Federal Employees' Group Life Insurance: Retirement Benefit and Retained Asset Account Disclosures Could Be Improved
Highlights
The Federal Employees' Group Life Insurance program (FEGLI), administered by the Office of Personnel Management (OPM), insures over 4 million federal employees and annuitants in the event of an enrollee's death. As a result, it is important that the program is clearly explained and properly overseen. However, some aspects of FEGLI, such as program disclosures and the use of retained asset accounts (RAA)--financial accounts used to settle life insurance claims--have raised questions about the program's operations. GAO was asked to describe and evaluate (1) the FEGLI program's structure and operations, (2) OPM's administration and oversight of the program, and (3) the use of RAAs in FEGLI claims payments. To address these objectives, GAO reviewed FEGLI law and regulations, interviewed OPM, Metropolitan Life Insurance Company (MetLife), and state insurance officials, and met with insurance industry experts.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Office of Personnel Management | To help better ensure that federal employees have all the information they need when deciding whether to purchase life insurance through FEGLI, the Director of the Office Personnel Management should take steps to ensure that FEGLI disclosures include complete and accurate information on key benefits and features, including the program's postretirement coverage, composite rates, and level-premium structure. |
As of August 2014, OPM officials have revised FEGLI disclosure information on the FEGLI website and in the FEGLI handbook to more fully describe program benefits and features, including postretirement coverage, rates, and the program's level premium structure.
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| Office of Personnel Management | To help ensure that FEGLI provides relevant benefits that meet the needs of federal employees at a reasonable and appropriate cost, the Director of the Office of Personnel Management should develop and implement a more structured process for comparing FEGLI with private sector group life insurance plans and for documenting OPM actuaries' rate recommendations and any management decisions concerning those recommendations. |
OPM has implemented a process for documenting annual recommendations made by OPM actuaries regarding FEGLI premium rates. This includes documentation of actuaries' justification for either keeping the rates the same or revising them, and in years where a rate change is recommended, documentation of management's decision on the recommendation.
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| Office of Personnel Management | To help ensure that FEGLI beneficiaries are provided with information on all relevant aspects of selecting an RAA as a FEGLI settlement option, the Director of the Office of Personnel Management should include more complete information on financial protections and regulatory oversight in program disclosures, working as necessary with MetLife and National Association of Insurance Commissioners' (NAIC) to determine the appropriate state regulator for beneficiaries and their RAAs. |
As of June 2014, OPM has revised the form that FEGLI beneficiaries must complete when filing a claim for FEGLI benefits. The form now makes it clear that claimants have the option to receive a check for the full amount of the claim or to place the funds in a retained asset account administered by MetLife. The form also provides key information on that account, such as interest rates earned. The same information has also been added to OPM's website, which also includes a link to the National Association of Insurance Commissioners information page on retained asset accounts.
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