SEEKING TO IMPROVE THE FEDERAL EMPLOYEES GROUP LIFE INSURANCE PROGRAM (FROM CASES IN ACCOUNTABILITY, P 87-92, 1979, BY ERASMUS H KLOMAN - SEE NCJ-69444)

• NCJ Number: 69446
• Author(s): R E SHELTON
• Date Published: 1979
• Length: 6 pages
• Sale Source: Westview Press, Inc
• Language: English
• Country: United States of America

Annotation

THE GENERAL ACCOUNTING OFFICE'S (GAO) FEDERAL PERSONNEL AND COMPENSATION DIVISION AND THE HOUSE SUBCOMMITTEE CONDUCTED A SURVEY OF THE FEDERAL EMPLOYEES GROUP LIFE INSURANCE (FEGLI) PROGRAM.

Abstract

THE PROGRAM HAD GENERATED SERIOUS QUESTIONS BECAUSE HIGH PREMIUM RATES WERE DRIVING YOUNGER AND BETTER-RISK EMPLOYEES FROM THE PROGRAM, AND POOR RETIREMENT BENEFITS WERE MAKING OLDER EMPLOYEES DISSATISFIED. THE SURVEY THUS COVERED FEDERAL PROGRAMS PROVIDING SURVIVOR BENEFITS, THE DESIGN AND TOTAL COST OF GROUP LIFE INSURANCE PROGRAMS, AND THE GOVERNMENT'S RELATIONSHIP WITH PRIVATE INSURANCE FIRMS (THE PRIME INSURANCE CARRIER). THE 1977 REPORT SHOWED THAT THE GOVERNMENT WAS NOT BUYING LIFE INSURANCE AS GENERALLY BELIEVED, BUT WAS OPERATING AS A SELF-INSURER. FEDERAL EMPLOYEES WERE RECEIVING LESS AND PAYING MORE FOR THEIR LIFE INSURANCE THAN THEIR NONFEDERAL COUNTERPARTS. THE REPORT AFFIRMED THAT FEGLI COULD BE RESTRUCTURED TO MAKE IT MORE EQUITABLE AND COMPARABLE TO NONFEDERAL PROGRAMS AT NO INCREASE IN COST. FURTHER, WHILE OVERALL DEATH BENEFITS WERE GENERALLY COMPARABLE TO PRIVATE SECTOR COVERAGE, FEDERAL EMPLOYEES WERE REQUIRED TO CONTRIBUTE GREATER AMOUNTS TOWARD THE COSTS OF THE PROGRAMS THAN THEIR NONFEDERAL COUNTERPARTS. LIFE INSURANCE COVERAGE WAS SUPERIOR IN THE NONFEDERAL SECTOR AND WAS USUALLY FREE TO EMPLOYEES. UNDER FEGLI, THE GOVERNMENT ASSUMED ALL LIABILITIES AND RISKS, ESTABLISHED AND COLLECTED PREMIUMS, AND MANAGED MOST OF THE FUNDS. THUS, GAO RECOMMENDED THAT CONGRESS RESCIND THE REQUIREMENT THAT FEGLI PAY STATE PREMIUM TAXES AND INSURANCE COMPANY RISK CHARGES. CONGRESSIONAL RESPONSES TO THE GAO'S EFFORTS WERE POSITIVE. THE CIVIL SERVICE COMMISSION ISSUED A MORE ACCURATE, INFORMATIVE, AND DESCRIPTIVE PAMPHLET ON THE FEGLI PROGRAM (AS THERE HAD BEEN COMPLAINTS THAT THE PROGRAM WAS FALSELY ADVERTISED AS LOW-COST INSURANCE). MOREOVER, THE COMMISSION REDUCED THE FEGLI PREMIUM BY ALMOST 30 PERCENT. SIX NOTES AND THREE STUDY QUESTIONS ARE PROVIDED.