[Federal Register Volume 67, Number 250 (Monday, December 30, 2002)]
[Notices]
[Pages 79659-79662]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-32891]


=======================================================================
-----------------------------------------------------------------------

OFFICE OF PERSONNEL MANAGEMENT


Federal Employees' Group Life Insurance Program: New Age Bands 
and New Premiums

AGENCY: Office of Personnel Management.

[[Page 79660]]


ACTION: Notice of new age bands and premiums for the Federal Employees' 
Group Life Insurance Program.

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

SUMMARY: The Office of Personnel Management (OPM) has completed a study 
of funding and claims experience within the Federal Employees' Group 
Life Insurance (FEGLI) Program. OPM is announcing additional age bands 
for Optional insurance and revised premiums throughout the Program. 
This information will be maintained on the FEGLI Web site at 
www.opm.gov/insure/life.

EFFECTIVE DATE: January 1, 2003.

FOR FURTHER INFORMATION CONTACT: Kathleen Healy, (202) 606-0004.

SUPPLEMENTARY INFORMATION: OPM is issuing interim regulations in a 
separate Federal Register publication removing the Federal Employees' 
Group Life Insurance (FEGLI) premiums and age bands from 5 CFR 870 to 
streamline the process OPM uses to announce premium changes. 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. In 1999, OPM made premium changes for all FEGLI options. Most 
premiums remained unchanged or were lowered. A few rates increased due 
to the experience of the group and were necessary to sufficiently fund 
the projected future increases.
    The Federal Employees Life Insurance Improvement Act, Pub. L. 105-
311, (112 Stat. 2950) provided expanded choices for employees, 
retirees, and compensationers under Option B and Option C coverage. 
Eligible employees upon retirement or entitlement to receipt of 
compensation, may elect unreduced Option B and Option C coverage by 
paying the full premium for unreduced coverage after age 65. 
Previously, the Option B and Option C coverage of annuitants began to 
reduce at age 65, and premiums stopped. Since most covered individuals 
over age 65 were annuitants whose coverage was reducing, there was not 
need for an upper age band beyond age 60 prior to the enactment of 
Public Law 105-311. This change will necessitate a premium adjustment 
since former rates were based on coverage declaining 2 percent per 
month after age 65 for 50 months, at which point the coverage ended. 
The expanded coverage now available to retired enrollees has changed 
the demographic make-up of the 60+ age band.
    Current premium levels for older enrollees in the Option B and 
Option C category are insufficient to meet the cost of the expanded 
coverage. The legislative structure of the FEGLI Program assumes that 
we set premiums for each age band independently of the other bands, so 
that each age band is financially self-supporting. The additional 
Option C age bands (Ages 65-69, and Ages 70 and Over) were implemented 
by OPM effective April 24, 2000. The addition of Option B and Option C 
new premium levels at older age bands will eliminate the need for 
younger enrollees to subsidize the cost of insuring older enrollees. 
Without them, younger FEGLI enrollees currently in the 60+ age band 
will disproportionately bear the premium costs for the increasing 
number of older Option B and Option C (those 65 and over) enrollees. 
This is required to ensure long term premium adequacy as the average 
age of Federal employees increases and there is a boom in Federal 
retirements in the coming years. The number of enrollees who are over 
age 65 is projected to grow by 400% within twenty years.
    Premiums will be lower for Basic insurance, the post-65 No 
Reduction election, and for the majority of enrollees in Option B. 
There are not changes to the Option A premiums. Annuitants with the 
post-65 50% Reduction election will have a small increase in their 
premiums. Older enrollees (age 65 and above) in Option B will see their 
premiums increases. However, Option B enrollees between age 45 and 64 
will have a decrease in premiums. The oldest enrollees (age 75 and 
above) in Option C will also experience a premium increase.
    Premiums for the new Option B age bands (Ages 65-69), (Ages s70-
74), (Ages 75-79) and Ages 80 & Over) are being phased-in over a 3-year 
period. This Federal Register Notice reflects the premiums for phase 
one. Future Federal Register notices will be issued for both phase 2 
and phase 3. We will issue guidance to all agencies for the purpose of 
counseling employees and we will notify affected annuitants directly. 
The FEGLI premium rates will be maintained on the FEGLI Web site 
www.opm.gov/insure/life.
    The new FEGLI premium rates are as follows:

               FEGLI Basic Premium for $1,000 of Insurance
------------------------------------------------------------------------
                                                  Biweekly     Monthly
------------------------------------------------------------------------
Enrollee Premium..............................      $0.1500      $0.3250
Government Premium............................       0.0750       0.1625
                                               --------------
    Total Premium.............................       0.2250       0.4875
------------------------------------------------------------------------

    The premiums for compensationers who are paid every four weeks are 
two times the biweekly premium.

             Annuitant Basic Premium per $1,000 of Insurance
------------------------------------------------------------------------
                                              Monthly         Monthly
                                            withholding     withholding
                                             for each        for each
                Election                  $1,000 of your  $1,000 of your
                                          BIA before age   BIA after age
                                                65              65
------------------------------------------------------------------------
75% Reduction...........................         $0.3250           (\1\)
50% Reduction...........................          0.9250           $0.60

[[Page 79661]]

 
No Reduction............................          2.155            1.83
------------------------------------------------------------------------
\1\ None--Basic insurance is free.


          Compensationer Basic Premium per $1,000 of Insurance
------------------------------------------------------------------------
                                            Withholding     Withholding
                                            every four      every four
                                          weeks for each  weeks for each
                Election                  $1,000 of your  $1,000 of your
                                          BIA before age   BIA after age
                                                65              65
------------------------------------------------------------------------
75% Reduction...........................         $0.3000           (\1\)
50% Reduction...........................          0.8600         $0.5600
No Reduction............................          1.9800          1.680
------------------------------------------------------------------------
\1\ None--Basic insurance is free.


                Option A Premium per $10,000 of Insurance
------------------------------------------------------------------------
                   Age band                       Biweekly     Monthly
------------------------------------------------------------------------
Under age 35..................................        $0.30        $0.65
Ages 35-39....................................         0.40         0.87
Ages 40-44....................................         0.60         1.30
Ages 45-49....................................         0.90         1.95
Ages 50-54....................................         1.40         3.03
Ages 55-59....................................         2.70         5.85
Age 60 & Over.................................         6.00        13.00
------------------------------------------------------------------------

    The premiums for compensationers who are paid every four weeks are 
two times the biweekly premium.

                Option B Premium per $1,000 of Insurance
------------------------------------------------------------------------
                   Age band                       Biweekly     Monthly
------------------------------------------------------------------------
Under age 35..................................        $0.03       $0.065
Ages 35-39....................................         0.04        0.087
Ages 40-44....................................         0.06        0.130
Ages 45-49....................................         0.09        0.195
Ages 50-54....................................         0.14        0.303
Ages 55-59....................................         0.28        0.607
Ages 60-64....................................         0.60        1.300
Ages 65-69....................................         0.71        1.538
Ages 70-74....................................         0.87        1.885
Ages 75-79....................................         1.07        2.318
Ages 80 & Over................................         1.27        2.752
------------------------------------------------------------------------

    The premiums for compensationers who are paid every four weeks are 
two times the biweekly premium.

               Option C Premium per Multiple of Insurance
------------------------------------------------------------------------
                   Age band                       Biweekly     Monthly
------------------------------------------------------------------------
Under age 35..................................        $0.27        $0.59
Ages 35-39....................................         0.34         0.74
Ages 40-44....................................         0.46         1.00
Ages 45-49....................................         0.60         1.30
Ages 50-54....................................         0.90         1.95
Ages 55-59....................................         1.45         3.14
Ages 60-64....................................         2.60         5.63
Ages 65-69....................................         3.00         6.50
Ages 70-74....................................         3.40         7.37

[[Page 79662]]

 
Ages 75-79....................................         4.50         9.75
Ages 80 & Over................................         6.00        13.00
------------------------------------------------------------------------

    The premiums for compensationers who are paid every four weeks are 
two times the biweekly premium.

U.S. Office of Personnel Management.
Kay Coles James,
Director.
[FR Doc. 02-32891 Filed 12-27-02; 8:45 am]
BILLING CODE 6325-50-M