Subpart E-Termination and Conversion 872.501 Termination and conversion of in

surance.

Subpart F-Annuitants and Compensationers 872.601 Amount of insurance.

872.602 Termination of annuity or compensation.

872.603 Waiver or suspension of annuity or compensation.

872.604 Reemployed annuitants. 872.605 Restored disability annuitants.

Subpart G-Assignments of Life Insurance

872.701 Assignments.

AUTHORITY: 5 U.S.C. 8716.

SOURCE: 49 FR 3042, Jan. 25, 1984, unless otherwise noted.

Subpart A-Administration and
General Provisions

§ 872.101 Actions on the policy.

Optional life insurance (referred to in this part as "additional optional insurance") shall be payable in accordance with an amendment to the policy purchased by OPM from the Metropolitan Life Insurance Co., 1 Madison Avenue, New York, N.Y. 10010, pursuant to section 8709 of title 5, U.S.C., to provide group insurance coverage (referred to in this part as "basic insurance"). Actions at law or in equity to recover on the policy, in which there is not alleged any breach of any obligations undertaken by the United States, shall be brought against the insurance company.

§ 872.102 Payment of benefits; designations of beneficiary.

Additional optional insurance in force on a person at the date of his/ her death shall be paid, on receipt of a valid claim, in the same order of precedence and under the same conditions as are applicable to basic insurance. A designation of beneficiary for basic insurance is also a designation of beneficiary for additional optional insurance unless the insured person specifes otherwise in his/her designation.

§ 872.103 Correction of an error, mistake, or omission.

OPM's Associate Director for Compensation or his/her designee may

order correction of an error, mistake, or omission upon a showing satisfactory to the Associate Director or his/ her designee that it would be against equity and good conscience not to do

SO.

§ 872.104 Definitions.

The terms defined under § 870.103 of this chapter have the same meanings in this part.

Subpart B-Coverage

§ 872.201 Eligibility.

Each employee who is insured for basic insurance and for whom an uncanceled declination of additional optional insurance is not in effect is eligible to elect the additional optional insurance, if his/her periodic pay, after all other deductions, is sufficient to cover its full cost.

§ 872.202 Election or declination.

(a) Except as otherwise provided in paragraph (b) of this section, each employee shall, on the form entitled Life Insurance Election, elect or decline the additional optional insurance within 31 days after becoming eligible, unless during earlier employment he/ she filed an election or declination which remains in effect. The 31-day time limit begins to run on the first day after February 28, 1981, on which an individual meets the definition of an employee.

(b) On a determination by an employing office, within six months after an employee becomes eligible, that he/she was unable, for cause beyond his/her control to elect the additional optional insurance within the prescribed time limit, the employee shall elect or decline the additional optional insurance within 31 days after he/she is advised of the determination. Additional optional insurance in that case is retroactive to the first day of the first pay period beginning after the date the person became eligible, or after April 1, 1981, whichever is later, and the person shall pay the full cost of the insurance from that date for the time that he/she is in a pay status or retired or in receipt of compensation and under age 65.

(c) A person who does not file with his/her employing office an election of additional optional insurance on the Life Insurance Election form does not have the additional optional insurance.

§ 872.203 Effective date of insurance.

(a) The effective date of an election of additional optional insurance is the first day on or after April 1, 1981, that an employee actually enters on duty in a pay status on or after the day the election is received in his/her employing office.

(b) An election of additional optional insurance remains in effect until canceled as provided in § 872.204. For an employee whose additional optional insurance has stopped for a reason other than a declination or waiver, additional optional insurance is reinstated on the first day he/she actually enters on duty in a pay status in a position in which he/she again becomes eligible.

(c) An open enrollment election of additional optional insurance filed during the period from June 1 through July 1, 1985, is effective on the first day of the first pay period beginning on or after August 1, 1985, which immediately follows a pay period during which the employee was in a pay and duty status for at least 32 hours. A part-time employee will need to have been in a pay and duty status for one-half of the regularly-scheduled tour of duty indicated on his or her current Standard Form 50 for newlyelected coverage to become effective. An employee who has no regularlyscheduled tour of duty or who is employed on an intermittent basis will have to have been in a pay and duty status for one-half of the hours customarily worked before newly-elected coverage can become effective. For the purpose of this subsection, employing offices can determine the number of hours customarily worked by averaging the number of hours worked in the calendar year quarter ending June 30, 1985.

[49 FR 3042, Jan. 25, 1984, as amended at 50 FR 26689, June 28, 1985]

(a) An insured person may cancel entirely or reduce the number of multiples of his/her additional optional insurance at any time by filing a declination or request to reduce the number of multiples of additional optional insurance or a waiver of basic insurance coverage. An employee files with the employing office. An annuitant files with OPM or other office that administers his/her retirement system. If still employed, a compensationer files with the employing office, and, if not still employed, with OWCP.

(b) A cancellation of additional optional insurance becomes effective and additional optional insurance stops at the end of the pay period in which the declination or waiver is properly filed. A reduction in the number of an employee's additional optional insurance multiples is effective at the end of the pay period in which the Life Insurance Election form is received in his/her employing office. A reduction in the number of a retired employee's or compensationer's additional optional insurance multiples is effective at the end of the pay period in which the request to reduce coverage is properly filed.

(c) A declination or reduction in multiples of additional optional insurance remains in effect until it is canceled as provided in § 872.205.

§ 872.205 Cancellation of declination.

(a)(1) An employee who has declined the additional optional insurance may elect it if:

(i) At least 1 year has elapsed since the effective date of his/her declination or waiver; and

(ii) He/she furnishes satisfactory evidence of insurability.

(2) An employee who has declined additional optional insurance may elect it upon his/her marriage or the acquisition of an unmarried dependent child within the meaning of section 8701(d) of title 5, United States Code, and Subpart G of Part 873 of this chapter. In order to be valid, the election must be filed with the employing office on the Life Insurance Election form before the employee's 36th birthday and no more than 60 days follow

ing the date of the event which permits the election. This 60-day time limit may be extended if the individual is not serving in a covered position on the date of the event, or if the individual separates from covered service prior to completion of the 60-day time limit. This extension of the time limit may not exceed the 31-day time limit for electing insurance following employment in a covered position. The number of multiples which an employee may obtain upon acquisition of a spouse or child is limited to the number of family members (spouse and/or children) acquired with the event which permits the employee to elect

additional optional insurance under this paragraph.

(3) An employee who has in force additional optional insurance of at least one but fewer than five multiples of annual pay may increase the number of multiples if:

(i) At least 1 year has elapsed since the effective date of his/her last election of fewer than five multiples (including a reduction in the number of multiples); and

(ii) He/she furnishes satisfactory evidence of insurability. The requirement that at least 1 year elapse since the effective date of the last election does not apply when an employee elected fewer than five multiples because of the limitation on the number of multiples which may be elected under paragraph (a)(2) or (a)(4) of this section.

(4) An employee who has in force additional optional insurance of at least one but fewer than five multiples of annual pay may elect to increase the number of multiples upon his/her marriage or the acquisition of an unmarried dependent child within the meaning of section 8701(d) of title 5, United States Code, and Subpart G of Part 873 of this chapter. To be valid, the election to increase the number of multiples must be filed with the employing office on the Life Insurance Election form no more than 60 days following the date of the event which permits the increase. This 60-day time limit may be extended if the individual is not serving in a covered position on the date of the event, or if the individual separates from covered service

prior to completion of the 60-day time limit. This extension of the time limit may not exceed the 31-day time limit for electing insurance following employment in a covered position. The number of multiples which an employee may add upon acquisition of a spouse or child is limited to the number of family members (spouse and/or children) acquired in the event which permits the employee to increase multiples.

(5)(i) A previous declination is automatically canceled at time of reinstatement on or after April 1, 1981, if an employee has been separated from service for at least 180 days. If no new declination is filed, additional optional insurance coverage is effective on the date the employee actually enters on duty in a pay status in a position wherein he/she is not excluded from insurance by law or regulation, provided that the employee has filed an affirmative election of additional optional insurance on the Life Insurance Election form. An employee whose declination is so canceled and who does not file the form with his/her employing office within 31 days after reinstatement shall be deemed to have declined additional optional insurance, except that an employee who fails to file the form during that period due to cause beyond his/her control shall be allowed to enroll belatedly under the conditions prescribed under

§ 872.202(b).

(ii) An employee who returned to Federal service between April 1, 1981, and December 8, 1983, after a 180-day break in service may elect additional optional insurance upon application to his or her employing office before March 7, 1984.

(b)(1) The effective date of the additional optional insurance or of an increased number of multiples of additional optional insurance elected under paragraph (a)(1) or (a)(3) of this section is the first day the employee actually enters on duty in a pay status, on or after the day his/her election is received in his/her employing office following the approval of his/her Request for Insurance by the Office of Federal Employees' Group Life Insurance established by the insurance company. This approval is re

voked automatically and the additional optional insurance does not become effective if the employee fails to submit his/her election or meet the pay and duty status requirement within 31 days following the date of the approval.

(2) The effective date of an election under paragraph (a)(2) or (a)(4) of this section is the first day the employee actually enters on duty in pay status, on or after the day his/her election is received in the employing office and the basic insurance is in force.

(c) An annuitant or compensationer is not eligible to cancel a declination under this section, nor to increase multiples of additional optional insur

ance.

(d)(1) An open enrollment period will be held from June 1 through July 1, 1985, during which time employees otherwise eligible for coverage may cancel their existing declinations of coverage by affirmatively electing to be insured on a form designated by OPM.

(2) An employing office may make a determination, within 6 months after the June 1 through July 1, 1985 open enrollment period, that an employee was unable, for cause beyond his or her control, to cancel his or her then existing declination of coverage by affirmatively electing to be insured during the 1985 open enrollment period. The employee shall be permitted to submit an affirmative election of coverage within 31 days after he or she is advised of that determination. Additional optional insurance coverage in that case is retroactive to the first pay period beginning on or after August 1, 1985, which immediately follows a pay period during which the employee was in a pay and duty status for a sufficient length of time, as specified in § 872.203(c) to acquire coverage. Failure on the part of the employee to file within the 31 days prescribed in this paragraph shall be deemed a declination of additional optional in

surance.

[49 FR 3042, Jan. 25, 1984, as amended at 50 FR 26689, June 28, 1985; 51 FR 21497, June 13, 1986]

An eligible employee may elect additional optional insurance of 1, 2, 3, 4, or 5 multiples of his/her annual pay. For this purpose, each multiple is equal to the lowest multiple of $1,000 which is not less than the current rate of the employee's annual pay as determined under § 870.302 of this chapter. A multiple shall not exceed the annual rate of basic pay payable for positions at level II of the Executive Schedule under section 5313 of title 5, United States Code, rounded to the next higher multiple of $1,000.

Subpart D-Withholdings

§ 872.401 Withholdings.

(a) During any period in any part of which an insured employee is in a pay status, the employing agency shall withhold the full cost of additional optional insurance from his/her pay.

(b)(1) Subject to the provisions of § 872.604, the full cost of additional optional insurance shall be withheld from the annuity of an annuitant or from the compensation of a compensationer, except that there is no withholding for an annuitant or compensationer for coverage after the end of the calendar month in which he/she becomes 65 years of age.

(2) Withholdings are not required for the period between the end of the pay period in which an individual separates from service and the beginning of the annuity or compensation payments, if later.

(c) The biweekly full cost per $1,000 of additional optional insurance in force, until determined by OPM on the basis of experience to be otherwise, is

For persons under age 35............................................................. $0.04

The amount withheld from pay, annuity, or compensation paid on other than a biweekly period shall be determined at a proportionate rate, adjusted to the nearest one-tenth of one cent.

(d) For the purposes of this section, a person is deemed to attain 35, 40, 45, 50, 55, or 60 years of age on the first day of his/her pay period beginning on or after January 1 of the year following the one in which his/her corresponding birthday occurs.

(e) The amount withheld from the pay of an insured person whose annual pay is paid during a period shorter than 52 workweeks is the sum obtained by converting the biweekly rate for his/her age group to an annual rate and prorating the annual rate over the number of installments of pay regularly paid during the year. (f) The amount withheld from the pay of an insured employee whose amount of insurance changes during a pay period is based on the last amount of insurance in force during the pay period.

(g) When an agency withholds less than or none of the proper cost of additional optional life insurance from an individual's pay, annuity, or compensation, the agency must submit an amount equal to the uncollected deductions required under section 8714b of Title 5, United States Code, to OPM for deposit to the Employees' Life Insurance Fund.

(h) The deposit to OPM as described in paragraph (g) of this section must be made as soon as possible but no later than 60 calendar days after the date the employing office determines the amount of the underdeduction that has occurred, regardless of whether or when the underdeduction is recovered by the agency. A subsequent agency determination whether to waive collection of an overpayment of pay caused by failure to properly withhold life insurance deductions shall be made in accordance with 5 U.S.C. 5584 as implemented by 4 CFR Chapter I, Subchapter G, unless the

agency involved is excluded from application of 5 U.S.C. 5584, in which case any applicable authority to waive the collection may be used.

(i) Direct premium payments under 5 U.S.C. Chapter 84.

(1) If the annuity received under 5 U.S.C. Chapter 84 (Federal Employees' Retirement System), excluding Subchapter III of Chapter 84 (Thrift Savings Plan), is too low to cover the additional optional insurance premium, the retirement system will notify the annuitant of the opportunity to pay the premium directly to the retirement system.

(2) The retirement system shall establish a method for accepting direct payment for additional optional insurance premiums from annuitants retiring under 5 U.S.C. Chapter 84 whose annuities are too low to cover their premiums. The retirement system will provide the annuitant with a premium payment schedule and statement of the requirements for continued enrollment. The annuitant must continue to make direct payment of the premium even if the annuity increases to the extent that it covers the premium.

(3) The annuitant must remit to the retirement system the premium for additional optional insurance for every pay period during which the coverage continues, exclusive of the 31-day temporary extension of coverage for conversion provided in § 872.501. Payment must be made after the pay period in which the individual is covered in accordance with a schedule established by the retirement system. If the retirement system does not receive payment by the date due, the retirement system will notify the annuitant by certified mail return receipt requested that continuation of coverage rests upon payment being made within 15 days after receipt of the notice. The additional optional insurance coverage of an annuitant who fails to remit payment within the specified time frame will be terminated. An individual whose coverage is terminated because of nonpayment of premium may not re-elect or reinstate coverage, except as provided in paragraph (i)(4).

(4) If the individual was prevented by circumstances beyond his or her control from making payment within