Back to Basics – FEGLI for Federal Employees

2.14.25: Audio automatically transcribed by Sonix

2.14.25: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

Speaker1:
Welcome back to the Federal Retirement Show. I am your host, Val Majewski with American Benefits Exchange. Appreciate you taking the time out of your schedule to view our content, to view our show. Um, that's what it's there for. It's for you, the federal employee who is looking for information regarding benefits and retirement so you can make the best decisions going forward. And I get notes all the time. I just got an email over the weekend from a federal employee that said, I'm very frustrated. I'm very discouraged. Uh, I'm very disappointed in the government. Again, this is what she was saying, but disappointed that a lot of this information is not provided to us or we're giving or we're being given information piece by piece by piece. And it's not really comprehensive, it's not completely put together. And I appreciated the note and the honesty because that's what I'm trying to do. That's what this show and what our organization does is provide information to federal employees, fill in the blanks, make sure you know everything it is you need to know about your situation, about benefits and retirement so you can go through your working career and make the best decisions along the way. Set yourself up properly so you can retire how you want, when you want, with the lifestyle that you're looking to retire with. So you hear me say that all the time. If you watch the show, I apologize for reiterating it, but if it is your first time, you've caught us at a great point because we're going back to the basics now, what does that mean? We're going back to the beginning.

Speaker1:
These were episodes that that we did way back when, but just kind of rekindling it, giving you some updated information, sharing a fresh look at it and going back to the basics. The last episode, we talked about retirement. We talked about going about the retirement requirements and we talked about the retirement calculation. Today we're going back to the basics when it comes to fegley your federal employee group life insurance. So let's dive into today's topic. And we're going to go back to the basics when it comes to your phegley. So what is Phegley? As I said, it is Federal Employees Group Life insurance. Um, it's a group plan as it insinuates, right? Everybody's lumped together whether you're healthy or sick, smoker or non-smoker, male or female, everybody is lumped together. It's administered by MetLife. That's who's under contract with OPM. Uh, most people would recognize MetLife, you know, Snoopy and the blimp. The MetLife blimp. Um, but that's who is administering your Phegley program. And there are four parts to Phegley. There's basic and there's options A, B, and C. You must have basic in order to have any of the optional coverages. We're going to go over these as well as go through an example of a federal employee that has these different things to see.

Speaker1:
So you can kind of compare it to your situation and see if you need any assistance. Distance. So basic. Basic. What is it? This is something that federal employees are automatically covered under when you first get hired. Unless you explicitly state in writing by the end of the first pay period that you do not want it, you can opt out right away. Most federal employees will have basic. Why? Because the costs are relatively low. You pay $0.16 per pay period per $1,000 worth of coverage that you have. And again, we're going to go over an example. I'll show you how this works. Um, coverage. Now, how much coverage do you have when it comes to your basic. It's essentially one multiple of your salary. Now we take your total base pay, base pay plus locality around that number up to the next $1,000. Add two more thousand to that. And that is your total basic coverage amount. Again, there's a cost for that. We just mentioned $0.16 per thousand per pay period. But this is how you get your basic coverage amount. Out, there is an extra benefit for those that are under the age of 45. Basic offers some extra free insurance. How do we calculate that? If you look at this chart based on your age, you take that factor and you multiply that by your basic fegley coverage and add that to the total.

Speaker1:
So if your age 43, you're going to get a 20% bump in your coverage when it comes on top of your fegley basic. Notice how this is a decreasing extra benefit and ceases to exist at age 45. But for those under 45, you get a little bit of extra coverage. For those under 35 or 35 and under, you get essentially a doubling, right? The factor is 1% or not, 1% is 1.0, meaning they will take whatever your fegley basic is, multiply it by one, and then add that to the total. So there's a doubling effect in retirement. With your basic, you have essentially four options when it comes to this. Now one now. One of them is pretty simple. You can cancel it. I don't see a lot of federal employees do this, but you can certainly cancel coverage altogether, not keep it with you in retirement. When you do fill out your retirement paperwork, however, they're going to give you the three choices. Which continuation of basic do you want to take? And you have three choices. If you want to keep something, there's one that has you retain 25% of your coverage. It's called the 75% reduction option. You can keep 50%. That's called the 50% reduction option. And you can keep all of it, which is a 0% reduction option. These are the three you can keep 25%, keep 50, or keep it all.

Speaker1:
Just out of curiosity, if you're watching this and you're wondering which one should I choose, which one do you think is the most popular option that federal employees take or federal retirees take? Give you a second. If you thought or said the 25% option, you'd be correct. Now, I'm not going to go into go into detail on all of these. I'll just let you know that the reason that the 75% reduction option, or keeping 25% is the most popular is because this is the only one that will be free in retirement. So in retirement or at age 65, whichever happens later, this effectively basic amount will be free and start to reduce, and you get to keep 25% of your basic for free in retirement. That's why it's the most popular. We can go over your individual situation and see which one is right for you. Now, if you have basic and maybe you chose these optional coverages, I want to let you know what those options are. If you are not familiar with the optional coverage, or do not know if you have these optional coverages, we need to talk because we can look at your leave and earnings statement, your paycheck stub. And just a rule of thumb is if you do not have it or you're not paying for it, you do not have it. If you are not paying for it, you do not have it. The government gives you some things for free, but they're not going to give you all these options for free.

Speaker1:
So if you're not paying for it, you do not have it. We could decipher what those codes are and your paycheck stub, so you can see which coverages you elected and which coverages you still have. And what do I mean by that is because if you did not make a change from now or from when you got hired until now, then those selections have remained exactly the same. So understand that if situations change, circumstances change. Your life has changed since you first got hired and your life insurance need has changed, then those have remained exactly the same. The government doesn't automatically change those for you, so you want to know what you have. We got to take a deeper dive into your situation. Go to our website. Fill out the form. We will be in touch in order to go over not only just your family, but all of your benefits and retirement situation. Okay, let's go over the optional coverages. There's options A, B, and C. Option A is the easiest one to understand. This is just an extra $10,000 worth of Worth of insurance. It's also known as standard optional insurance. I said $10,000. There's very low costs for this. And just like all the other options, premiums do increase. Costs do increase every five years. This one begins at age 40 is when you'll start seeing increases.

Speaker1:
As I mentioned, we're going to go over an example of this. If you want to keep your option A in retirement unlike basic you don't have multiple choices. If you want to keep option A in retirement, it's one option. It will become free at the age of 65 or retirement, whichever is later, and it will reduce and ultimately stop at 25% or in this case, an extra $2,500 that you would take with you for free for the rest of your life. Option B now this is the biggest one. This is the one that causes the biggest concern for federal employees. Why? Because you can get up to five times your salary. You can choose between 1 to 5 multiples of your salary in additional life insurance, on top of basic on top of option A, May premiums do increase every five years, starting at age 40. We'll go over an example and you can see exactly how that works. Option C now up to this point as a federal employee, your basic option A and option B, they are all on you the federal employee. Option C is the first one. Now that is on spouse and children. So this is where you can get up to five units of coverage. Option C is known as family optional insurance. You can get up to five units. I've seen this get confused where people have told me I have five times my salary for me, and then I have five times my salary for my spouse and that is incorrect.

Speaker1:
You have up to five units of coverage for option C, what is a unit? A unit is $5,000 for a spouse max coverage, then 25,000 and it's 2500 for each child. A child is under the age of 22 and not married, and the max coverage for them is 12,500. So again, it's up to five units, not five multiples for option C. See a big thing with Fegley that I want to remind you of is make sure that your beneficiaries know that you have this. Why? Because if you have additional life insurance, if you've had private life insurance, what do you probably have? You have policy documents. You have papers that you can put in with all of your other important documents. And somebody would find those. Worst case scenario, they didn't know that you had it. They find it and they can go through the process of filing a claim. Your family members may not know that you have this. Plus you don't have a tangible policy document that's going to be there that you can put with your important things if they're going to stumble upon it, if they don't know you had it, then they're not going to be able to file a claim. And trust me, the office of Phegley is not in the business of just sending out checks when you pass away.

Speaker1:
There has to be a claim file. So make sure your beneficiaries know that you have this. Number one. Know who your beneficiary is. Who did you elect? Because if you haven't made any changes, your beneficiary is exactly the same person that you set it up to be when you first started working. Make any updates as needed. If you realize that you need to make a change, and I would recommend you print out a claim form and leave it with your important documents, maybe put a sticky note on there, at least if there's no instructions and say, hey, I have this file a claim in case something happens to me, because that way people will at least know you don't want them guessing. Hey, what did Mom and Dad, what did you know? My brother or sister? What do they have in place? And, you know, trying to scramble. Make it easy for them in this regard. Print out that claim form. If you need a copy of the claim form, we can help you with that as well. Go to the website, fill out the form, and when we do talk, say, hey, I'm looking for the claim form. So let's look at this example, uh, of a federal employee okay. We got a 53, uh, sorry, 53, uh, 43 year old female federal employee making 97,000 plus. And let's say she had everything options a five times B, five units of C.

Speaker1:
And we want to look at how does this change. What does the coverage look like today. Uh, how do things change during the career. What does it look like in like in retirement costs all of those things, and then the options so that you could see what this person would have when it's all said and done. And you can compare this to your personal situation as we go through. You can also request that we review your personal situation by going to the website, filling out that form. Okay. So just on the high level, somebody has everything basic. How do we calculate the basic. You take the base rate of pay in this case was 97,000 plus round up to 98,000 and add two more thousand dollars worth of coverage. So this person has $100,000 worth of basic. We mentioned all three optional coverages. So option A you recall from a few slides back. And that's just an extra $10,000. Option B five times the salary. How do we get there. Take 97 plus that she makes round up to 98,000. Multiply that by five. So she would have an additional $490,000 of additional coverage. All of those basic option A and option B are on her. The federal employee then. Option C this is spouse and child coverage. As we talked about five units 25,000 on a spouse. 12,500 on each eligible child.

Speaker1:
Now, it's important to note I said a child has to be under the age of 22 and not married. It doesn't matter how many kids you have. Each child that is eligible will have the same amount of coverage on them. And once they attain the age of 22, they will no longer be covered. The cost will remain the same along the way, just that child will no longer no longer have coverage. It's not convertible. It's not transferable. They'd have to look at private insurance if they want coverage beyond that. Okay, so what does the cost look like for all of these things. So we went over the coverages. Now what's the cost. We said basic. She has $100,000. It's $0.16 per thousand per pay period. In this case would be $16 a pay period. Pretty easy math for us. That's why I did it that way. $16 a pay period. For that said, Basic is Relatively inexpensive compared to private life insurance, I highly recommend. This is just my general recommendation. This is my opinion that federal employees keep basic along through their working career. Extra benefit. In this case, this person is under the age of 45. So what extra coverage would they have for free? Looking at the chart, the factor for a 43 year old is 0.2 or 20%. She would get 20% more or an extra $20,000 on top of her basic coverage. So now the total there with basics 120,000.

Speaker1:
At the age of 43, at 41, it would be only 10% more, and at age 45 it would go away. So just understand that extra benefit is free for those that are under the age of 45. Okay. Option A option A is an extra $10,000. Looking at the chart, pretty simple. 43 year old is paying $0.30 a pay period for this coverage. Not a ton of coverage, but also not a ton of cost. Right. And you can see that cost goes up every five years, starting at age 40, caps out at Out at $6 a pay period at age 60, and will eventually become free if a person keeps it into retirement beyond the age of 65. So, as I said at age 65 or at retirement, whichever is later, this would become free or reduced down. A person can walk away with an extra 2500 for free for the rest of their life. Here is the biggest one. Biggest one is option B. Now in this example, this person has $490,000 of additional coverage. If you can see my chart here. What is it that they're currently paying? $14.70 a pay period that is relatively cheap. That's a decent cost right there for life insurance. But what's the problem with option B? This is not where that cost stays. It does not lock in. You don't have the option to lock it in. If you want to keep option B you have to keep paying the cost increases.

Speaker1:
So as a 43 year old, relatively inexpensive, I mean, it's on par with what private life insurance looks like for a 43 year old. But what happens at the at the age of 60? Just a few short years, 17 years later, they will be paying $196 per pay period. Per pay period. That's not per month per pay period for the same coverage. Now, that's not assuming there's pay raises along the way and bumps in pay promotions, uh, colas, whatever it might be. This is just going from 1470 a pay period, to 196, a pay period at the age of 60. So if you want to not pay these cost increases over time, I would recommend just in my opinion, looking at other options out there that will save you a ton of money compared to sticking with option B over the course of your career. Because what would happen at this point? She's 60 years old and now is like, whoa, this is getting really expensive. I need to get rid of this. Well, her options might be limited at 60. We're getting a little older. Cost of insurance is higher out there. Plus, health might be an issue. So while you're younger, while you're healthier, um, it's more beneficial for you to start looking at other options. Again, go to our website, fill out the form. We can definitely assist and point you in the right direction.

Speaker1:
Option C this is the spouse coverage. So five units is 25,000 for the spouse, 12,500 for each eligible child. This is costing this person $1.85 a pay period. Not a ton of extra coverage. Not a whole lot of cost either. The cost does not go up crazy. It does go up, but it's not going to. If the bank is as hard as option B does, right? So if we're looking at, uh, option C, well here's the problem with it. It's not a lot of coverage. You can get up to five times your salary for you, but only up to five units of coverage, 25,000 for a spouse. There's a pretty big imbalance there. I know if something happened to my spouse, uh, 25,000. Definitely not going to cover it. So, you know, looking at options there to provide more coverage for your spouse is generally recommended. That way you guys are on on par, or at least have a healthier balance when it comes to life insurance coverage on each of you. So just to review your phegley right. Phegley. We're going back to the basics, and I know I went through that information relatively quick, but I want to share with you just a review and hit the highlights when it comes to Phegley. Why? Because this is extremely important. Because you have, uh, options that you may or may not know about. You have costs that you want to find out where they're going to and what they're covering and and what are you paying for? You want to understand how to be the best, uh, or most efficient when it comes to your money and what's coming out of your paycheck.

Speaker1:
You just want to let it go willy nilly and just say, yeah, it's the government plan. I'm sticking with it. No. If you have ways that you can save money or put, uh, you know, better things in place, you should know about that. So let's review phegley. What is it? And and what do we recommend here? Phegley. Uh, basic has low cost. I generally recommend that federal employees that have basic keep it throughout their working career, and then they can even keep it in retirement. Um, generally, I said the 75% reduction option is the most popular because it is the only one that will be free. So you can end up walking away with 25% of whatever you retire with. As far as your basic for free for the rest of your life, so that life insurance amount should be enough to maybe cover your burial or final wishes, final expenses, whatever it might be. And hey, the government doesn't give you much for free. They want to give you some free life insurance for the rest of your life in retirement. A lot of folks take them up on it. That's why this is the most popular.

Speaker1:
The extra benefit we said with basic goes away at age 45. But while you're under the age of 45, you get a little bit of extra free insurance on your basic from the government. Option A just a flat extra $10,000. Not a whole lot of cost involved with this. So most people that I talk to that have basic and option A, I recommend in general keeping it. You'll also be able to keep some free life insurance with option B and retirement. Right. It works just like that free option with basic option B, we mentioned can get up to five times your salary, but the downfall is it can get very expensive. As you get older and go through your working career. You got to pay attention to this because the office of Phegley, uh, in that example that we talked about, when the person is paying $14.70 now at age 43, but at age 60, he's going to pay 1.96 a pay period. You're not going to get a letter in the mail. You're not going to get a birthday card from the office of Phegley or OPM and say, hey, you're 60 years old. Congratulations, you made it. This is awesome. Happy birthday. Uh, but just want to let you know the cost of your option be more than doubled as a result of turning 60 again. Happy birthday. You're not going to get that. So you have to be aware of the increases.

Speaker1:
You have to be aware of what's going on. Uh, pay attention to your paycheck stub. See if you notice any changes when you hit these certain five year benchmarks. If so, you can take control of that and help yourself be a little more effective or efficient with what you're paying for. Option C, we mentioned the spouse and child insurance. It's up to five units. It's not five multiples, but there's a big imbalance here. You can get such a lot of life insurance on yourself, but not so much when it comes to your spouse and kids. There could be some better options out there for you if you're interested. And then I mentioned options and retirement with basic and option A, most federal employees keep the free insurance. Uh, that's just a general recommendation. But when it comes to B and C, it's all or nothing. You can keep whatever you have with option B and C, you just have to continue to pay the cost increases over time. So a lot of folks that I talk to and this doesn't mean you have to do it, but I'm just saying a lot of folks that I talk to end up canceling B and C and retirement because they do not want to keep paying the cost increases over time. So understand we're going to utilize this series to go back to the basics and give you a baseline understanding of particular topics that we like to hit on with federal government employees, because these are the things that we believe you need to know so you can educate yourself and and make the best decisions going through your working career.

Speaker1:
So as always, I really do appreciate you viewing our content watching our show. If you do like what you're seeing, subscribe to our content. Get notified when a new episode pops up. Share this with friends and colleagues and other people that you believe need to know this information. I get that all the time. It's it's a lot more than I anticipated, so I thank you for it. But hey, I passed your information to so and so. I told them about the, the podcast. And next thing I know, that person's reaching out to me saying, hey, I've, I've binge listened to not watched, but binged listened to a number of your episodes while driving in the car and love the content. Got some questions? Love to get a benefits review done. I hear that all the time and it's shocking. And it's humbling as well, because I did not realize, uh, the response that we would get. People really love the information that we're putting out there. So thank you for that. Thank you for your, um, your dedication to the show, for watching, for For sharing, for liking, for subscribing all of that, and we look forward to seeing you on a future episode.

Speaker2:
Dark and tumultuous times have led to a variety of questions about ESPN's future, but a recent Disney earnings report is shining a spotlight on a potential comeback for the worldwide leader. I'm Jim Tarabukin for the Retirement Radio Network, powered by Aerolithe. Despite a small decrease in streaming revenue. Wall Street came away impressed with Disney's recent quarter two fiscal earnings as profits and revenue topped expectations. Disney's CFO Hugh Johnston telling CNBC. These quarterly results have given the company a positive outlook.

Speaker3:
I feel great about the quarter, well in excess of expectations and, most importantly, broad based growth.

Speaker2:
Despite the number of ESPN+ paid subscribers falling 3% to 24.9 million. Disney owned ESPN posted domestic revenue of $4.4 billion, up 9% year over year in Disney's fiscal quarter two. The final three months of 2024. Furthermore, the network's revenue growth was due in large part to a 15% jump in domestic ad sales revenue to $1.3 billion, mostly from an increase in ad rates. Disney CEO Bob Iger, speaking on an earnings call in early February, addressed the plans to launch the ESPN flagship direct to consumer product in the fall of 2025. A personalized product with integrated features like betting and fantasy. Iger went on to say, quote, if you're a sports fan, it's not about one boxing event or one day of football. It's about sports every single day of the year, every hour of the day. Sports viewership and a revamped content strategy has proven successful for Disney and ESPN. And after a period of struggle, the reports show ESPN is bouncing back strong in 2025 for the Retirement Radio network powered by Amira life. I'm Jim.

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