[Federal Register Volume 78, Number 246 (Monday, December 23, 2013)]
[Proposed Rules]
[Pages 77365-77366]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-30415]


========================================================================
Proposed Rules
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains notices to the public of 
the proposed issuance of rules and regulations. The purpose of these 
notices is to give interested persons an opportunity to participate in 
the rule making prior to the adoption of the final rules.

========================================================================


Federal Register / Vol. 78, No. 246 / Monday, December 23, 2013 / 
Proposed Rules

[[Page 77365]]



OFFICE OF PERSONNEL MANAGEMENT

5 CFR Part 870

RIN 3206-AM96


Federal Employees' Group Life Insurance Program: Options B and C

AGENCY: U.S. Office of Personnel Management.

ACTION: Proposed rule.

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

SUMMARY: The U.S. Office of Personnel Management (OPM) is proposing to 
amend the Federal Employees' Group Life Insurance (FEGLI) regulations 
to provide an election opportunity for employees enrolled in FEGLI 
Option B and Option C. This new procedure replaces the procedure by 
which FEGLI enrollees elect the allowable multiples of coverage they 
wish to continue during retirement or while receiving compensation.

DATES: Comments are due on or before February 21, 2014.

FOR FURTHER INFORMATION CONTACT: Ronald Brown, Policy Analyst, (202) 
606-0004, or by email to Ronald.Brown@opm.gov.

SUPPLEMENTARY INFORMATION: On October 30, 1998, Public Law 105-311, 112 
Stat. 2950, was signed into law. This law, the Federal Employees Life 
Insurance Improvement Act, changed many parts of the FEGLI Program. 
Before the enactment of Public Law 105-311, Option B and C coverage 
began to reduce for annuitants when they reached age 65. Both coverages 
were reduced by 2% per month until there was no coverage left. This 
reduction was automatic, and annuitants had no choice about it.
    Public Law 105-311 allows an annuitant to make an election at 
retirement as to whether or not he/she wants Option B and Option C 
coverage to reduce. (This also applies to persons becoming insured as 
compensationers.)
    Previous FEGLI regulations provided that shortly before an 
individual's 65th birthday, he/she would receive a reminder notice, 
showing what coverage the annuitant/compensationer elected and what the 
premiums would be for coverage beyond age 65. The individual then had 
an opportunity to change his/her election, including choosing to have 
some multiples of Optional insurance reduced and others not reduced. 
For a person already over age 65 at the time of retirement or becoming 
insured as a compensationer, the reminder notice was sent as soon as 
the retirement processing was completed.
    On October 1, 2010, OPM published FEGLI final regulations (75 FR 
60573) with miscellaneous changes, clarifications, and corrections, 
ending the election opportunity at age 65. OPM has further reviewed the 
changes made to 5 CFR 870.705(b) and 870.705(d) that required that any 
employee separating for retirement or becoming insured as a 
compensationer elect the number of multiples of Option B and Option C 
insurance he or she wants to continue by making an election at the time 
of retirement or at the time he or she becomes insured as a 
compensationer.
    In light of OPM policy to expand the options available under the 
FEGLI program and the comments received in response to our October 1, 
2010 ruling, we are reversing this regulation so that the post-65 
election for FEGLI Option B and Option C will be made at the time the 
enrollee attains age 65. We are restoring this election opportunity in 
order to allow enrollees expanded flexibility to choose among several 
retirement coverage levels beginning at age 65.

Changes

    Public Law 105-311, the Federal Employees Life Insurance 
Improvement Act, 112 Stat. 2950, enacted October 30, 1998, amended 
chapter 87 of title 5, U.S. Code, to allow a retiring employee to elect 
either No Reduction or Full Reduction for his/her Option B and Option C 
coverage. This election was to be made at the time of retirement, the 
same as the election for Basic insurance. Implementing this provision 
required programming changes to the electronic records system for an 
annuitant to allow for ``mixed'' elections, i.e., electing reductions 
for some coverage but not for other coverage. While these system 
changes were being made, an annuitant was required to elect either No 
Reduction or Full Reduction for Option B and Option C coverage at the 
time of retirement. Then, shortly before the annuitant's 65th birthday, 
the insured was given a second opportunity to make another election, 
this time being allowed to choose No Reduction for some multiples and 
Full Reduction for others. While the law states that the election must 
be made at the time of retirement, enrollees affected by this provision 
have expressed interest in having a second election. Thus, we are 
restoring the opportunity for a second election at age 65. This change 
can be found in section 870.705(b) and 870.705(d).

Regulatory Flexibility Act

    I certify that this regulation will not have a significant economic 
impact on a substantial number of small entities because the regulation 
only affects life insurance benefits of Federal employees and retirees.

Executive Order 12866, Regulatory Review

    This rule has been reviewed by the Office of Management and Budget 
in accordance with Executive Order 12866.

List of Subjects in 5 CFR Part 870

    Administrative practice and procedure, Government employees, Life 
insurance, Retirement.

    U.S. Office of Personnel Management.
Katherine Archuleta,
Director.
    For the reasons stated in the preamble, OPM proposes to amend 5 CFR 
part 870 as follows:

PART 870--FEDERAL EMPLOYEES' GROUP LIFE INSURANCE PROGRAM

0
1. The authority citation for 5 CFR part 870 is revised to read as 
follows:

    Authority: 5 U.S.C. 8716; Subpart J also issued under section 
599C of Pub. L. 101-513, 104 Stat. 2064, as amended; Sec. 
870.302(a)(3)(ii) also issued under section 153 of Pub. L. 104-134, 
110 Stat. 1321; Sec. 870.302(a)(3) also issued under sections 
11202(f), 11232(e), and 11246(b) and (c) of Pub. L. 105-33, 111 
Stat. 251, and section 7(e) of Pub. L. 105-274, 112 Stat. 2419; Sec. 
870.302(a)(3) also issued under section 145 of Pub. L. 106-522, 114 
Stat. 2472; Secs. 870.302(b)(8), 870.601(a), and 870.602(b) also 
issued under Pub. L. 110-279, 122 Stat. 2604; Subpart E also issued 
under 5 U.S.C. 8702(c); Sec. 870.601(d)(3) also issued under 5 
U.S.C. 8706(d); Sec. 870.703(e)(1) also issued under section 502 of 
Pub. L. 110-177, 121 Stat.

[[Page 77366]]

2542; Sec. 870.705 also issued under 5 U.S.C. 8714b(c) and 8714c(c); 
Public Law 104-106, 110 Stat. 521.

 Subpart G--Annuitants and Compensationers

0
2. Amend Sec.  870.705 by revising paragraph (b)(3)(ii), adding 
paragraph (b)(4), and revising paragraph (d)(1)(i) to read as follows:


Sec.  870.705  Amount and election of Option B and Option C.

* * * * *
    (b) * * *
    (3) * * *
    (ii) Except as provided in paragraph (b)(4) of this section, after 
reaching age 65, an annuitant or compensationer cannot change from Full 
Reduction to No Reduction.
    (4)(i) Shortly before an annuitant or compensationer's 65 birthday, 
the retirement system will send a reminder about the election he/she 
made and will offer the individual a chance to change the election. At 
that time, the annuitant or compensationer can choose to have some 
multiples of Option B and Option C reduce and some not reduce.
    (ii) If the individual is already 65 or older at the time of 
retirement or becoming insured as a compensationer, the retirement 
system will send the reminder and give the opportunity to change the 
election as soon as the retirement processing or compensation transfer 
is complete.
    (iii) If the individual assigned his/her insurance as provided in 
subpart I of this part, and if the employee elected No Reduction for 
Option B coverage at the time of retirement or becoming insured as a 
compensationer, the retirement system will send the reminder notice for 
Option B coverage to the assignee.
    (iv) An annuitant or compensationer who wishes to change his/her 
reduction election must return the notice by the end of the month 
following the month in which the individual turns 65, or if already 
over age 65, by the end of the 4th month after the date of the letter. 
An annuitant or compensationer who does not return the election notice 
will keep his/her initial election.
* * * * *
    (d)(1) * * *
    (i) Annuitants and compensationers who were under age 65 were 
notified of the option to elect No Reduction. The retirement system 
will send these individuals an actual election notice before their 65th 
birthday, as provided in paragraph (b)(4) of this section.
* * * * *
[FR Doc. 2013-30415 Filed 12-20-13; 8:45 am]
BILLING CODE 6325-39-P