Claim for Refund of Life Insurance Premiums

An authorized certifying officer with the Department of Agriculture, National Finance Center, asked questions concerning the circumstances under which an employee is due a refund of life insurance deductions made from his salary. Specifically, he asked whether he might certify vouchers for the refund of premiums which were withheld under the following circumstances: (1) an employee had a temporary appointment rendering him ineligible for regular life insurance, but administrative error resulted in deductions which continued for 18 pay periods; (2) an employee elected regular life insurance and waived optional coverage, but administrative error resulted in deductions for both regular and optional insurance which continued for 41 pay periods; and (3) an employee waived life insurance when employed in 1968, He was separated and subsequently reinstated to a career appointment in 1972, and upon reemployment, he elected regular and optional insurance but did not take appropriate action to cancel the waiver from his 1968 appointment. The Office of Personnel Management issues regulations which prescribe the time at which and the conditions under which an employee is eligible for coverage. In the first circumstance, the employee was indeed ineligible for coverage, and the errors in withholdings should be deducted in subsequent pay periods. In the second circumstance, since a declination of optional insurance is similar in effect to a waiver of regular insurance coverage, the employee should be refunded the optional premiums deducted from his pay. GAO had earlier permitted the refund of life insurance premiums which were withheld from the salary of an employee who had previously executed a waiver of regular insurance coverage. In the third circumstance, GAO noted that the waiver of life insurance coverage executed in 1968 extended to both regular and optional life insurance. A properly executed waiver of regular insurance remains in effect until canceled, even though the employee may transfer to another agency or be reappointed after a break in service. Therefore, the employee was not covered by life insurance and would not be liable for premiums during the period in question. The erroneously withheld premiums should be refunded to him. Accordingly, the vouchers may be certified for payment, if otherwise proper.