SOURCE: www.nteu.org
Washington, D.C. . . . The National Treasury Employees Union (NTEU) today offered its support for House legislation that would provide federal employees and their beneficiaries with a lump sum benefit payment as the first option under the federal group life insurance program.
The Federal Life Insurance Transparency Act, introduced by Rep. Gerald Connolly (D-VA), would make payment in a lump sum the default option for Federal Employees Group Life Insurance Program (FEGLI) benefits if no election benefits is chosen. The current default option under FEGLI is to a checking account obtained through an insurance company – known as Total Control Account (TCA).
“NTEU believes the lump-sum payment is the most straightforward and sensible approach to paying insurance benefits if no election is made,” said NTEU President Colleen M. Kelley. The bill is H.R. 6175.
At present, TCA’s are a permitted payment option under FEGLI; they are administered by the Office of Personnel Management and the insurance company.
Recent news stories have highlighted issues involving TCA’s including low interest payments to beneficiaries with insurance companies receiving a much higher return on their investment of the funds, and the fact that such accounts are not federally-insured and are subject only to state regulation.
“NTEU believes the default provisions in your bill address an important issue,” President Kelley wrote to Rep. Connolly. “For those beneficiaries who prefer another payment option, such as a TCS, an active election will allow one. However, we believe (your) approach with a lump-sum default is the prudent practice in this federal program, while still affording transparency and choice for the federal workforce family.”
NTEU is the largest independent federal union, representing 150,000 employees in 31 agencies and departments.