When you were hired, you were automatically enrolled in FEGLI Basic insurance unless you specifically waived it. This coverage amount equals your base salary rounded up to the next $1,000, plus an additional $2,000. As your salary rises, so does your Basic insurance coverage. The government pays two-thirds of these premiums, with the remaining one-third covered by you.
Basic Insurance in Retirement
At retirement, you’ll have three options for your Basic insurance coverage: a 75 percent reduction, a 50 percent reduction, or no reduction. Selecting the 75 percent reduction allows you to maintain the same premiums you paid as an employee until age 65, after which your insurance value decreases by 2 percent per month until it reaches 25 percent of its original face value. Premiums stop altogether at age 65.
50 Percent Reduction Option
Opting for a 50 percent reduction will result in a decrease of 1 percent per month starting at age 65 until your coverage reaches 50 percent of its face value. However, choosing this option requires higher premiums compared to the 75 percent reduction.
No Reduction Option
If you decide against any reduction, you’ll maintain full coverage but at a higher premium rate.
Additional Coverage with Option A
For those with Basic insurance, an additional $10,000 in coverage, called Option A, is available at your own expense. Though premiums are relatively low for younger employees, they gradually increase with age. Premium deductions cease at the end of the month in which you turn 65, after which your Option A coverage decreases by 2 percent per month until it reaches 25 percent of its face value.
Multiples of Coverage with Option B
Option B lets you purchase coverage equal to one to five times your annual salary, rounded up to the nearest $1,000. At retirement, you may retain your coverage level, but premiums will continue to increase as you age. However, you can reduce costs by choosing fewer multiples or allowing the coverage to decline by 2 percent per month starting at age 65, which continues for 50 months until it reaches zero.
Dependent Coverage with Option C
Option C provides coverage for your spouse and eligible dependents under a single policy, also at your own expense. Like Option B, you can select up to five multiples, with each multiple offering $5,000 in coverage for your spouse and $2,500 per child. Premiums for Option C depend on your age, and, after 65, the coverage becomes free but gradually decreases at 2 percent per month over 50 months until it reaches zero.
