FY 2022 begins in October – and so new Federal Employee Group Life Insurance premiums go into effect
Edward A. Zurndorfer
In Benefits Administration Letter (BAL) Number 21-204 dated September 9, 2021, the Office of Personnel Management announced new Federal Employees Group Life Insurance (FEGLI) premium rate changes. FEGLI is the group-sponsored life insurance program offered by the federal government to permanent employees and annuitants. This column discusses these premium rate changes, and what they mean to federal employees and annuitants enrolled in the FEGLI program
Effective October 1, 2021, FEGLI life insurance premium rates will change for some types of coverages. In particular, premium rates for the FEGLI “basic” insurance for employees and annuitants (who elect to retain full “basic” Insurance into and throughout retirement) will increase. Those employees who elect a 50 percent reduction to their “basic” insurance during retirement will also see an increase in their premium rates. Most premium rates for Option A, Option B, and Option C will decrease. Premium rates for older age bands (post-age 74) of Option B and Option C will increase. The full list of new FEGLI premium rate changes for the various coverages are shown and discussed below.
The effective date for the new premiums is Oct. 1, 2021. Payroll offices must apply the new premiums for the first pay period beginning on or after that date. For many federal agencies, that date is Oct. 10, 2021.
FEGLI Premium Rates Effective October 1, 2021
FEGLI “basic” insurance is an employee’s current SF 50 salary rounded up to the next $1,000 plus $2,000. For example, if an employee’s current SF 50 salary is $94,200, then the employee’s FEGLI “basic” insurance is equal to $95,000 plus $2,000, or $97,000. Employees pay 2/3 of the premium cost and the federal government pays the other 1/3. Bi-weekly premium costs (per $1,000 of insurance) pre-October 1, 2021 and post-September 30, 2021 are presented in the table below.
Bi-Weekly Premium Cost for FEGLI “Basic” (per $1,000 of insurance)
| (a) Pre-Oct. 1, 2021 | (b) Post-Sept. 30, 2021 | (c) Difference [(b) – (a)] | |
| Employee | $0.150 | $0.160 | +$0.010 |
| Government | $0.075 | $0.080 | +$0.005 |
| Total | $0.225 | $0.240 | +$0.015 |
The following example illustrates:
Carlos is enrolled in FEGLI “basic” insurance. His current (2021) SF 50 salary is $122,300. His FEGLI “basic” insurance is therefore $123,000 plus $2,000 or $125,000. Under the new FEGLI “basic” premium rates that become effective in early October 2021, Carlos is paying 125 (thousand) times $0.15, or $18.75 per pay date, or $487.50 per year. When the new FEGLI premium rates take effect on Oct. 1, 2021, Carlos will be paying 125 times $0.16, or $20 per pay date, or $520 per year. Carlos will therefore be paying $520 less $487.50, or $32.50 more per year for his FEGLI “basic” insurance starting after October 1, 2021.
Annuitants pay the regular premium for “basic” insurance coverage during retirement until the month they become age 65. Starting the month after the annuitant becomes age 65 (or starting the month after they retire if they retire after age 65) FEGLI “basic” insurance is free because it is reduced to 25 percent of what it was on the day the employee retired. But if the retiring employee elects (via Form SF 2818) to keep 100 percent or 50 percent of the amount of FEGLI “basic” coverage on the day the employee retires, then there will be a premium cost. The following two tables (pre-Oct. 1,2021 and post-Sept 30,2021) summarize the premium costs:
Cost of FEGLI “Basic” Insurance After Retirement (Pre-October 1, 2021)
| Reduction Election at age 651 | Cost before age 651 | Cost on and after age 651 |
| 75% | $0.3252 | Free |
| 50% | $1.0352 | $0.712 |
| No Reduction | $2.4552 | $2.132 |
Cost of FEGLI “Basic” Insurance After Retirement (Post-September 30, 2021)
| Reduction election at age 651 | Cost before age 651 | Cost on and after age 651 |
| 75% | $0.34672 | Free |
| 50% | $1.09672 | $0.752 |
| No reduction | $2.59672 | $2.252 |
1 the month after the employee retires, if the employee retires after age 65
2 Per $1,000 of FEGLI “basic” insurance per month
Example: Cost of FEGLI “basic” insurance after retirement
Age at retirement: 62
Amount of FEGLI “basic” insurance coverage on day of retirement: $120,000
Cost of FEGLI “basic” Insurance After Retirement (Pre-October 1, 2021)
| Retirement election (reduction at age 65) | Amount of insurance after election | Cost per month before age 65 | Cost per month on and after age 65 |
| 75% | $30,000 | $39.00 | Free |
| 50% | $60,000 | $124.20 | $42.60 |
| No Reduction | $120,000 | $294.60 | $255.60 |
Cost of FEGLI “basic” Insurance After Retirement (Post-September 30, 2021)
| Retirement Election (reduction at age 65) | Amount of insurance after election | Cost per month before age 65 | Cost per month on and after age 65 |
| 75% | $30,000 | $41.60 | Free |
| 50% | $60,000 | $131.60 | $45.00 |
| No Reduction | $120,000 | $311.60 | $270.00 |
Optional Coverages
There are three optional coverages under FEGLI. Employee and annuitants pay the full premium cost with no government contribution. These optional coverages are Option A (Standard insurance – $10,000 coverage), Option B). Additional coverage up to five times SF 50 salary) and Option C (Family coverage on a spouse and children under the age of 22).
The pre-October 1,2021 and post-September 30, 2021 premium rates for Options A, B and C are presented below.
FEGLI Option A (Standard for $10,000 of Life Insurance)
| Age Band | (a) Bi-weekly Cost (pre-Oct 1, 2021) | (b) Bi-weekly Cost (post-Sept. 30, 2021) | Difference [Column(b)-Column(a)] |
| Under age 35 | $0.20 | $0.20 | $0.00 |
| 35-39 | $0.30 | $0.20 | -$0.10 |
| 40-44 | $0.40 | $0.30 | -$0.10 |
| 45-49 | $0.70 | $0.60 | -$0.10 |
| 50-54 | $1.10 | $1.00 | -$0.10 |
| 55-59 | $2.00 | $1.80 | -$0.20 |
| 60+ | $6.00 | $6.00 | $0.00 |
Note that with the exception of the under age 35 and greater than age 60, in almost all age bands, premium rates for Option A will be decreasing $0.10 bi-weekly.
FEGLI Option B Premium Cost (per $1,000 of Insurance)
| Age Band | (a) Bi-weekly Cost (pre-Oct 1, 2021) | (b) Bi-weekly Cost (post-Sept. 30, 2021) | Difference [Column(b)-Column(a)] |
| Under age 35 | $0.02 | $0.02 | $0.00 |
| 35-39 | $0.03 | $0.02 | -$0.01 |
| 40-44 | $0.04 | $0.03 | -$0.01 |
| 45-49 | $0.07 | $0.06 | -$0.01 |
| 50-54 | $0.11 | $0.10 | -$0.01 |
| 55-59 | $.20 | $0.18 | -$0.02 |
| 60-64 | $0.44 | $0.40 | -$0.04 |
| 65-69 | $0.54 | $0.48 | -$0.06 |
| 70-74 | $0.96 | $0.86 | -$0.10 |
| 75-79 | $1.80 | $1.80 | $0.00 |
| 80+ | $2.64 | $2.88 | +$0.24 |
Note that except for the age band 80 plus, Option B rates will be decreasing as of October 1, 2021.
Option C (per multiple of insurance). This insurance provides multiples (up to 5) of $5,000 for a spouse and $2,500 for each child under age 22. An employee or annuitant may elect additional coverage in multiples of up to five times the base amount. Premium cost depends on the employee or annuitant’s age (not the spouse’s or child’s age).
FEGLI Option C Family Coverage Premium Cost for Each Multiple of Coverage
| Age Band | (a) Bi-weekly Cost (pre-Oct 1, 2021) | (b) Bi-weekly Cost (post-Sept. 30, 2021) | Difference [Column(b)-Column(a)] |
| Under age 35 | $0.22 | $0.20 | -$0.02 |
| 35-39 | $0.27 | $0.24 | -$0.03 |
| 40-44 | $0.41 | $0.37 | -$0.04 |
| 45-49 | $0.59 | $0.53 | -$0.06 |
| 50-54 | $0.92 | $0.83 | -$0.09 |
| 55-59 | $1.48 | $1.33 | -$0.15 |
| 60-64 | $2.70 | $2.43 | -$0.27 |
| 65-69 | $3.14 | $2.83 | -$0.31 |
| 70-74 | $3.83 | $3.83 | $0.00 |
| 75-79 | $5.26 | $5.76 | +$0.50 |
| 80+ | $7.20 | $7.80 | +$0.60 |
Note that except for the greater than age 74 age band, Option C cost has decreased.
The following example illustrates the pre-and post-October 1,2021 monthly premium cost, (pre-Oct 1, 2021 and post-Sept 30,2021) for a retiree with $10,000 Option A coverage, $300,000 of Option B coverage, and $25,000 Option C coverage and spouse.
Pre-Oct 1,2021 Monthly Premium Cost for the Optional Coverages
| Age Band | $10,000 Option A | $300,000 (Annuitant) Option B Cost/$1,000 | $300,000 (Annuitant) Option B Cost for $300,000 | $25,000 (five multiples of $5,000 for spouse) Option C Cost Per Multiple | $25,000 (five multiples of $5,000 for spouse) Option C Cost for 5 Multiples | |
| 60-64 | $13.00 | $285.90 | $5.85 | $29.25 | ||
| 65-69 | $0.00 | $351.00 | $6.80 | $34.00 | ||
| 70-74 | $0.00 | $624.00 | $8.30 | $41.50 | ||
| 75-79 | $0.00 | $1,170.00 | $11.30 | $57.00 | ||
| 80+ | $0.00 | $1,716.00 | $15.60 | $78.00 |
Post-Sept 30,2021 Monthly Premium Cost for the Optional Coverages
| Age Band | $10,000 Option A | $300,000 (Retiree) Option B Cost/$1,000 | $300,000 (Retiree) Option B Cost for $300,000 | $25,000 (five multiples of $5,000 for spouse) Option C Cost Per Multiple | $25,000 (five multiples of $5,000 for spouse) Option C Cost for 5 Multiples | |
| 60-64 | $13.00 | $0.867 | $260.10 | $5.27 | $26.35 | |
| 65-69 | $0.00 | $1.040 | $312.00 | $6.13 | $30.65 | |
| 70-74 | $0.00 | $1.863 | $558.00 | $8.30 | $41.50 | |
| 75-79 | $0.00 | $3.900 | $1,170.00 | $12.48 | $62.40 | |
| 80+ | $0.00 | $6.240 | $1,872.00 | $16.90 | $84.50 |
Note that while the overall premium cost for Option B and Option C are generally lower (except for starting with the age band greater than age 74), an annuitant has to keep full “basic” insurance coverage in retirement in order to retain full Option B and Option C coverages. As discussed above, the cost for retaining full “basic” FEGLI life insurance in retirement is greater post-September 30, 2021.
Edward A. Zurndorfer is a CERTIFIED FINANCIAL PLANNER™ professional, Chartered Life Underwriter, Chartered Financial Consultant, Chartered Federal Employee Benefits Consultant, Certified Employees Benefits Specialist and IRS Enrolled Agent in Silver Spring, MD. Tax planning, Federal employee benefits, retirement and insurance consulting services offered through EZ Accounting and Financial Services, and EZ Federal Benefits Seminars, located at 833 Bromley Street – Suite A, Silver Spring, MD 20902-3019 and telephone number 301-681-1652. Raymond James is not affiliated with and does not endorse the opinions or services of Edward A. Zurndorfer or EZ Accounting and Financial Services. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional.
