If you are a Federal government or Postal Service employee, you should have life insurance. It is essential for your job security, but you need to understand what it covers. The basic coverage is paid to you every year; the optional coverage is based on your age. You can also change your coverage options or cancel it altogether.
Basic insurance is your annual basic pay
FEGLI Basic insurance is a type of health insurance that nearly all federal employees receive. When employees are hired, they are automatically enrolled in this plan. The cost is deducted from their paycheck. Typically, an employee is eligible for up to $10,000 of coverage. However, if you need more coverage, you can pay a higher premium.
This basic coverage provides coverage for accidental death and dismemberment. AD&D coverage pays out a full or partial payment if you die or lose one body part. This additional benefit is paid out on top of your Basic coverage. Once you retire, your AD&D coverage ceases.
Premiums for FEGLI vary depending on your age. When you are young, premiums are very competitive. However, as you age, premium rates are less competitive.
Optional insurance depends on your age
The cost of optional life insurance depends on the coverage level you select and your age and the age bracket you’re in. The older you are, the more you’ll have to pay in premiums, as the policy’s coverage decreases with age. Luckily, there are ways to keep the cost of this coverage at a low level as you age.
If you’re younger than 42, you may still qualify for the MIT Optional Life Insurance. The monthly premium for $250,000 of coverage is $0.030 per $1,000 of coverage. Keep in mind, that your actual semi-monthly or weekly payroll premium may be different, due to rounding. It is important to review and update your beneficiary designation on your MIT Life Insurance policy.
Payment of Living Benefits
The Federal Employees’ Group Life Insurance Program (FEGLI) is a group life insurance plan for Federal employees. The plan is based on the employee’s service, not on age. In many cases, the government shares the cost of Basic insurance, while the employee pays the remaining 2/3. Basic insurance does not increase in cost as the employee ages, though optional insurance does.
The FEGLI policy covers individuals who have lost a spouse, child, or parent. These employees are treated just like Federal employees, and can elect to receive their FEGLI benefits, provided they meet the required pay requirements. However, it is important to remember that there are certain conditions and restrictions. If you are not sure whether FEGLI benefits are right for you, contact your human resources office to find out whether you qualify.
FEGLI offers an additional benefit for those under the age of 45. If you are 35 or younger, your FEGLI living benefit will be doubled. Once you reach age 36, the benefit will decrease 10 percent per year until you reach age 45.
Cancellation or reduction of coverage
The USPS, like other federal agencies, provides retirement health benefits to its workers. However, since FY2007, the agency has had to prefund the health benefits for its current employees. This prefunding process costs the agency about $5 billion a year. Currently, the agency does not have enough cash to cover all of these payments.
There has been a great deal of policy debate on how to pay for the benefits of USPS retirees. Many bills were introduced in the 113th Congress to address this issue. One proposed amendment would allow the USPS to reimburse any overpayment that it received for FERS. Another would provide non-FERS coverage for newly hired USPS employees.
While the proposed changes are primarily aimed at improving the financial condition of the Postal Service, they may also affect the health benefits of its employees and retirees. Federal retirees, for example, do not have to enroll in Medicare Part D because they have FEHB. Instead, they would receive the same benefits through the Medicare Part D Employer-Group Waiver Plan.