[Federal Register Volume 64, Number 80 (Tuesday, April 27, 1999)]
[Rules and Regulations]
[Pages 22543-22544]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-10595]



 ========================================================================
 Rules and Regulations
                                                 Federal Register
 ________________________________________________________________________
 
 This section of the FEDERAL REGISTER contains regulatory documents 
 having general applicability and legal effect, most of which are keyed 
 to and codified in the Code of Federal Regulations, which is published 
 under 50 titles pursuant to 44 U.S.C. 1510.
 
 The Code of Federal Regulations is sold by the Superintendent of Documents. 
 Prices of new books are listed in the first FEDERAL REGISTER issue of each 
 week.
 
 ========================================================================
 

  Federal Register / Vol. 64, No. 80 / Tuesday, April 27, 1999 / Rules 
and Regulations  

[[Page 22543]]


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

OFFICE OF PERSONNEL MANAGEMENT

5 CFR PART 870

RIN 3206-AI54


Federal Employees--Group Life Insurance Program: New Premiums

AGENCY: Office of Personnel Management.

ACTION: Interim regulations with request for comments.

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

SUMMARY: The Office of Personnel Management is issuing interim 
regulations as a result of the Federal Employees Life Insurance 
Improvement Act, enacted October 30, 1998, to expand the number of age 
bands in the Federal Employees' Group Life Insurance (FEGLI) Program, 
to implement new premium rates for all coverage categories, and to 
change the current birthday rule effective date for Optional insurance 
when an employee, annuitant, or compensationer moves from one premium-
rated age band to another for Optional insurance. The purpose of these 
regulations is to publish the new changes within the time frame 
prescribed by law.

DATES: Interim regulations are effective April 24, 1999. Comments must 
be received on or before May 27, 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, P.O. 
Box 57, Washington, DC 20044; delivered to OPM, Room 3425, 1900 E 
Street NW, Washington, DC; or FAX to (202) 606-0633.

FOR FURTHER INFORMATION CONTACT: Sharon Neuner, (202) 606-0004.

SUPPLEMENTARY INFORMATION: The Federal Employees Life Insurance 
Improvement Act increases the options available under the FEGLI Program 
to provide greater choice of coverage and to continue coverage that 
would otherwise terminate. This has necessitated an expansion of the 
number of age bands and a change in the premium rates for all coverage 
categories. Additionally, the interim regulations change the current 
birthday rule effective date for Optional insurance when an employee, 
annuitant, or compensationer moves from one premium-rated age band to 
another for Optional insurance.
    The standard age band of ``60 and over'' has been divided into 
three new age bands of 60-64, 65-69, and 70 and over for Option C 
insurance. Option C (Family) insurance new age bands are necessary to 
accommodate changes provided under the law, which allow for the 
election of unreduced Option C at retirement by continuing to pay 
premiums after age 65. Currently, an individual is considered to have 
reached 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. Effective April 24, 1999, the date for age-
banded premium rate changes as a result of a birthday will be the first 
day of the pay period following the pay period in which the birthday 
occurs. For enrollees whose birthday occurs between January 1 and April 
23, 1999, the effective date of the age-banded change will be the first 
pay period beginning on or after April 24, 1999. (For retirees, any 
changes in premium levels will be reflected in their June 1, 1999, 
annuity payments.)
    The last premium change for Basic coverage and for some age 
categories for Option A (Standard), B, and C insurances was on the 
first pay period beginning on or after January 1, 1993. Actuarial 
analyses indicate the Federal Employees' Group Life Insurance Program 
continues to experience changes relevant to premiums, including 
improved mortality. This has resulted in a decrease in the Basic 
premium rate.
    The reduction in Option A rates is due to improved morbidity. The 
reduction in Option B and C premium rates for enrollees in most age-
bands under age 60 is primarily due to the change in the birthday rule, 
which will move enrollees into new age bands sooner.
    As prescribed by law, there are increased coverage options under 
Option C which allow employees to elect coverage up to five times the 
current amount. The premium for Option C coverage will equal the 
premium rate for one multiple times the number of multiples selected. 
The new age bands and premium rates for 65-69 and 70 and over will go 
into effect on the first day of the pay period beginning on or after 
April 24, 2000.
    Legislative changes eliminated the maximums on Basic and Option B. 
The elimination of the maximum for Basic and Option B means that the 
available amount of Option A coverage will be $10,000 for all eligible 
employees.
    As provided by law, an open enrollment period, effective April 24, 
1999 through June 30, 1999, will be offered to employees. Employees 
will be given the chance to review their insurance needs and, if 
needed, either add to their coverage or enroll in FEGLI if they have 
previously waived some or all coverage. Proposed regulations will be 
published in the near future which expand on and clarify other changes 
in the Federal Employees' Group Life Insurance Program as a result of 
Pub. L. 105-311.
    Finally, OPM is assessing the need for new age bands and increased 
premiums associated with retirees' new option of continuing unreduced 
Option B coverage beyond age 65. Since retirees and employees are 
covered by the same premium rates, this new option has the potential 
for significantly increasing the premiums that employees age 65 and 
over now pay. For example, rates could double for employees age 70 and 
over. Given this potential impact, OPM will not determine new age bands 
and premium rates until all alternatives have been thoroughly explored 
and the earliest that any increase would be effective is April 24, 
2001. Any increases resulting from these changes would be phased in 
over a three-year period starting on that date.

Waiver of Notice of Proposed Rulemaking

    Pursuant to section 553(b)(3)(B) of title 5 of the U.S. Code, I 
find that good cause exists for waiving the general notice of proposed 
rulemaking. This notice is being waived in order to implement required 
legislation within the time specified by law and in time for open 
enrollment decision making,

[[Page 22544]]

which will be held from April 24 to June 30, 1999. Waiver of the notice 
of proposed rulemaking will provide agencies with sufficient advanced 
notice to implement systems modifications required by these interim 
regulations.

Executive Order 12866, Regulatory Review

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

Regulatory Flexibility Act

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

List of Subjects in 5 CFR Part 870

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

Office of Personnel Management.

Janice R. Lachance,
Director.

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

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, 
Pub. L. 101-513, 104 Stat. 1979, Sec. 870.302 also issued under 
secs. 11202(f), 11232(e), and 11246 (b) and (c) Pub. L. 105-33, 111 
Stat. 251 and sec. 7(e), Pub. L. 105-274, 112 Stat. 2419; 
Sec. 870.401 and 870.402 also issued under Pub. L. 105-311, 112 
Stat. 2950.

Subpart D--Cost of Insurance


Sec. 870.401  Withholdings and contributions for Basic insurance.

    2. In Sec. 870.401, paragraphs (b)(1) and (d) are revised to read 
as follows:
* * * * *
    (b)(1) During each pay period in which an insured employee is in 
pay status for any part of the period, $0.1550 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 one cent.
* * * * *
    (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 $0.3358 for each 
$1,000 of the BIA. For a compensationer who makes this election, the 
amount withheld weekly is $0.0775 for each $1,000. These withholdings 
stop the month after the month in which the annuitant 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 $0.9258 for each 
$1,000 of the BIA until the month after the month in which the 
annuitant reaches age 65; the amount is then reduced to $0.59 for each 
$1,000. For a compensationer who makes this election, the amount 
withheld weekly is $0.2175 for each $1,000 of the BIA until age 65; the 
amount is then reduced to $0.14 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 $2.3758 for each $1,000 of the BIA until the month 
after the month in which the annuitant reaches age 65; the amount is 
then reduced to $2.04 for each $1,000. For a compensationer who makes 
this election, the amount withheld weekly is $0.5475 for each $1,000 of 
the BIA until age 65; the amount is then reduced to $0.47 for each 
$1,000.


Sec. 870.402  Withholdings for Optional insurance.

    3. In Sec. 870.402, the tables in paragraphs (d)(1) and (e)(1) are 
revised and paragraphs (f)(1) and (g) are revised to read as follows:
    (d)(1) * * *


For persons under age 35.......................................    $0.30
For persons ages 35 through 39.................................      .40
For persons ages 40 through 44.................................      .60
For persons ages 45 through 49.................................      .90
For persons ages 50 through 54.................................     1.40
For persons ages 55 through 59.................................     2.70
For persons ages 60 and over...................................     6.00
 

* * * * *
    (e)(1) * * *


For persons under age 35.......................................    $0.03
For persons ages 35 through 39.................................      .04
For persons ages 40 through 44.................................      .06
For persons ages 45 through 49.................................      .10
For persons ages 50 through 54.................................      .15
For persons ages 55 through 59.................................      .31
For persons ages 60 and over...................................      .70
 

* * * * *
    (f)(1) The biweekly cost of Option C for one multiple of coverage 
is based on the age of the employee, annuitant, or compensationer. 
Table 1 shows the age bands and associated cost up through age 59, 
effective the first day of the pay period beginning on or after April 
24, 1999. The age bands 60-64, 65-69 and 70 and over, the applicable 
premium rates, and effective dates are shown in Table 2.

                                Table 1.
------------------------------------------------------------------------
 
------------------------------------------------------------------------
For persons under age 35.......................................    $0.27
For persons ages 35 through 39.................................      .34
For persons ages 40 through 44.................................      .46
For persons ages 45 through 49.................................      .60
For persons ages 50 through 54.................................      .90
For persons ages 55 through 59.................................     1.45
------------------------------------------------------------------------


                        Table 2.--Effective Date
------------------------------------------------------------------------
         First pay period on or after             4/24/99     4/24/2000
------------------------------------------------------------------------
For persons ages 60 through 64................         2.60         2.60
For persons ages 65 through 69................         2.60         3.00
For persons ages 70 and over..................         2.60         3.40
------------------------------------------------------------------------

* * * * *
    (g) For the purpose of this subpart, effective April 24, 1999, an 
individual is considered to reach age 35, 40, 45, 50, 55, 60, 65, or 70 
on the first day of the pay period following the pay period in which 
his/her birthday occurs.
* * * * *
[FR Doc. 99-10595 Filed 4-23-99; 12:21 pm]
BILLING CODE 6325-01-P