1. Choose 75% reduction. Basic coverage reduces 2% per month until it reaches 25% of its pre-reduction amount. Employee pays no further premiums once reduction begins.

  2. Choose 50% reduction. Basic coverage reduces by 1% per month until it reaches 50%. Employee pays an additional premium, or switch to 75% reduction or cancel

  3. Choose no reduction. Basic coverage remains. Employee pays a larger premium, or switch to 75% or cancel.

  4. Federal employees insured for the basic insurance coverage may elect options to cover family members- the employees spouse and unmarried children under age 22.

  5. The coverage amount is equal to up to multiples of $5,000 for a spouse and up to five multiples of $2,500 for each covered child. The premium depends on the employee’s age and increases every 5 years. The employee pays the full cost for this coverage.


Federal employees covered under basic insurance have the option to purchase additional insurance.

Option A - An additional $10,000 of coverage. (Reduces by 2% per month after age 65 until it reaches $2,500.)

Option B - Choose 1,2,3,4,or 5 times your salary. The cost for this coverage increases every 5 years and the employee pays the full cost. Retirees at age 65 no longer have to pay premiums but the coverage begins to decline at a rate of 2% per month for 50 months at which point the coverage ceases. Employees however at the time of retirement have an option to keep this coverage and continue to pay premiums.

An example of the cost of option B is as follows. An employee age 35 who earns $80,000 per year and chooses coverage for 5 times ($400,000,) his or her salary would pay:

  • Age   35       =    $ 26.00 per month

  • Age   50       =    $112.80 per month

  • Age   65       =    $537.20 per month

  • Age   75       =   $1560 .00 per month

  • Age    80+   =    $2080.00 per month

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 *Under current law, annuities grow tax-deferred. Annuities may be subject to taxation during the income or withdrawal phase. We do not give tax or legal advice. You should consult your own legal advisor. Withdrawals taken before age 59 and ½ may be subject to IRS penalties.


Broadridge Investor Communication Solutions, Inc. does not provide investment, tax, or legal advice. The information presented here is not specific to any individual's personal circumstances.

To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.