With the substantial number of federal employees being subjected to reductions in force (RIFs), taking early retirement under the Voluntary Early Retirement Authority (VERA), or resigning or retiring early under the deferred resignation program, the issue arises as to what happens to employees’ life insurance benefits in that situation. The answer depends on several factors.
Although the insurance in the Federal Employee Group Life Insurance (FEGLI) program is provide by private insurance companies, the FEGLI program is ultimately governed by statute, 5 U.S. Code, Chapter 87, which cannot be modified without action by Congress, although OPM is authorized to issue implementing regulations (which it has done in 5 Code of Federal Regulations, Chapter 870). For separating employees, what happens to their FEGLI benefits depends on whether or not they are retiring. For those not retiring, FEGLI coverage terminates at separation from federal service, subject to an automatic extension of 31 calendar days. See 5 C.F.R. §§ 870.601, 870.602.
With no option for temporary continuation of coverage or for conversion to a non-group policy. See 5 C.F.R. §§ 894.601(a); 894.603. Employees who leave the federal government for more than 30 days then reenter federal service can enroll in FEDVIP upon their return, whether or not they were enrolled before; those who return after a break of 30 days or less can only reenroll if they were enrolled in FEDVIP prior to separation. See 5 C.F.R. § 894.512. Separating employees have the option to convert their FEGLI policy into an individual plan. See 5 C.F.R. § 870.603. The deadline for such conversion depends on if and when the employee receives notice of the right to convert coverage.
Employees retiring upon separation (either under a VERA, under discontinued service retirement (DSR) based on a RIF separation or retiring under the deferred resignation program because they are otherwise eligible to retire) may be able to retain their FEGLI benefits into retirement. See 5 C.F.R. § 894.701. This is subject to several requirements. . First, the employee must have been continuously enrolled in FEGLI for the five years prior to separation, or for the entire period that they could have been enrolled pre-separation in FEGLI if that period is less than 5 years. Second, the employee must be moving into “immediate retirement” status (whether it be MRA+10, MRA+30, early retirement under VERA or DSR, or disability retirement); a deferred retirement does not qualify (although an exception applies where an employee eligible for MRA+10 retirement postpones when they being collecting their annuity, under which the employee can potentially reenroll under FEGLI when they claim their annuity). Those employees who might only be determined to be eligible for “immediate retirement” after a delay (for example, if the Office of Personnel Management delays in finding the employee eligible for disability retirement), and who have converted to an individual policy, are eligible to revert their policy back to an ordinary FEGLI policy, provided they converted the policy before their annuity was approved.
If you are a federal employee facing a RIF or separation under a VERA or the deferred resignation program, and wish to discuss your rights, consider contacting Gilbert Employment Law to request an initial consultation.