How Your FEGLI Basic Insurance Amount Is Calculated (With a Worked Example)

Almost every federal employee carries FEGLI Basic. Few can say what their coverage is actually worth, because the figure is not a round number you chose — it is derived from your salary by a formula with a rounding quirk in it.

The short answer: Your Basic Insurance Amount is the greater of (a) your annual rate of basic pay rounded up to the next $1,000, plus $2,000, or (b) $10,000. Employees under 45 also carry an Extra Benefit that adds to it at no cost.

How is the Basic Insurance Amount calculated?

OPM states the rule directly: “Your Basic Insurance Amount (BIA) is equal to the greater of (a) your annual rate of basic pay rounded up to the next even $1,000 plus $2,000, or (b) $10,000.”

Three steps, in order.

1. Start with your annual rate of basic pay — the salary for your position, including increases for which retirement deductions are withheld. It excludes overtime, bonuses, and awards.
2. Round up to the next $1,000. Always up. A salary of $97,050 rounds to $98,000, not $97,000.
3. Add $2,000. That is your BIA — unless the result is under $10,000, in which case $10,000 applies.

A worked example

An employee with an annual basic pay rate of $97,400 rounds up to $98,000, then adds $2,000. The Basic Insurance Amount is $100,000.

At the current employee rate of $0.16 biweekly per $1,000 of coverage, that costs $16.00 biweekly, about $34.67 a month. The rate is the same at every age — OPM notes a 25-year-old employee and a 64-year-old retiree pay an identical Basic rate per thousand, because Basic uses a composite premium structure set by law.

The rounding quirk is worth noticing. Salaries of $97,001 and $97,999 produce the same $100,000 BIA and the same premium. A raise from $97,999 to $98,001 pushes the BIA to $101,000 and the premium up 16 cents a pay period.

How does the Extra Benefit change the Basic Insurance Amount?

Most employees have never heard of it. OPM describes an additional Basic provision called the Extra Benefit, which “doubles the amount of Basic insurance payable at no extra cost for enrollees age 35 or younger. Beginning on an enrollee’s 36th birthday, the Extra Benefit decreases 10% each year until age 45, after which, there is no Extra Benefit.”

OPM’s illustration: an employee aged 40 is five years under 45, so the benefit rises 10 percent for each year under 45 — a 50 percent increase. A BIA of $48,000 becomes $72,000 of coverage.

So a 30-year-old with a $48,000 BIA is actually carrying $96,000 of Basic coverage — and on their 45th birthday, coverage steps down to the BIA with no change in premium and no notice.

Why does the Basic Insurance Amount matter at retirement?

Because every FEGLI figure downstream is a percentage of it. The reduction election you make at retirement — 75 percent, 50 percent, or no reduction — applies to the Basic Insurance Amount in effect when you retire. Under 75 percent reduction, coverage falls 2 percent a month from 65 until it reaches 25 percent of that figure, and premiums stop.

So a $100,000 BIA at retirement means $25,000 of free lifetime coverage under the default election. A $60,000 BIA means $15,000. The election is identical; the outcome is set by the number the formula produced on your last day. Option B is priced off the same rounded salary figure.

Key takeaways

• BIA equals annual basic pay rounded up to the next $1,000, plus $2,000, with a $10,000 floor (source: OPM FEGLI program booklet).
• Basic pay excludes overtime, bonuses, and awards (source: OPM).
• The employee Basic premium is $0.16 biweekly per $1,000, level at every age (source: OPM FEGLI Premium Overview).
• The Extra Benefit doubles Basic coverage at age 35 or younger, then declines 10 percent a year from the 36th birthday until it ends at 45 (source: OPM).
• The BIA in effect at retirement sets the base for the 75, 50, or no-reduction election (source: OPM).

Frequently asked questions

Is locality pay included?
Locality pay is part of the annual rate of basic pay for most General Schedule employees, so it is included in the calculation.

Does the government pay part of the Basic premium?
Yes. OPM’s rate history shows Basic split between a government share and an employee share. The optional coverages — Option A, B, and C — are entirely employee-paid.

Know the number before the election

The reduction choice at retirement is close to permanent, and it applies to a figure most employees have never calculated. Fed Pilot’s free federal retirement workshops cover FEGLI alongside the rest of the benefits package. Register for an upcoming workshop.