Lawmaker wants probe of federal life insurance program
(This item has been updated since it was first posted.)
By The Post's Federal Diary columnist Joe Davidson:
The chairman of the House Oversight and Government Reform Committee wants the Government Accountability Office to examine the operation of the Federal Employees Group Life Insurance (FEGLI) program.
In an letter to the GAO, Rep. Edolphus "Ed" Towns (D-N.Y.) questioned the "retained asset accounts" method the program administrator uses to disperse money due a beneficiary. The program is administered by MetLife insurance company and overseen by the Office of Personnel Management.
John Calagna, a MetLife vice president, said the company believes the accounts, which it calls Total Control Accounts (TCA) "are equal to or more favorable than receiving a check in virtually every scenario. Since TCAs are fully liquid on-demand accounts, TCA account holders have immediate access to the full amount of their life insurance benefits."
These accounts are basically low-interest bank accounts, but they are not insured by the federal government, as regular bank accounts are. Instead of giving lump sum payments directly to the beneficiaries, the money is held in a retained asset account until the beneficiary withdraws it. The deposits earn interest, but Metlife keeps a far greater portion of that interest than that paid to the beneficiaries, according to the committee.
"It appears that MetLife is paying itself a much higher interest rate on the money in these accounts than the interest they pay to the account holder. To many people that does not seem fair," Towns said in a press statement. "Furthermore, I am concerned that some beneficiaries may not fully understand their right to obtain immediate, lump-sum payment of their benefits."
About half of the accounts earn 3 percent interest and 80 percent earn 1.5 percent or better, Calagna said.
Leave your thoughts in the comments section below
| September 30, 2010; 3:42 PM ET
Categories: Congress, Workplace Issues
Save & Share: Previous: Telework continues its Congressional tango
Next: Bill directing agencies to use 'plain' language advances
Posted by: njchurus | October 1, 2010 8:26 AM | Report abuse
Posted by: darbyohara | October 1, 2010 8:59 AM | Report abuse
The comments to this entry are closed.