FEGLI Optional Coverage Reductions After Federal Retirement

One of the many things that kicks in with federal retirement is a reduction in your FEGLI optional coverage and basic coverage. It’s important that you understand how the Federal Employees’ Group Life Insurance (FEGLI) Program is designed to reduce the cover for retirees in a phased manner.

The reductions kick in at the start of the second month after your 65th birthday, or the beginning of the second month following the date of your retirement, whichever comes later.

You must choose what happens at this point. As far as FEGLI Basic life insurance is concerned, you have three options. The first option is a 75 percent reduction that reduces your cover amount by two percent each month until it hits 25 percent of your pre-retirement FEGLI Basic amount. At this point, your FEGLI Basic becomes free (no premiums) and will stay at this level until your death.

The second option is a 50 percent reduction with a one percent reduction each month until it hits 50 percent of the pre-retirement amount. You will need to pay an extra premium until you die if you opt for this choice.

The third option is no reduction, and you pay an extra premium to ensure that your FEGLI Basic insurance remains unchanged after federal retirement.

FEGLI Optional Coverage in Options A, B & C 

As for FEGLI Options A, FEGLI Option B and FEGLI Option C, there are different rules for reductions in each one after retirement. So the FEGLI Option A amount you signed up for before retirement automatically starts reducing by two percent each month until it reaches $2,500, and is then free (no premium) until death once the reductions begin.

FEGLI Option B and C coverage likewise reduces by two percent each month for those who choose the full reduction option. If so, FEGLI Option B and C coverage will reduce until it reaches zero, and is free (no premium) once the reductions begin. Those who choose no reduction can maintain the same level of FEGLI Option B and FEGLI Option C they had as federal employees by paying an extra premium until death.

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