to the 
provisions of Sec. 870.504(a) or 870.506.
    (d) Optional insurance is effective the 1st day an employee 
actually enters on duty in pay status on or after the day the employing 
office receives the election.
    (e) For an employee whose optional insurance stopped for a reason 
other than a waiver, the insurance is reinstated on the 1st day he/she 
actually enters on duty in pay status in a position in which he/she 
again becomes eligible.


Sec. 870.505  Optional insurance: Waiver/cancellation of insurance.

    (a) An insured individual may cancel entirely any type of optional 
insurance, or reduce the number of multiples of his/her Option B 
insurance, at any time by filing a waiver of optional insurance 
coverage. An employee files with the employing office. An annuitant 
files with OPM or other office that administers his/her retirement 
system. If still employed, a compensationer files with the employing 
office, and if not still employed, with OWCP.
    (b) A cancellation of optional insurance becomes effective, and 
optional insurance stops, at the end of the pay period in which the 
waiver is properly filed. Exception: If Option C is cancelled because 
there are no eligible family members, the effective date is retroactive 
to the end of the pay period in which there stopped being any eligible 
family members.
    (c) A waiver of optional insurance remains in effect until it is 
cancelled as provided in Sec. 870.506.


Sec. 870.506  Optional insurance: Cancelling a waiver.

    (a)(1) An employee who has waived Option B coverage may elect it, 
and an employee who has Option B of fewer than five multiples of annual 
pay may increase the number of multiples, upon his/her marriage or 
divorce, upon a spouse's death, or upon acquiring an eligible child.
    (2) The number of multiples of Option B coverage that an employee 
can obtain or add (which can't exceed a total of five) is limited to 
the following:
    (i) For marriage, the number of additional family members (spouse 
and eligible children) acquired with the marriage;
    (ii) For acquisition of children, the number of eligible children 
acquired; and
    (iii) For divorce or death of a spouse, the total number of 
eligible children of the enrollee.
    (3) An employee who has waived Option C coverage may elect it upon 
his/her marriage or upon acquiring an eligible child. An employee may 
also elect Option C coverage upon divorce or death of a spouse, if the 
employee has any eligible children.
    (4)(i) The employee must file the election on the Life Insurance 
Election form, along with proof of the event, with the employing office 
no later than 60 days following the date of the event that permits the 
election.
    (ii) This 60-day time limit may be extended if the individual isn't 
serving in a covered position on the date of the event or if the 
individual separates from covered service prior to the end of the 60-
day time limit. This extension cannot exceed the 31-day time limit for 
electing insurance following employment in a covered position or the 
31-day period following the 1st day on which the individual becomes 
eligible to cancel a waiver of basic insurance.
    (5)(i) The effective date of Option B insurance elected under this 
paragraph is the 1st day the employee actually enters on duty in pay 
status on or after the day the employing office receives the election.
    (ii) The effective date of Option C insurance elected under this 
paragraph is the day the employing office receives the election.
    (b)(1) An employee who has waived Option A or Option B coverage may 
elect it if:
    (i) At least 1 year has passed since the effective date of the 
waiver, and
    (ii) He/she provides satisfactory medical evidence of insurability.
    (2) An employee who has Option B coverage of fewer than five 
multiples of annual pay may increase the number of multiples if:
    (i) At least 1 year has passed since the effective date of his/her 
last election of fewer than five multiples (including a reduction in 
the number of multiples), and
    (ii) He/she provides satisfactory medical evidence of insurability.
    (iii) The requirement for at least 1 year to have passed since the 
effective date of the last election doesn't apply when an employee 
elected fewer than five multiples because of the limitation under 
paragraph (a)(2) of this section. [[Page 21766]] 
    (c) OFEGLI reviews the request filed by an employee who has 
complied with paragraph (b) of this section and decides whether to 
approve it. The optional insurance is effective when, after OFEGLI's 
approval, the employee actually enters on duty in pay status in a 
position in which he/she is eligible for insurance. If the employee 
doesn't enter on duty in pay status within 31 days following the date 
of OFEGLI's approval, the approval is automatically revoked and the 
employee does not have the optional insurance requested.
    (d)(1) If an employee waived Option A insurance on or before 
February 28, 1981, the waiver was automatically cancelled effective on 
the 1st day the employee entered on duty in pay status on or after 
April 1, 1981. Option A was effective on the date of the waiver's 
cancellation, if the employee filed an election of Option A during the 
March 1, 1981 through March 31, 1981 open enrollment period. If the 
employee didn't file the election form with his/her employing office 
during the March, 1981 open enrollment period, the employee will be 
considered to have waived Option A on March 31, 1981.
    (2) When an employee who has been separated from service for at 
least 180 days is reinstated on or after April 1, 1981, a previous 
waiver of optional insurance is automatically cancelled, as follows:
    (i) An employee who returned to service between April 1, 1981 and 
December 8, 1983, after a 180-day break in service was permitted to 
elect any form of optional insurance by applying to his/her employing 
office before March 7, 1984.
    (ii) An employee who returns to service after December 8, 1983, 
following a 180-day break in service may elect any form of optional 
insurance by applying to his/her employing office within 31 days after 
reinstatement. Coverage is effective on the 1st day the employee 
actually enters on duty in pay status in a position in which he/she is 
eligible for insurance on or after the date the employing office 
receives the election. If the employee doesn't file a Life Insurance 
Election form within the 31-day period, the employee is considered to 
have waived optional insurance. However, an employee who fails to file 
during the 31-day period due to reasons beyond his/her control may 
enroll belatedly under the conditions stated in Sec. 870.504(a)(2).
    (e) An annuitant or compensationer is not eligible to cancel a 
waiver or to increase multiples of Option B under this section.
    (f) The United States Postal Service may have less limiting 
requirements for cancelling waivers for USPS employees in some 
situations.


Sec. 870.507  Open enrollment periods.

    (a) There are no regularly scheduled open enrollment periods for 
life insurance. Open enrollment periods are held only when specifically 
scheduled by OPM.
    (b) During an OPM-scheduled open enrollment period, eligible 
employees may cancel their existing waivers of basic and/or optional 
insurance by electing the insurance on an OPM-designated form.
    (c)(1) OPM sets the effective date for all insurance elected during 
an open enrollment period. The newly elected insurance is effective on 
the 1st day of the first pay period which begins on or after the OPM-
established date and which follows a pay period during which the 
employee was in pay and duty status for at least 32 hours.
    (2) A part-time employee must be in pay and duty status for one-
half the regularly scheduled tour of duty shown on his/her current 
Standard Form 50 for newly elected coverage to become effective.
    (3) An employee who has no regularly scheduled tour of duty or who 
is employed on an intermittent basis must be in pay and duty status for 
one-half the hours customarily worked before newly elected coverage can 
become effective. For the purpose of this paragraph, employing offices 
can determine the number of hours customarily worked by averaging the 
number of hours worked in the most recent calendar year quarter prior 
to the start of the open enrollment period.
    (d) Within 6 months after an open enrollment period ends, an 
employing office may determine that an employee was unable, for reasons 
beyond his/her control, to cancel an existing waiver by electing to be 
insured during the open enrollment period. In this case, if the 
employee wants coverage, he/she must submit an election within 31 days 
after being notified of the determination. Coverage is retroactive to 
the first pay period which begins on or after the effective date set by 
OPM and which follows a pay period during which the employee was in pay 
and duty status for at least 32 hours. If the employee doesn't file an 
election within this 31-day time limit, he/she will be considered to 
have waived coverage.


Sec. 870.508  Nonpay status.

    (a) An employee who is on leave without pay is entitled to continue 
life insurance for up to 12 months. No premium payments are required.
    (b) If an insured employee who is entitled to free insurance while 
in nonpay status accepts a temporary appointment to a position in which 
he/she would normally be excluded from insurance, the insurance 
continues. The amount of basic insurance is based on whichever 
position's salary is higher. Withholdings are made from the employee's 
pay in the temporary position.
    (c) If an insured employee goes on leave without pay to serve as a 
full-time officer or employee of certain employee organizations, within 
60 days of the start of the leave-without-pay he/she may elect to 
continue life insurance. The insurance continues for the length of the 
appointment, even if the leave-without-pay lasts longer than 12 months. 
The employee must pay to the employing office the full cost of basic 
and optional insurance. There is no Government contribution for these 
employees.
    (d) If an insured employee goes on leave without pay while assigned 
to a State government, local government, or institution of higher 
education, life insurance continues for the length of the assignment, 
even if the leave-without-pay lasts longer than 12 months. The employee 
must pay his/her premiums to the Federal agency on a current basis. The 
agency must continue to pay its contribution as long as the employee 
makes his/her payments.


Sec. 870.509  Transfers to international organizations.

    An employee transferred to an international organization as 
provided in 5 U.S.C. 3582 may continue life insurance coverage. 
Regulations governing these transfers are in part 352 of this title.

Subpart F--Termination and Conversion


Sec. 870.601  Termination of basic insurance.

    (a) Except as provided in Sec. 870.701, the basic insurance of an 
insured employee stops on the date he/she separates from service, 
subject to a 31-day extension of coverage.
    (b) The basic insurance of an employee who separates from service 
after meeting the requirement for an immediate annuity under 
Sec. 842.204(a)(1) of this title and who postpones receiving the 
annuity, as provided by Sec. 842.204(c) of this title, stops on the 
date he/she separates from service, subject to a 31-day extension of 
coverage.
    (c) The basic insurance of an insured employee who moves without a 
break in service to a position in which he/she is 
[[Page 21767]] excluded from life insurance stops on his/her last day 
in the former position, subject to a 31-day extension of coverage.
    (d)(1) Except as provided in Sec. 870.701, the basic insurance of 
an insured employee who is in nonpay status stops on the date the 
employee completes 12 months in nonpay status, subject to a 31-day 
extension of coverage. The 12 months' nonpay status may be broken by 
periods of less than 4 consecutive months in pay status. If an employee 
has at least 4 consecutive months in pay status after a period of 
nonpay status, he/she is entitled to begin the 12 months' continuation 
of basic insurance again. If an employee has used up his/her 12 months' 
continuation in nonpay status and returns to duty for less than 4 
consecutive months, his/her basic insurance stops on the 32nd day after 
the last day of the last pay period in pay status.
    (2) For the purpose of this paragraph, 4 consecutive months in pay 
status means any 4-month period during which the employee is in pay 
status for at least part of each pay period.


Sec. 870.602  Termination of optional insurance.

    (a) The optional insurance of an insured employee stops when his/
her basic insurance stops, subject to the same 31-day extension of 
coverage.
    (b) The optional insurance of an employee who separates from 
service after meeting the requirement for an immediate annuity under 
Sec. 842.204(a)(1) of this title and who postpones receiving the 
annuity, as provided by Sec. 842.204(c) of this title, stops on the 
date he/she separates from service, subject to a 31-day extension of 
coverage.
    (c) If, because of a waiver, an insured employee isn't eligible to 
continue optional coverage as an annuitant or compensationer (see 
Sec. 870.701), the optional insurance stops on the date that his/her 
basic insurance is continued or reinstated under the provisions of 
Sec. 870.701, subject to a 31-day extension of coverage.
    (d) If, at the time of an individual's election of basic insurance 
during receipt of annuity or compensation (see Sec. 870.701), he/she 
elects no basic life insurance, the optional insurance stops at the end 
of the month in which the election is received in OPM, subject to a 31-
day extension of coverage.
    (e) Except as provided in Sec. 870.404, optional insurance stops, 
subject to a 31-day extension of coverage, at the end of the pay period 
in which it's determined that an individual's periodic pay, 
compensation, or annuity, after all other deductions, isn't enough to 
cover the full cost of the optional insurance. If an individual has 
more than one type of optional insurance, and his/her pay, 
compensation, or annuity is sufficient to cover some but not all of the 
insurance, Option C terminates first, followed by Option A and then 
Option B.


Sec. 870.603  Conversion of basic and optional insurance.

    (a)(1) When group coverage terminates for any reason other than 
voluntary cancellation, an employee may apply to convert all or any 
part of his/her basic and optional insurance to an individual policy; 
no medical examination is required. The premiums for the individual 
policy are based on the employee's age and class of risk. An employee 
is eligible to convert the policy only if he/she doesn't return, within 
3 calendar days from the terminating event, to a position allowing 
coverage under the group plan.
    (2) The employing agency must notify the employee of the loss of 
coverage and the right to convert to an individual policy either before 
or immediately after the event causing the loss of coverage.
    (3) The employee must submit the request for conversion information 
to OFEGLI. It must be postmarked within 31 days following the date of 
the terminating event or within 31 days of the date the employee 
received the notice of loss of group coverage and right to convert, 
whichever is later.
    (4) An employee who fails to use his/her conversion right within 31 
days after receiving notice of the right to convert or within 31 days 
of the terminating event, whichever is later, is considered to have 
refused coverage, unless OFEGLI determines the failure was for reasons 
beyond the employee's control, as described in paragraph (a)(5) of this 
section.
    (5) When the employee fails to request conversion information 
within the time limit set in paragraph (a)(3) of this section for 
reasons beyond his/her control, he/she may make a belated request by 
writing to OFEGLI. The employee must make the request within 6 months 
after becoming eligible to convert the insurance. The employee must 
show that he/she wasn't notified of the loss of coverage and the right 
to convert and was not otherwise aware of it or that he/she was unable 
to convert to an individual policy for reasons beyond his/her control. 
OFEGLI will determine if the employee is eligible to convert. When the 
request is approved, the employee must convert within 31 days of that 
determination.
    (b) The individual conversion policy is effective the day after the 
group coverage ends. The employee must pay the premiums for any period 
retroactive to that date.
    (c) The 31-day extension of coverage provided under this subpart 
does not depend upon timely notification of the right to convert to an 
individual policy. The extension cannot be continued beyond 31 days.

Subpart G--Annuitants and Compensationers


Sec. 870.701  Eligibility for life insurance.

    (a) When an insured employee retires, basic life insurance (but not 
accidental death and dismemberment) continues or is reinstated if he/
she:
    (1) Is entitled to retire on an immediate annuity under a 
retirement system for civilian employees, including the retirement 
system of a nonappropriated fund instrumentality of the Department of 
Defense or the Coast Guard;
    (2) Was insured for the 5 years of service immediately before the 
date the annuity starts, or for the full period(s) of service during 
which he/she was eligible to be insured if less than 5 years; and
    (3) Has not converted to an individual policy as described in 
Sec. 870.603. If it is not determined that an individual is eligible to 
continue the group coverage as an annuitant until after he/she has 
converted, the group enrollment must be reinstated. The conversion 
policy must be voided, and the premiums already paid on the policy must 
be refunded to the individual.
    (b) A compensationer's basic life insurance (but not accidental 
death and dismemberment) continues or is reinstated if he/she:
    (1) Has been insured for the 5 years of service immediately before 
the date of entitlement to compensation, or for the full period(s) of 
service during which he/she was eligible to be insured if less than 5 
years; and
    (2) Has not converted to an individual policy as described in 
Sec. 870.603. If it is not determined that an individual is eligible to 
continue the group coverage as a compensationer until after he/she has 
converted, the group enrollment must be reinstated. The conversion 
policy must be voided, and the premiums already paid on the policy must 
be refunded to the individual.
    (c) An individual who meets the requirements under paragraphs (a) 
or (b) of this section or Sec. 870.707 for continuation or 
reinstatement of life insurance must complete a written election on the 
appropriate form at the time entitlement is established. For the 
election to be valid, OPM must receive [[Page 21768]] the election form 
before it has made a final decision on the individual's application for 
annuity or supplemental annuity or an individual's request to continue 
life insurance as a compensationer. If there is no valid election, OPM 
considers the individual to have chosen the option described in 
paragraph (a)(2) of Sec. 870.702.
    (d) If the annuity or compensation of an insured individual is 
terminated, or if the Department of Labor finds that an insured 
compensationer is able to return to duty, his/her basic life insurance 
held as an annuitant or compensationer stops on the date of the 
termination or finding. There is no 31-day extension of coverage or 
conversion right.
    (e)(1) An annuitant or compensationer who is eligible to continue 
or have reinstated basic insurance is also eligible to continue or have 
reinstated optional insurance if he/she meets the same coverage 
requirements for optional insurance as those stated in paragraph (a) or 
(b) of this section for basic insurance.
    (2) For the purpose of continuing insurance as an annuitant or 
compensationer, an employee is not considered to have been eligible for 
Option C during any period when the employee had no eligible family 
member.


Sec. 870.702  Election of basic insurance.

    (a) An individual who makes an election under Sec. 870.701(c) must 
select one of the following options:
    (1) Termination of the insurance. The individual's insurance stops 
upon conversion to an individual policy as provided under Sec. 870.603. 
If the individual doesn't convert to an individual policy, insurance 
stops at the end of the month in which OPM or the employing office 
receives the election;
    (2) Continuation or reinstatement of basic insurance with a maximum 
reduction of 75 percent during retirement. Premiums are withheld from 
annuity or compensation (except as provided under Sec. 870.401(d)(1)). 
The amount of basic life insurance in force reduces by 2 percent a 
month until the maximum reduction is reached. This reduction starts at 
the beginning of the 2nd month after the date the insurance would 
otherwise have stopped or the date of the insured's 65th birthday, 
whichever is later;
    (3) Continuation or reinstatement of basic insurance with a maximum 
reduction of 50 percent during retirement. Premiums are withheld from 
annuity or compensation. The amount of basic insurance in force reduces 
by 1 percent a month until the maximum reduction is reached. This 
reduction starts at the beginning of the 2nd month after the date the 
insurance would otherwise have stopped or the date of the insured's 
65th birthday, whichever is later; or
    (4) Continuation or reinstatement of basic insurance with no 
reduction after age 65. Premiums are withheld from annuity or 
compensation.
    (b)(1) An insured individual may cancel an election under paragraph 
(a)(3) or (a)(4) of this section at any time. The amount of basic 
insurance automatically switches to the amount that would have been in 
force if the individual had originally elected the 75 percent 
reduction. This revised amount is effective at the end of the month in 
which OPM receives the request to cancel the previous election.
    (2) If the individual files a waiver of insurance, the coverage 
stops without a 31-day extension of coverage or conversion right. This 
is effective at the end of the month in which OPM receives the waiver.


Sec. 870.703  Amount of life insurance.

    (a)(1) The amount of an annuitant's or compensationer's basic 
insurance is his/her BIA on the date insurance would otherwise have 
stopped because of separation from service or completion of 12 months 
in nonpay status, minus any reductions applicable under 
Sec. 870.702(a).
    (2) For the purpose of paying benefits upon the death of a retired 
insured individual under age 45, the BIA is multiplied by the 
appropriate age factor shown in Sec. 870.202(c). Exception: If the 
insured individual retired before October 10, 1980.
    (b) The amount of an annuitant's or compensationer's Option A 
coverage reduces by 2 percent a month up to a maximum reduction of 75 
percent. This reduction starts at the beginning of the 2nd month after 
the date the insurance would otherwise have stopped or the date of the 
insured's 65th birthday, whichever is later.
    (c) (1) The number of multiples of Option B coverage an annuitant 
or compensationer can continue is the smallest number of multiples in 
force during the applicable period of service required to continue 
Option B.
    (2) Each multiple of an annuitant's or compensationer's Option B 
coverage reduces by 2 percent a month. This reduction starts at the 
beginning of the 2nd month after the date the insurance would otherwise 
have stopped or the insured's 65 birthday, whichever is later. At 12 
noon on the day before the 50th reduction, the insurance stops, with no 
extension of coverage or conversion right.
    (d) The amount of an annuitant's or compensationer's Option C 
coverage on each family member reduces by 2 percent a month. This 
reduction starts at the beginning of the 2nd month after the date the 
insurance would otherwise have stopped or the annuitant's or 
compensationer's 65th birthday, whichever is later. At 12 noon on the 
day before the 50th reduction, the insurance stops, with no extension 
of coverage or conversion right.
    (e)(1) Judges retiring under 28 U.S.C. 371 (a) and (b), 28 U.S.C. 
372(a), and 26 U.S.C. 7447 are considered employees under the FEGLI 
law. Basic and optional insurance for these judges continues without 
interruption or reduction upon retirement.
    (2) If a judge chooses to receive compensation instead of an 
annuity, his/her optional insurance reduces as stated in paragraphs 
(b), (c), and (d) of this section.


Sec. 870.704  Reinstatement of life insurance.

    (a) An annuitant whose disability annuity terminates because he/she 
recovers from the disability or because his/her earning capacity 
returns, and whose disability annuity is later restored under 5 U.S.C. 
8337(e) (after December 31, 1983), may elect to resume the basic 
insurance held immediately before his/her disability annuity 
terminated. OPM must receive the election within 60 days after OPM 
mails a notice of insurance eligibility and election form.
    (b) An annuitant described in paragraph (a) of this section may 
elect to resume any optional insurance held immediately before the 
annuity terminated if:
    (1) He/she has made an election under paragraph (a) of this 
section; and
    (2) OPM receives the election within 60 days after OPM mails a 
notice of insurance eligibility and election form.
    (c) Basic and optional insurance reinstated under paragraphs (a) 
and (b) of this section are effective on the 1st day of the month after 
the date OPM receives the election form. Any applicable annuity 
withholdings are also reinstated on the 1st day of the month after OPM 
receives the election form.
    (d) The amounts of basic and optional insurance reinstated under 
paragraphs (a) and (b) of this section are the amounts that would have 
been in force if the individual's annuity hadn't terminated.


Sec. 870.705  Waiver or suspension of annuity or compensation.

    (a) Except as provided in paragraph (b) of this section, when 
annuity or [[Page 21769]] compensation is waived or suspended, optional 
life insurance continues. When the annuity or compensation is resumed, 
back payments must be withheld for the full cost of the optional 
insurance for the period of waiver or suspension during which the 
person is under age 65.
    (b) If suspension of annuity or compensation is because of 
reemployment, the reemploying office must withhold the full cost of the 
insurance during each pay period of reemployment.


Sec. 870.706  Reemployed annuitants.

    (a) (1) If an insured annuitant is appointed to a position in which 
he/she is eligible for insurance, the amount of his/her basic life 
insurance as an annuitant (and any applicable annuity withholdings) is 
suspended on the day before the 1st day in pay status under the 
appointment, unless the reemployed annuitant waives all insurance 
coverage. The benefit payable upon the death of a reemployed annuitant 
who has basic insurance in force as an employee cannot be less than the 
benefit which would have been payable if the individual hadn't been 
reemployed.
    (2) Except as provided in paragraph (b) of this section, the basic 
insurance obtained as an employee stops, with no 31-day extension of 
coverage or conversion right, on the date reemployment terminates. Any 
suspended basic insurance (and any applicable annuity withholdings) is 
reinstated on the day following termination of the reemployment.
    (b) Basic insurance obtained during reemployment can be continued 
after the reemployment terminates if:
    (1) The annuitant qualifies for a supplemental annuity or receives 
a new retirement right;
    (2) He/she has had basic insurance as an employee for at least 5 
years of service immediately before separation from reemployment or for 
the full period(s) during which such coverage was available to him/her, 
whichever is less; and
    (3) He/she doesn't convert to nongroup insurance when basic 
insurance as an employee would otherwise terminate.
    (c) If the basic insurance obtained during reemployment is 
continued as provided in paragraph (b) of this section, any suspended 
basic life insurance stops, with no 31-day extension of coverage or 
conversion right.
    (d)(1) An annuitant appointed to a position in which he/she is 
eligible for basic insurance, is also eligible for optional insurance 
as an employee, unless he/she has on file an uncanceled waiver of basic 
or optional insurance.
    (2) If the individual has Option A or C as an annuitant, that 
insurance (and applicable annuity withholdings) is suspended on the day 
before his/her 1st day in pay status under the appointment. Unless he/
she waives Option A or C (or waives basic insurance), he/she obtains 
Option A or C as an employee.
    (3) If the individual has Option B as an annuitant, that insurance 
(and applicable annuity withholdings) continues as if the individual 
weren't reemployed, unless:
    (i) The individual files with his/her employing office an election 
of Option B on the Life Insurance Election form within 31 days after 
the date of reemployment. In this case Option B (and applicable annuity 
withholdings) as an annuitant is suspended on the date that Option B as 
an employee becomes effective; or
    (ii) The individual waives basic insurance.
    (4) Except as provided in paragraph (e) of this section, the 
optional insurance obtained as an employee stops, with no 31-day 
extension or conversion right, on the date reemployment terminates. The 
amount of suspended optional insurance which remains in force after 
applicable monthly reductions after age 65 (and corresponding 
withholdings) is reinstated on the day after reemployment terminates.
    (e) Optional life insurance obtained during reemployment may be 
continued after the reemployment terminates if the annuitant:
    (1) Qualifies for a supplemental annuity or receives a new 
retirement right;
    (2) Continues his/her basic life insurance under paragraph (d)(2), 
(3), or (4) of Sec. 870.701; and
    (3) Has had optional insurance in force for the 5 years of service 
immediately before separation from reemployment or for the full 
period(s) of service during which it was available to him/her, 
whichever is less.
    (f) If optional insurance obtained during reemployment is continued 
as provided in paragraph (e) of this section, any suspended optional 
insurance stops, with no 31-day extension of coverage or conversion 
right.
    (g) If a reemployed annuitant waives life insurance as an employee, 
the waiver also cancels his/her life insurance as an annuitant.


Sec. 870.707  MRA-plus-10 annuitants.

    (a) The basic insurance of an individual whose coverage terminates 
under Sec. 870.601(a), and who meets the requirements for continuing 
basic insurance after retirement as stated in Sec. 870.601(b), resumes 
on the starting date of annuity or on the date OPM receives the 
application for annuity, whichever is later. The individual must file 
an election as provided in Sec. 870.701(c) so that OPM receives it 
within 60 days after OPM mails a notice of insurance eligibility and 
election form.
    (b) Optional insurance of an individual whose coverage terminates 
under Sec. 870.602(a), and who meets the requirements for continuing 
optional insurance after retirement under Sec. 870.602(b), resumes on 
the starting date of annuity or on the date OPM receives the 
application for annuity, whichever is later.

Subpart H--Order of Precedence and Designation of Beneficiary


Sec. 870.801  Order of precedence and payment of benefits.

    (a) Benefits are paid according to the order of precedence stated 
in 5 U.S.C. 8705, as follows:
    (1) To the designated beneficiary (or beneficiaries);
    (2) If none, to the widow(er);
    (3) If none, to the child, or children in equal shares, with the 
share of any deceased child going to his/her children;
    (4) If none, to the parents in equal shares or the entire amount to 
the surviving parent;
    (5) If none, to the executor or administrator of the estate;
    (6) If none, to the next of kin according to the laws of the State 
in which the insured individual legally resided.
    (b) If an insured individual provided in a valid designation of 
beneficiary for insurance benefits to be payable to the insured's 
estate, or to the Executor, Administrator, or other representative of 
the insured's estate, or if the benefits would otherwise be payable to 
the duly appointed representative of the insured's estate under the 
order of precedence specified in 5 U.S.C. 8705(a), payment of the 
benefits to the duly appointed representative of the insured's estate 
bars recovery by any other person.
    (c) Option A or B insurance in force on a person on the date of 
his/her death is paid, on receipt of a valid claim, in the same order 
of precedence and under the same conditions as basic insurance. A 
designation of beneficiary for basic [[Page 21770]] insurance is also a 
designation of beneficiary for Option A or B, unless the insured 
individual states otherwise in his/her designation.
    (d) Upon the death of an insured family member, Option C benefits 
are paid to the employee, annuitant, or compensationer responsible for 
withholdings under Sec. 870.402(f), except as provided in paragraph (e) 
of this section.
    (e) In spite of an assignment of life insurance under subpart I of 
this part, if an employee, annuitant, or compensationer entitled to 
receive Option C benefits dies before the benefits are paid, the Option 
C benefits are paid to the individual(s) entitled to receive basic life 
insurance benefits.


Sec. 870.802  Designation of beneficiary.

    (a) If an insured individual wants benefits paid differently from 
the order of precedence, he/she may file a designation of beneficiary. 
A designation of beneficiary cannot be filed by anyone other than the 
insured individual.
    (b) A designation of beneficiary must be in writing, signed, and 
witnessed by two people. The employing office (or OPM, in the case of 
an individual receiving an annuity or compensation must receive the 
designation before the death of the insured.
    (c) A designation, change, or cancellation of beneficiary in a will 
or any other document not witnessed and filed as required by this 
section has no legal effect with respect to benefits under this 
chapter.
    (d) A witness to a designation of beneficiary cannot be named as a 
beneficiary.
    (e) Any individual, firm, corporation, or legal entity can be named 
as a beneficiary, except an agency of the Federal or District of 
Columbia Government.
    (f) An insured individual may change his/her beneficiary at any 
time without the knowledge or consent of the previous beneficiary. This 
right cannot be waived or restricted.
    (g) A designation of beneficiary is automatically cancelled 31 days 
after the individual stops being insured.
    (h) An insured individual may provide that a designated beneficiary 
is entitled to the insurance benefits only if the beneficiary survives 
him/her for a specified period of time (not more than 30 days). If the 
beneficiary doesn't survive for the specified period, insurance 
benefits will be paid as if the beneficiary had died before the 
insured.


Sec. 870.803  Child incapable of self-support.

    (a) When it receives a claim for Option C benefits because of the 
death of a child over age 21, OFEGLI determines, based on whatever 
evidence it considers necessary, whether the deceased child was 
incapable of self-support because of a mental or physical disability 
which existed before the child reached age 22.
    (b) If an employee elects Option C under Sec. 870.506(a)(3), and 
the opportunity to elect is based solely on the acquisition of a child 
over age 21, the employee must submit to the employing office at the 
time of making the election a doctor's certificate stating that the 
child is incapable of self-support because of a physical or mental 
disability which existed before the child reached age 22 and which is 
expected to continue for more than 1 year. The certificate must include 
the name of the child, the type of disability, how long it has existed, 
and its expected future course and duration. The certificate must be 
signed by the doctor and show his/her office address.

Subpart I--Assignments of Life Insurance


Sec. 870.901  Assignments permitted.

    (a) Section 208 of the Bankruptcy Amendments and Federal Judgeship 
Act of 1984, Pub. L. 98-353, effective July 10, 1984, permits Federal 
judges to irreversibly assign their FEGLI coverage to one or more 
individuals, corporations, or trustees. A judge may assign ownership of 
all life insurance under this part, except Option C. If a judge owns 
more than one type of coverage, he/she must assign all the insurance; a 
judge cannot assign only a portion of the coverage. Option C cannot be 
assigned.
    (b) A judge cannot name conditional assignees in case the primary 
assignee dies before the insured judge.
    (c) If the insurance is assigned to two or more individuals, 
corporations, or trustees, the judge must specify percentage shares, 
rather than dollar amounts or types of insurance, to go to each 
assignee.
    (d) If a judge who has made an assignment later elects increased 
insurance coverage under Sec. 870.506 or during an open enrollment 
period, the increased coverage is considered included in the already-
existing assignment. The right to increase coverage remains with the 
judge, rather than transferring to the assignee.
    (e) A judge who assigns ownership of insurance continues to be the 
insured individual, but the assignee receives those rights of an 
insured employee that are specified in this part.
    (f) Once assigned, the value of the insurance increases or 
decreases automatically as provided by this part.


Sec. 870.902  Making an assignment.

    To assign insurance, a judge must make a written request for an 
approved assignment form. The judge must complete and submit to the 
employing office the signed and witnessed form indicating the intent to 
irreversibly assign all ownership of the insurance. (Assignments 
submitted prior to November 28, 1986, were accepted without an approved 
assignment form.)


Sec. 870.903  Effective date of assignment.

    An assignment under this section is effective on the date the 
employing office receives the properly completed, signed, and witnessed 
assignment form.


Sec. 870.904  Amount of insurance.

    The amount of insurance is based on the judge's basic pay as stated 
in subpart B of this part.


Sec. 870.905  Withholdings.

    Premium withholdings for assigned insurance are withheld from the 
salary, annuity, or compensation of the judge, as provided in subpart D 
of this part.


Sec. 870.906  Cancellation of insurance.

    The assignee has the right to cancel insurance according to the 
provisions of Secs. 870.502 and 870.505. When there is more than 1 
assignee, all assignees must agree to the cancellation. A cancellation 
of basic insurance also cancels all optional insurance.


Sec. 870.907  Termination and conversion.

    (a) Assigned insurance terminates under the conditions stated in 
subpart F of this part.
    (b) (1) When a judge's insurance terminates, an assignee has the 
right to convert all or part of the group insurance to an individual 
policy on the judge. The conditions stated in subpart F of this part 
apply to assignees who elect to convert.
    (2) When there is more than 1 assignee, each assignee has the right 
to convert all or part of his/her share of the insurance. Any assignee 
who doesn't convert loses all ownership of the insurance.
    (3) When there is more than 1 assignee and they wish to convert the 
assigned insurance to individual policies on the judge, the maximum 
amount of insurance each assignee will be able to convert is determined 
by the dollar amount corresponding to the assignee's share of the total 
insurance. This amount will be rounded up to the next higher thousand, 
if it's not already an even thousand dollar amount. [[Page 21771]] 
    (4) Premiums for converted life insurance are based on the insured 
judge's age and class of risk at the time the conversion policy is 
issued.
    (5) The employing office must notify each assignee of the 
conversion right at the time the assigned group insurance terminates.


Sec. 870.908  Annuitants and compensationers.

    (a) If a judge assigns basic insurance and later becomes eligible 
to continue such insurance coverage while receiving annuity or 
compensation as provided in Sec. 870.701:
    (1) At the time he/she retires or becomes eligible to receive 
compensation, the judge may elect unreduced or partially reduced 
insurance coverage as provided in Sec. 870.702(a).
    (2) After the judge has made the election described in paragraph 
(a)(1) of this section, the assignee (or, if more than one, all of the 
assignees acting together) may, at any time, elect to cancel all or 
part of the basic insurance coverage as provided in Sec. 870.702(b).
    (b) Judges retiring under 28 U.S.C. 371 (a) and (b), 28 U.S.C. 
372(a), and 26 U.S.C. 7747 are considered employees under the FEGLI 
law. Insurance for these judges continues without interruption or 
reduction upon retirement. The amount of basic insurance for a judge 
who elects to receive compensation in lieu of annuity will be computed 
according to Sec. 870.703(e)(2).


Sec. 870.909  Designations and changes of beneficiary.

    (a) Each assignee (or the legally appointed guardian of an 
assignee) may designate a beneficiary or beneficiaries to receive 
insurance benefits upon the death of the insured judge and may also 
later change the beneficiaries. Assignees may designate themselves the 
primary beneficiaries and name other conditional beneficiaries to 
receive insurance benefits if the assignees die before the insured 
judge.
    (b) Benefits for assigned insurance are paid to an assignee's 
estate if the assignee dies before the insured judge and:
    (1) The assignee did not designate a beneficiary; or
    (2) The assignee's designated beneficiary dies before the insured 
judge.
    (c) An assignment automatically cancels a judge's prior designation 
of beneficiary.
    (d) The provisions of Sec. 870.802 apply to designations of 
beneficiary made by assignees.


Sec. 870.910  Notification of current addresses.

    Each assignee and each beneficiary of an assignee must keep the 
office where the assignment is filed informed of his/her current 
address.

Subpart J--Benefits for United States Hostages in Iraq and Kuwait 
and United States Hostages Captured in Lebanon


Sec. 870.1001  Purpose.

    This subpart sets forth the conditions for life insurance coverage 
according to the provisions of section 599C of Pub. L. 101-513.


Sec. 870.1002  Definitions.

    In this subpart:
    Hostage and hostage status have the meaning set forth in section 
599C of Pub. L. 101-513.
    Pay period for individuals insured under this subpart means the pay 
period set by the U.S. Department of State.
    Period of eligibility means the period beginning on the effective 
date set forth in Sec. 870.1004 and ending 12 months after hostage 
status ends.


Sec. 870.1003  Coverage and amount of insurance.

    (a) An individual is covered under this subpart when the U.S. 
Department of State determines that the individual is eligible under 
section 599C of Pub. L. 101-513.
    (b) (1) The amount of basic life insurance for these individuals is 
the amount specified in Sec. 870.202, subject to the applicable 
conditions stated in this subpart.
    (2) The BIA under Sec. 870.202 is the amount of the payment 
specified in section 599C(b)(2) of Pub. L. 101-513, rounded to the next 
higher $1,000, plus $2,000.
    (c) Individuals who have basic insurance under this section also 
have group accidental death and dismemberment insurance.
    (d) Individuals insured by this subpart are not eligible for 
optional insurance.
    (e) Individuals insured by this subpart are not considered 
employees for the purpose of this part.
    (f) Eligibility for insurance under this subpart depends on the 
availability of funds under section 599C(e) of Pub. L. 101-513.


Sec. 870.1004  Effective date of insurance.

    Insurance under this subpart was effective on August 2, 1990, for 
hostages in Iraq and Kuwait and on January 1, 1990, for hostages 
captured in Lebanon, unless the U.S. Department of State sets a later 
date.


Sec. 870.1005  Premiums.

    (a) Government contributions and employee withholdings required 
under subpart D of this part are paid from the funds provided under 
section 599C(e) of Pub. L. 101-513.
    (b) If an individual isn't insured for the full pay period, 
premiums are paid only for the days he/she is actually insured. The 
daily premium is the monthly premium multiplied by 12 and divided by 
365.
    (c) OPM may accept the payments required by this section in advance 
from a State Department appropriation, if necessary to fund the 12-
month period of coverage beginning the earlier of:
    (1) The day after sanctions or hostilities end; or
    (2) The day after the individual's hostage status ends.
    (d) OPM will place any funds received under paragraph (c) of this 
section in an account set up for that purpose. OPM will make the 
deposit required under 5 U.S.C. 8714 from the account when the 
appropriate pay period occurs.


Sec. 870.1006  Cancellation of insurance.

    (a) An individual who is insured under this subpart may cancel his/
her insurance at any time by written request. The cancellation is 
effective on the 1st day of the pay period after the pay period in 
which the U.S. Department of State receives the request.
    (b) Cancellation must be requested by the insured individual and 
cannot be requested by a representative acting on the individual's 
behalf.
    (c) An individual who cancels the insurance under this section 
cannot obtain the insurance again, unless the U.S. Department of State 
determines that it would be against equity and good conscience not to 
allow the individual to be insured.


Sec. 870.1007  Termination and conversion.

    (a) Insurance under this subpart terminates 12 months after hostage 
status ends, unless the individual cancels the insurance earlier.
    (b) Insured individuals whose coverage terminates are eligible for 
the 31-day extension of coverage and conversion as set forth in subpart 
F of this part, unless the individual cancelled the coverage.


Sec. 870.1008  Order of precedence and designation of beneficiary.

    Insurance benefits are paid under the order of precedence set forth 
in 5 U.S.C. 8705 and under the provisions of subpart H of this part. 
[[Page 21772]] 


Sec. 870.1009  Responsibilities of the U.S. Department of State.

    (a) The U.S. Department of State functions as the ``employing 
office'' for individuals insured under this subpart.
    (b) The U.S. Department of State must determine the eligibility of 
individuals under Pub. L. 101-513 for insurance under this subpart. 
This includes determining whether an individual is barred from 
insurance under chapter 87 of title 5 U.S.C. because of other life 
insurance, as provided in section 599C of Pub. L. 101-513.

 PART 871--[REMOVED]

    2. Part 871 is removed.

 PART 872--[REMOVED]

    3. Part 872 is removed.

 PART 873--[REMOVED]

    4. Part 873 is removed.

 PART 874--[REMOVED]

    5. Part 874 is removed.

[FR Doc. 95-10778 Filed 5-2-95; 8:45 am]
BILLING CODE 6325-01-P