[Federal Register Volume 64, Number 246 (Thursday, December 23, 1999)]
[Rules and Regulations]
[Pages 71983-71984]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-33366]



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 Rules and Regulations
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  Federal Register / Vol. 64, No. 246 / Thursday, December 23, 1999 / 
Rules and Regulations  

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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: Final rule.

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SUMMARY: The Office of Personnel Management (OPM) is issuing a final 
regulation to incorporate new provisions resulting from the Federal 
Employees Life Insurance Improvement Act, enacted October 30, 1998. The 
regulation changes the premium rates for Basic and Optional coverages, 
changes the effective date of the birthday rule for moving from one 
premium-rated age band to another under Optional coverage, and 
establishes new age bands for Option C.

EFFECTIVE DATE: January 24, 2000.

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

SUPPLEMENTARY INFORMATION: On April 27, 1999, OPM issued an interim 
regulation in the Federal Register (64 FR 22543) that amends 5 CFR part 
870, the Federal Employees' Group Life Insurance (FEGLI) Program. The 
interim regulation published new rates for Basic and Optional coverages 
(Option A--Standard, Option B--Additional, and Option C--Family), 
removed the maximum cap on Basic and Option B, increased the number of 
multiples of coverage under Option C, expanded post-65 coverage options 
for Options B and C for annuitants and compensationers, and changed the 
birthday rule which determines the effective date an employee, 
annuitant, or compensationer begins to pay a new age-based premium 
under Optional coverages. Previously, an individual was 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 or 
her corresponding birthday. Effective April 24, 1999, the date for age-
based premium changes is the first day of the pay period following your 
birthday.
    OPM received comments from one Federal employee who expressed 
concern regarding present and future FEGLI premium rate increases for 
Optional coverage in the face of improved mortality for the population 
as a whole and the dissemination of information to employees and 
retirees on the new expanded coverage options. The premium rates for 
all coverage categories within the FEGLI Program are specific to the 
experience of the group and are not based on mortality rates within the 
general population. The rates represent actuarial estimates of premium 
income necessary to pay future expected benefits costs.
    The Federal Employees Life Insurance Improvement Act provides 
expanded choices for employees, retirees, and compensationers under 
Options B and C coverage. The final age band of 60 and over was 
expanded to 60-64, 65-69, and 70 and over for Option C to reflect the 
change made in the law allowing eligible employees upon retirement or 
entitlement to receipt of compensation to elect unreduced Option C 
coverage at retirement by paying the full premium for unreduced 
coverage after age 65. The new age bands for this coverage become 
effective on the first day of the pay period on or after April 24, 
2000. The rates are higher for these two new age bands because: (1) 
former rates for Option C were based on coverage declining by 2 percent 
per month for 50 months after an annuitant's 65th birthday, and; (2) 
the higher probability of mortality for individuals who elect full 
coverage after age 65. We were able to reduce the rates for most age 
bands up to age 60 in Options B and C because employees, annuitants, 
and compensationers will begin paying higher premiums sooner because of 
the birthday rule change.
    Improved mortality was responsible for the reduction in the Basic 
insurance premiums for those under 65. Increases in Basic premiums for 
annuitants 65 and older who elect to retain unreduced or partially 
reduced Basic coverage are based on actuarial estimates of the premium 
income needed to cover the eventual benefits costs. Basic coverage is 
not age-based.
    Under the new provisions of the law, employees who retire or become 
entitled to receipt of compensation may now elect Option B that is 
unreduced upon attaining age 65 by continuing to pay the full cost of 
the premiums after age 65. Prior to Public Law 105-311, Option B 
coverage reduced by 2 percent per month beginning on the 2nd month 
following the annuitant's 65th birthday for 50 months until coverage 
stopped. Because of the expanded option to continue coverage following 
attainment of age 65, OPM will be studying the need to add new age 
bands and associated rates to accommodate this new provision. The 
earliest that any increases would be effective is April 24, 2001, and 
any increases resulting from these changes would be phased in over a 
three-year period starting on that date.
    New program information was provided to employees during the open 
enrollment period and annuitants received a special mailing. Although 
not covered in this regulation, new implementing regulations will be 
published in the near future describing the eligibility requirements 
for continuing existing and new Option B and C coverages upon 
retirement or becoming entitled to receipt of compensation. Open 
enrollment elections will not be effective until on or after the first 
pay period beginning on April 23, 2000. Employees retiring or becoming 
entitled to receipt of compensation prior to that effective date will 
be eligible to continue existing coverage as retirees or 
compensationers if they meet the five years of coverage or first 
opportunity rule of 5 U.S.C 8714b(c)(2) and 8714c(c)(2). Employees 
electing new coverage will be subject to the five year or first 
opportunity rule.
    Annuitants and compensationers who have Basic and Optional coverage 
have been notified of the changes. Annuitants and compensationers with 
Option B coverage who retired or became entitled to the receipt of 
compensation prior to April 24, 1999 and who are 65 or older will be 
given up to 5 months in which to elect to freeze their coverage to the 
amount in effect as of April 24, 1999. Current retirees and 
compensationers under age 65 with Option B coverage will get a notice 
prior to their 65th birthday notifying them of their right to

[[Page 71984]]

elect coverage that will remain unreduced after age 65.
    Due to an inadvertent error, the supplementary information for the 
interim regulation contained an incorrect effective date for open 
enrollment changes of April 24, 2000. The correct date is the first day 
of the pay period on or after April 23, 2000.

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.

    Accordingly, under the authority of 5 U.S.C. 8716, OPM is adopting 
its interim regulations under 5 CFR part 870 as published on April 27, 
1999 [64 FR 22543], as a final rule without change.

Office of Personnel Management.
Janice R. Lachance,
Director.
[FR Doc. 99-33366 Filed 12-22-99; 8:45 am]
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