Key Takeaways
- FEGLI Option B offers additional group life insurance for federal employees in customizable multiples of salary.
- Understanding costs, enrollment rules, and retirement implications is essential before electing or changing FEGLI Option B coverage.
The Federal Employees’ Group Life Insurance (FEGLI) program is a cornerstone benefit for federal workers, but its optional components like Option B can be confusing. If you’re uncertain about what Option B covers, how much it costs, or what happens to your coverage as you approach retirement, this straightforward guide will help you navigate the essentials with clarity and confidence.
What Is FEGLI Option B?
FEGLI program overview
The Federal Employees’ Group Life Insurance (FEGLI) program is the largest group life insurance plan in the United States, providing basic life coverage to most federal workers. The standard Basic coverage includes a benefit generally equal to your annual pay, rounded up to the next thousand dollars, plus an additional $2,000. All eligible employees are automatically enrolled in Basic coverage unless they waive it.
How Option B differs from Basic coverage
Option B is an elective feature of the FEGLI program. While Basic automatically covers most employees, Option B gives you the ability to purchase extra life insurance. Instead of a fixed amount, Option B lets you add coverage in multiples of your salary—providing increased protection for your family or financial obligations. Unlike Basic, the cost for Option B is entirely paid by you, the enrollee, and its cost structure is based on your age and elected coverage amount.
How Does Option B Coverage Work?
Coverage multiples explained
FEGLI Option B coverage is highly customizable. If you’re eligible, you may choose from one to five multiples of your annual basic pay (after rounding up to the nearest $1,000). For example, if your salary is $62,500, your eligible Option B coverage could range from $63,000 to $315,000, depending on the multiple you select. You may change your elected multiples within permitted opportunities, but increases can require evidence of insurability or qualifying life events.
Eligibility requirements
To enroll in Option B, you must already have Basic coverage in force. You typically elect Option B when you’re first hired or during special open seasons announced by the U.S. Office of Personnel Management (OPM). You may also acquire Option B if you experience a “qualifying life event,” such as marriage, divorce, or the birth of a child. If you decline Option B or later drop it, re-enrollment (without qualifying circumstances) often requires medical underwriting through a satisfactory Statement of Health.
What Costs Are Involved?
Premium structure and payment
The key distinction with Option B is that you pay the full cost of this added insurance—it is not subsidized by your agency. Premiums are determined by your age and the number of multiples you select. As you move into higher age brackets, your per-multiple monthly premiums automatically increase. Payments are deducted from your federal paycheck, with adjustments occurring as you cross into new age categories as defined by OPM.
Factors affecting Option B costs
Several elements affect the cost of your Option B coverage:
- Age band: Premium rates rise every five years beginning at age 35.
- Coverage multiples: Each elected multiple increases your total premium proportionally.
- Pay changes: If your base pay increases, your total coverage and monthly premium may rise accordingly—since Option B coverage is a function of your salary.
Official rates and current tables are published by OPM, which you should consult for up-to-date fee details.
Key Considerations Before Enrolling
Enrollment timing and rules
You generally have three main windows to elect Option B:
- When you are first eligible for FEGLI coverage, such as upon federal employment.
- After certain qualifying life events (e.g., marriage, divorce, or birth/adoption of a child).
- During government-wide FEGLI Open Season enrollments, which are not frequent.
Outside of these windows, you may apply only by submitting medical evidence of insurability. It’s important to note that coverage takes effect following the pay period in which you meet all enrollment requirements.
Continuation in retirement
Maintaining Option B into retirement is possible if you’ve been insured under Option B for the five years immediately before retiring. Upon retirement, you’ll be asked to choose how much of your Option B coverage you wish to continue and at what reduction level, which influences post-retirement premiums. You may elect a “full reduction” (coverage phases down to zero over time with no premium in retirement), a “no reduction” (you keep full coverage but continue paying age-based premiums), or something in between. Each choice involves different cost and benefit tradeoffs, so it’s essential to review these rules before finalizing your election as a retiree.
How Does FEGLI Option B End?
Termination and reduction options
Option B coverage ends if you:
- Cancel the coverage while still employed.
- Separate from federal service without qualifying for an immediate annuity.
- Reach retirement but elect to drop coverage or allow it to reduce.
If you keep Option B into retirement, you’ll choose a reduction schedule. With a “full reduction,” coverage gradually decreases (typically 2% per month) after age 65 or once you retire, and premiums eventually stop. With a “no reduction” option, you retain full coverage but must continue paying premiums throughout retirement.
Rules for changing or cancelling coverage
You may reduce or cancel Option B at any time by submitting the appropriate forms to your agency’s HR office or to OPM if already retired. Increasing multiples or reenrolling after cancellation is possible only during specific windows—generally following a qualifying life event or FEGLI Open Season, or with medical approval.
Is FEGLI Option B Right for Everyone?
Who might consider keeping coverage
Option B can be useful if you have dependents, significant debts, or anticipate estate obligations not addressed by Basic coverage alone. Some federal employees elect or keep Option B for peace of mind, especially while they have higher financial dependents or obligations. However, premiums generally increase with age, making retention into advanced retirement less common for some.
Common alternatives within FEGLI
Within FEGLI, you also have Option A (a fixed additional sum) and the Basic plan. Each serves different purposes and has distinct cost and eligibility structures. Some employees consider lowering Option B multiples prior to retirement, especially if their need for additional coverage decreases as debts are paid or family needs change. Reviewing all FEGLI options helps ensure your coverage meets current goals and circumstances.
