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

1,112 words·~5 min read·/register/2002/12/30/02-32891

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BILLING CODE 7515-01-P OFFICE OF PERSONNEL MANAGEMENT Federal Employees' Group Life Insurance Program: New Age Bands and New Premiums AGENCY: Office of Personnel Management. 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 Election Monthly withholding for each $1,000 of your BIA before age 65 Monthly withholding for each $1,000 of your BIA after age 65 75% Reduction $0.3250 ( 1 ) 50% Reduction 0.9250 $0.60 No Reduction 2.155 1.83 1 None—Basic insurance is free. Compensationer Basic Premium per $1,000 of Insurance Election Withholding every four weeks for each $1,000 of your BIA before age 65 Withholding every four weeks for each $1,000 of your BIA after age 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 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]

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5 CFR 870
Pub. L. 105-311
112 Stat. 2950

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Notices

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

Cite5 CFR 870

Pub. L.Pub. L. 105-311

Stat.112 Stat. 2950

Cites 3Cited by 0 across 0 sources