[Code of Federal Regulations]
[Title 5, Volume 2]
[Revised as of January 1, 2002]
From the U.S. Government Printing Office via GPO Access
[CITE: 5CFR870.705]

[Page 403-404]
 
                    TITLE 5--ADMINISTRATIVE PERSONNEL
 
          CHAPTER I--OFFICE OF PERSONNEL MANAGEMENT (Continued)
 
PART 870--FEDERAL EMPLOYEES' GROUP LIFE INSURANCE PROGRAM--Table of Contents
 
                Subpart G--Annuitants and Compensationers
 
Sec. 870.705  Amount and election of Option B and Option C.

    (a) The number of multiples of Option B and Option C coverage an 
annuitant or compensationer can continue is the highest number of 
multiples in force during the applicable period of service required to 
continue Option B and Option C.
    (b)(1)(i) At the time an employee retires or becomes insured as a 
compensationer, he/she must elect the number of allowable multiples he/
she wishes to continue during retirement or while receiving 
compensation.
    (ii) An employee who elects to continue fewer multiples than the 
number for which he/she is eligible is considered to have cancelled the 
multiples that are not continued.
    (iii) Employees separating for retirement and employees becoming 
insured as compensationers on or after April 24, 1999, must also elect 
either Full Reduction or No Reduction for all of the multiples being 
continued.
    (iv) An employee who does not make a reduction election is 
considered to have chosen Full Reduction.
    (2)(i) Prior to reaching age 65, an annuitant or compensationer can 
change from No Reduction to Full Reduction at any time. Exception: If 
the individual has assigned his/her insurance as provided in subpart I 
of this part, only the assignee can change from No Reduction to Full 
Reduction for the Option B coverage.
    (ii) Prior to reaching age 65, an annuitant or compensationer can 
change from Full Reduction to No Reduction at any time.
    (3)(i) After reaching age 65, an annuitant or compensationer can 
change from No Reduction to Full Reduction at any time. Exception: If 
the individual has assigned his/her insurance as provided in subpart I 
of this part, only the assignee can change from No Reduction to Full 
Reduction for the Option B coverage. If an individual age 65 or over 
changes to Full Reduction, the amount of insurance in force is computed 
as if he/she had elected Full Reduction initially. There is no refund of 
premiums.
    (ii) Except as provided in paragraph (b)(4) of this section, after 
reaching age 65, an annuitant or compensationer cannot change from Full 
Reduction to No Reduction.
    (4)(i) Shortly before an annuitant or compensationer's 65 birthday, 
the retirement system will send a reminder about the election he/she 
made and will offer the individual a chance to change the election. At 
that time, the annuitant or compensationer can choose to have some 
multiples of Option B and Option C reduce and some not reduce.
    (ii) If the individual is already 65 or older at the time of 
retirement or becoming insured as a compensationer, the retirement 
system will send the reminder and give the opportunity to change the 
election as soon as the retirement processing or compensation transfer 
is complete.
    (iii) If the individual assigned his/her insurance as provided in 
subpart I of this part, and if the employee elected No Reduction for 
Option B coverage at the time of retirement or becoming insured as a 
compensationer, the retirement system will send the reminder notice for 
Option B coverage to the assignee.
    (iv) An annuitant or compensationer who wishes to change his/her 
reduction election must return the notice by the end of the month 
following the month in which the individual turns 65, or if

[[Page 404]]

already over age 65, by the end of the 4th month after the date of the 
letter. An annuitant or compensationer who does not return the election 
notice will keep his/her initial election.
    (c)(1) For each multiple of Option B and/or Option C for which an 
individual elects Full Reduction, the coverage reduces by 2 percent of 
the original amount each month. This reduction starts at the beginning 
of the 2nd month after the date the insurance would otherwise have 
stopped or the beginning of the 2nd month after the insured's 65th 
birthday, whichever is later. At 12:00 noon on the day before the 50th 
reduction, the insurance stops, with no extension of coverage or 
conversion right.
    (2) For each multiple of Option B and/or Option C for which an 
individual elects No Reduction, the coverage in force does not reduce. 
After age 65 the annuitant or compensationer continues to pay premiums 
appropriate to his/her age.
    (d)(1) Employees who were already retired or insured as 
compensationers on April 24, 1999, and who had Option B, were given an 
opportunity to make an election for Option B.
    (i) Annuitants and compensationers who were under age 65 were 
notified of the option to elect No Reduction. The retirement system will 
send these individuals an actual election notice before their 65th 
birthday, as provided in paragraph (b)(4) of this section.
    (ii) Annuitants and compensationers who were age 65 or older, and 
who still had some Option B coverage remaining, were given the 
opportunity to stop further reductions. These individuals had until 
October 24, 1999, to make the No Reduction election. The amount of 
Option B coverage retained was the amount in effect on April 24, 1999. 
Those annuitants and compensationers who elected No Reduction were 
required to pay premiums retroactive to April 24, 1999.
    (2) Employees who were already retired or insured as compensationers 
on April 24, 1999, could not elect No Reduction for Option C.

[64 FR 72464, Dec. 28, 1999]