534 Special Circumstances Affecting Coverage

534.1 LWOP

534.11 Twelve–Month Maximum

Employees may be in nonpay status up to 12 months and their basic and optional life insurance coverage continues without cost. At the end of 12 months, the coverage ceases. The 12 months in nonpay status may be continuous or may be broken by periods of less than 4 consecutive months in nonpay status. If employees have at least 4 consecutive months during which they receive some pay in each pay period after a period of nonpay status, they are entitled to begin a new 12–month period.

534.12 Notice of Right of Conversion

See 535.63.

534.13 Return to Duty

If employees return to positions not excluded from coverage after their insurance coverage ceases due to expiration of the allowable maximum 12 months in nonpay status, they are again eligible for insurance. Restoration is automatic at the time employees actually enter on duty in a pay status unless they file a waiver of Basic Life Insurance (or decline optional insurance). If the employees again go on LWOP and have not completed 4 consecutive months in pay status, insurance coverage ceases the last day of the last pay period in which they were in pay status.

534.14 Appointment to Temporary Position
534.141 Coverage

If employees in nonpay status, who are entitled to free insurance (basic and/or optional) while in a nonpay status, accept temporary appointments to positions excluded from insurance coverage, they continue to receive insurance coverage. Basic Life Insurance coverage is based on the higher salary rate. Upon termination of the temporary appointment, the employee’s insurance coverage reverts to the first position and basic insurance coverage is based on that salary rate.

534.142 New Twelve–Month Maximum

If employees serve and receive pay for 4 consecutive months in temporary positions, they are entitled to begin a new 12–month maximum nonpay period during which their insurance continues.

534.143 Optional Insurance Withholdings

Withholdings for optional insurance are made from the employee’s pay earned in the temporary position.

534.15 Retirement Annuity Pending

Employees who are in nonpay status while their application for retirement annuity is pending, continue to be insured until the expiration of the 12 months in a nonpay status or until employees are separated, whichever occurs first. If insurance is terminated for either of these reasons, it is restored to employees as annuitants provided:

  1. Annuities become effective no later than 1 month after the insurance held as employees is terminated, and
  2. Employees are eligible to continue insurance coverage into retirement. (See 536.1.)

534.2 Service in Employee Organization

534.21 Election
534.211 General

Employees who are granted leave without pay (LWOP) to serve as full–time officers or employees of an employee organization composed primarily of federal/postal government employees may elect to continue life insurance coverage for as long as they are on LWOP. The election is filed with the employee’s installation head within 60 days after LWOP begins.

534.212 Employee Elects to Continue

If employees elect to continue insurance coverage, they pay for (or arrange to have paid), on a current basis, the total premium costs as determined by the Eagan ASC.

534.213 Employee Does Not Elect to Continue

If employees do not elect to continue insurance coverage, the insurance continues for the maximum 12–month LWOP period, and then is terminated.

534.22 Installation Head Responsibility
534.221 Notify Employee of Right to Elect

As soon as LWOP is authorized, the installation head notifies the employee of the right to elect to continue or to discontinue insurance coverage. The employee’s election must be in writing.

534.222 Set Up Reminder System

The installation sets up a follow–up system to remind employees that an election is to be filed within a 60–day time limit.

534.223 Contact Employee

If an employee does not make an election, the installation contacts the employee to urge that an election be made (if possible).

534.224 Document Action

If, after being contacted, the employee continues to refuse to make the election, all action taken is documented. Failure of the employee to make an election is considered an election not to continue the insurance.

534.225 Copy of Election Filed

A copy of the election (or installation head’s documentation) is filed in the employee’s official personnel folder.

534.3 Employees Receiving OWCP Benefits

534.31 Eligibility
534.311 Basic Life Insurance

Employees receiving OWCP benefits may retain basic insurance (not accidental death and dismemberment) provided:

  1. On the day that basic insurance would otherwise terminate, they are in receipt of benefits under the Federal Employees’ Compensation Act because of disease or injury, and the Department of Labor has held that they are unable to return to duty.
  2. They do not convert to an individual policy.
  3. They have been insured under the FEGLI Program for 5 years of service immediately preceding the date they became entitled to benefits under the Federal Employees’ Compensation Act, or the full period(s) of service since their first opportunity to be insured if less than 5 years.
534.312 Optional Insurance

Employees may retain optional life insurance (not accidental death and dismemberment) provided:

  1. They are eligible to continue Basic Life Insurance.
  2. They have had optional insurance in force no less than (1) the 5 years of service immediately preceding the date the employee becomes entitled to compensation benefits, or (2) if less than 5 years, the full period(s) of service during which the optional insurance was available to them.
534.32 Termination of Insurance

The continued insurance coverage accorded employees who are receiving OWCP benefits and who are unable to return to active service terminates when their compensation benefits cease, or when the Department of Labor rules that the employees are able to return to active service. These employees do not have a 31–day extension of life insurance (see 535.62), nor do they have the privilege of converting to an individual policy (see 535.7). They may, however, resume coverage if they return to active service in a position which affords life insurance coverage, i.e., a career position (see 534.33).

534.33 Resumption of Insurance

Employees who receive OWCP benefits and then return to pay status (or separate and then are reemployed) again become insured as employees. Employees who receive OWCP benefits and then receive an immediate Civil Service annuity retain insurance coverage as annuitants.

534.34 Notice of Right of Conversion or Continuation
534.341 Choice

Employees who have completed 12 months in a nonpay status and who are receiving benefits under the Federal Employees’ Compensation Act are given SF 2819, Notice of Conversion Privilege, and SF 2821, Agency Certification of Insurance Status, and are informed that they have a choice of converting to an individual policy or continuing with group life insurance (not accidental death or dismemberment) while in receipt of compensation. Employees must meet eligibility requirements cited in 534.31 in order to continue coverage.

534.342 Cost

If an employee is eligible to continue coverage during receipt of compensation, basic insurance continues without cost provided compensation benefits commence prior to January 1, 1990, and the employee elects a 75 percent reduction in coverage after attaining age 65. If the employee is also eligible to continue optional insurance, premiums are withheld from compensation payments.

534.343 Procedures for Continuation

If an eligible employee elects to continue group life insurance, the following procedures apply:

  1. The employing office has the employee complete SF 2818, Continuation of Life Insurance Coverage as a Retiree or Compensationer.
  2. The employing office forwards to OPM the following:
    1. SF 2821.
    2. SF 2818, Continuation of Life Insurance Coverage as a Retiree or Compensationer.
    3. SF 2817 and/or SF 176, Life Insurance Election (all copies).
    4. SF 2823 and/or SF 54, Designation of Beneficiary (all copies).

    Forms are forwarded by certified or registered mail to:

    PO BOX 45
    BOYERS PA 16017–0045

    A brief note should be attached to alert OPM that forms are being forwarded for “CSI (Civil Service Insurance) Processing.” A record of the action including copies of all forms should be kept in the employee’s OPF.

  3. OPM certifies insurance status and postretirement election to Department of Labor (OWCP) and then informs employee of insurability status.

534.4 Living Benefits

Employees with written documentation of a medical prognosis of terminal illness, indicating life expectancy that does not exceed 9 months, are eligible to elect a lump sum payment of life insurance equal to or less than the value of their Basic Life Insurance. This option is not available for additional optional insurance elections.

Elections must be submitted to the Office of Federal Employees’ Group Life Insurance (OFEGLI) on Form FE–8, Election of Living Benefits. This form is not available in local personnel services offices and must be requested directly from OFEGLI by calling 1–800–633–4542.

534.5 Assignment of Life Insurance

Assignment means that the employee gives up ownership of all life insurance elected under OFEGLI (except Option C — Family) with no option to rescind the decision. The assignee becomes the beneficiary and the employee continues to pay premiums as appropriate. The employee no longer has the right to change beneficiaries or reduce the amount of coverage.

Assignments are usually made for one of the following reasons:

  1. To comply with a court order for divorce.
  2. For inheritance tax purposes.
  3. To obtain cash before death.
  4. To satisfy a debt.

Form RI 76–10, Assignment of Federal Employees’ Group Life Insurance, is required and may be obtained from the personnel services office.

534.6 Erroneous Enrollments

In instances where an employee is allowed to enroll or increase benefits in either Basic or optional insurance and does not meet the criteria for completion of SF 2817, the enrollment may be allowed to stand. If the coverage remains in force for 2 years or more and the error is not detected and corrected within that 2–year period, the enrollment continues under the FEGLI Incontestability Clause.