Opt-out for 'automatic' spouse insurance ends soon
Military Update focuses on issues affecting pay, benefits and lifestyle of active and retired servicepeople. Its author, Tom Philpott, is a Virginia-based syndicated columnist and freelance writer. He has covered military issues for almost 25 years, including six years as editor of Navy Times. For 17 years he worked as a writer and senior editor for Army Times Publishing Co. Philpott, 49, enlisted in the U.S. Coast Guard in 1973 and served as an information officer from 1974-77.
By Tom Philpott
About 610,000 married members enrolled in Servicemembers' Group Life Insurance will see extra premiums deducted from their pay, starting Nov. 1, to cover a new benefit up to $100,000 in SGLI life insurance on their spouses.
Congress approved the "family" SGLI program last May and gave the departments of Veterans Affairs and Defense five months to implement it.
Maximum spouse coverage will be set at $100,000, and as with member SGLI, enrollment will be "automatic." That means married SGLI enrollees will begin paying premiums for maximum spouse coverage, unless they opt out or elect lesser coverage.
The SGLI family plan also provides $10,000 of life insurance on each dependent child, at no charge. Child coverage will take hold even if a service member elects to drop, or to lower, spousal SGLI, said VA officials.
Service member SGLI premiums are 80 cents a month, per $10,000 of coverage, or $20 a month for the maximum of $250,000. Spouse coverage cost a little more and will vary by the person's age. For the spouse maximum of $100,000, premiums will be $9 a month for spouses under 35; $13 for spouses age 35 to 44; $20 for age 45 to 49; $32 for 50 to 54, and $55 a month for a spouse 55 and older.
If the member elects SGLI of $50,000, spouse coverage can be equal to that, or less.
VA officials expect at least 25 percent of SGLI members to opt out of spouse coverage in the first month. The move will make sense to many members, particularly those married to "healthier" spouses, usually nonsmokers. They likely can get the same amount of coverage for lower premiums. Three nonprofit organizations that offer more competitive rates are: the Uniformed Services Benefit Association, the Navy Mutual Aid Association and the Armed Forces Benefit Association, or AFBA.
Gen. Dwight Eisenhower helped to form AFBA after World War II, upset that private insurance companies refused to pay claims on members lost in the war.
Today, said Bobby Johnson, executive vice president of AFBA in Alexandria, Va., AFBA has a variety of insurance offerings, including $100,000 in military spouse coverage for $7.50 a month if under age 50, in good health and a nonsmoker. The premium would double, to $15, if the spouse smokes. That still would beat SGLI premiums for spouses age 45 to 54.
More than 175,000 service spouses are insured by AFBA. Over time, SGLI family coverage will cut into that, Johnson conceded. But his "primary concern" is that SGLI's automatic enrollment feature will push healthy spouses into a plan with substantially higher premiums than members need to pay.
Stephen Wurtz, in Philadelphia, is deputy chief of insurance service for the Department of Veterans Affairs. His staff oversees both SGLI and Veterans' Group Life Insurance, the government alternative to SGLI after members leave service.
Wurtz conceded that spouse SGLI premiums will be higher than charged by some insurance alternatives. But SGLI, by law, must cover all spouses of enrolled members, without regard to health or age. Other insurance plans, he said, can "cherry pick," offering lower premiums to healthier applicants.
Congress was right to mandate automatic enrollment of spouses, and at the maximum $100,000, Wurtz said. It is consistent with member SGLI and it will ensure that enough spouses are covered to keep premiums reasonable.
As Nov. 1 nears, the services, particularly the Army, are concerned that they haven't had time to fully educate members on the SGLI family program. Yet to avoid a deduction in pay for spouse coverage, members must opt out by the end of October. Given the quick implementation schedule, and the war on terrorism, defense officials have negotiated an additional "grace period" with the VA. Service members who opt out of SGLI spouse coverage before the end of November will get their deductions for that month returned, probably by January, an official said.
Questions, comments and suggestions are welcome. Write to Military Update, P.O. Box 231111, Centreville, VA 20120-1111, or send e-mail to: firstname.lastname@example.org.