[Federal Register Volume 64, Number 65 (Tuesday, April 6, 1999)]
[Rules and Regulations]
[Pages 16601-16602]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-8279]



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 Rules and Regulations
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  Federal Register / Vol. 64, No. 65 / Tuesday, April 6, 1999 / Rules 
and Regulations  

[[Page 16601]]


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OFFICE OF PERSONNEL MANAGEMENT

5 CFR Part 870

RIN 3206-AI49


Federal Employees' Group Life Insurance Program: Court Orders

AGENCY: Office of Personnel Management.

ACTION: Interim rule with request for comments.

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SUMMARY: The Office of Personnel Management (OPM) is issuing interim 
regulations to implement a new law, which was enacted July 22, 1998. 
This law requires that provisions of a court decree of divorce, 
annulment, or legal separation, or the terms of a court order or court-
approved property settlement agreement relating to such a court decree 
be followed instead of the otherwise existing statutory order of 
precedence for payment of benefits under the Federal Employees' Group 
Life Insurance Program.

DATES: Interim rules are effective May 6, 1999. Comments must be 
received on or before June 7, 1999.

ADDRESSES: Send written comments to Abby L. Block, Chief, Insurance 
Policy and Information Division, Office of Insurance Programs, 
Retirement and Insurance Service, Office of Personnel Management, PO 
Box 57, Washington, DC 20044; or deliver to OPM, Room 3425, 1900 E 
Street, NW, Washington, DC; or FAX to (202) 606-0633.

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

SUPPLEMENTARY INFORMATION: The Federal Employees' Group Life Insurance 
(FEGLI) law sets an order of precedence for payment of benefits 
following the death of an insured employee, annuitant, or 
compensationer (5 U.S.C. 8705). First in the order of precedence is a 
designated beneficiary. There has been no statutory limitation on 
changing designations.
    When a divorce decree requires an individual insured under FEGLI to 
name his/her children or former spouse as the beneficiary, it is 
possible the individual may not comply or may comply and then change 
the designation at a later date. This action, while potentially in 
violation of the court order, did not violate the FEGLI law.
    Pub. L. 105-205, 112 Stat. 683, enacted July 22, 1998, requires 
benefits to be paid in accordance with the terms of a court decree of 
divorce, annulment, or legal separation, or the terms of any court 
order or court-approved property settlement agreement relating to a 
court decree of divorce, annulment, or legal separation, regardless of 
whether or not the insured individual actually completes a designation 
complying with the court order, if the court order is received in the 
appropriate office before the death of the insured individual. To the 
extent provided in the court order, the court order supersedes any 
prior designation by the insured individual. Pub. L. 105-205 also 
prohibits an insured individual from changing his/her designation, 
unless the person(s) named in the court order agrees or unless the 
court order is subsequently modified by the court that originally 
issued it.
    These regulations define the types of court orders that the law 
applies to and state that the statutory order of precedence will not be 
applicable if such a court order has been received in the appropriate 
office on or after the date of enactment of the legislation and prior 
to the death of the insured. The appropriate office for active 
employees is their employing agency; the appropriate office for 
separated employees (annuitants) is OPM. For a compensationer, during 
the first 12 months of nonpay status the appropriate office is their 
employing agency; after separation or the completion of 12 months in 
nonpay status, the appropriate office is OPM. To avoid the possibility 
of a fraudulent submission, we are requiring that certified copies of 
the court orders be submitted.
    In the event of conflicting court orders, the Office of Federal 
Employees' Group Life Insurance (OFEGLI) will pay benefits based on 
whichever court order has the earliest date of execution and meets the 
requirement of having been received by the appropriate office on or 
after the date of enactment and before the death of the insured. (A 
domestic relations court order from one court does not automatically 
have the effect of modifying an existing domestic relations court order 
from another court.)
    Pub. L. 105-205 also allows a court order to direct the insured to 
make an irrevocable assignment to the person(s) named in the court 
order. However, until the insured individual properly completes an 
assignment form, the assignment does not occur.
    These regulations also correct an error to Sec. 870.506(e)(2) to 
state that eligible employees who return to Federal service after a 
break in service of 180 days or more receive whatever Optional 
insurance coverage they had before separation, if they do not submit a 
Life Insurance Election specifically electing or waiving Optional 
insurance.

Waiver of General Notice of Proposed Rulemaking

    Under section 553 (b)(3)(B) and (d)(3) of title 5, United States 
Code, I find that good cause exists for waiving the general notice of 
proposed rulemaking. These regulations implement Pub. L. 105-205, which 
became effective July 22, 1998.

Regulatory Flexibility Act

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

Executive Order 12866, Regulatory Review

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

List of Subjects in 5 CFR Part 870

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

    U.S. Office of Personnel Management.
Janice R. Lachance,
Director.

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

[[Page 16602]]

PART 870--FEDERAL EMPLOYEES' GROUP LIFE INSURANCE PROGRAM

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

    Authority: 5 U.S.C. 8716; subpart J also issued under sec. 599C 
of Pub. L. 101-513, 104 Stat. 2064, as amended; Sec. 870.302 also 
issued under sections 11202(f), 11232(e), and 11246(b) and (c) of 
Pub. L. 105-33, 111 Stat. 251; Secs. 870.101, 870.801, 870.802, and 
870.901 also issued under Pub. L. 105-205, 112 Stat. 683.

    2. In Sec. 870.101, the definition Court order is added in 
alphabetical order to read as follows:


Sec. 870.101  Definitions.

* * * * *
    Court order means any court decree of divorce, annulment, or legal 
separation, or the terms of any court order or court-approved property 
settlement agreement relating to any court decree of divorce, 
annulment, or legal separation, the terms of which require FEGLI 
benefits to be paid to a specific person or persons.
* * * * *
    3. In Sec. 870.506, the third sentence of paragraph (e)(2) is 
revised to read as follows:


Sec. 870.506  Optional insurance: cancelling a waiver.

* * * * *
    (e) * * *
    (2) * * * If the employee doesn't file a Life Insurance Election, 
in a manner designated by OPM, within the 31-day period, the employee 
gets whatever Optional insurance coverage he/she had immediately before 
separating from Federal service and is considered to have waived any 
other Optional insurance. * * *
* * * * *
    4. In Sec. 870.801, paragraph (a), introductory text, is revised, 
paragraphs (d) and (e) are redesignated as paragraphs (e) and (f), and 
a new paragraph (d) is added to read as follows:


Sec. 870.801  Order of precedence and payment of benefits.

    (a) Except as provided in paragraph (d) of this section, benefits 
are paid according to the order of precedence stated in 5 U.S.C. 
8705(a), as follows:
* * * * *
    (d)(1) If there is a court order in effect naming a specific person 
or persons to receive life insurance benefits upon the death of an 
insured individual, Basic insurance and Option A and Option B insurance 
will be paid to the person or persons named in the court order, instead 
of according to the order of precedence.
    (2) To qualify a person for such payment, a certified copy of the 
court order must be received by the appropriate office on or after July 
22, 1998, and before the death of the insured.
    (3)(i) For employees, the appropriate office is their employing 
agency.
    (ii) For annuitants, the appropriate office is OPM.
    (iii) For compensationers during the first 12 months of nonpay 
status, the appropriate office is their employing agency.
    (iv) For compensationers after separation or the completion of 12 
months in nonpay status, the appropriate office is OPM.
    (4) If, within the applicable time frames, the appropriate office 
receives conflicting court orders entitling different persons to the 
same insurance, benefits will be paid based on whichever court order 
was issued first.
* * * * *
    5. In Sec. 870.802, the first sentence of paragraph (a) is revised, 
and a new paragraph (i) is added to read as follows:


Sec. 870.802  Designation of beneficiary.

    (a) Except as provided in paragraph (i) of this section, if an 
insured individual wants benefits paid differently from the order of 
precedence, he/she must file a designation of beneficiary. * * *
* * * * *
    (i) (1) Except as provided in paragraph (i)(2) of this section, if 
a court order has been received in accordance with Sec. 870.801(d), an 
insured individual cannot designate a different beneficiary, unless
    (i) The person(s) named in the court order gives written consent 
for the change, or
    (ii) The court order is modified.
    (2) If a court order has been received in accordance with 
Sec. 870.801(d), and the court order applies to only part of the 
insurance benefits, an insured individual can designate a different 
beneficiary to receive the insurance benefits that are not included 
under the court order. If the insured individual does not make a 
designation for these benefits and there is no previous valid 
designation on file, benefits will be paid according to the order of 
precedence shown in Sec. 870.801(a).
    (3) If a court order received in accordance with Sec. 870.801(d) is 
subsequently modified without naming a new person to receive the 
benefits, and a certified copy of the modified court order is received 
by the appropriate office before the death of the insured, the insured 
individual can designate a beneficiary. Benefits will be paid according 
to the order of precedence shown in Sec. 870.801(d) if the insured 
individual does not complete a new designation of beneficiary.
    6. In Sec. 870.901, paragraph (i) is added to read as follows:


Sec. 870.901  Assignments permitted

* * * * *
    (i) A court order can direct that an insured individual make an 
irrevocable assignment to the person(s) named in the court order. For 
an assignment to be effective, the insured individual must follow the 
procedures in Sec. 870.902.

[FR Doc. 99-8279 Filed 4-5-99; 8:45 am]
BILLING CODE 6325-01-P