GEHA LIFE INSURANCE COVERAGE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP59-00882R000100250004-7
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 7
• Document Creation Date: December 15, 2016
• Document Release Date: April 29, 1998
• Sequence Number: 4
• Content Type: MF

J
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MEMORANDUM FOR: Acting Director of Central Intelligence
SUBJECT:
GEHA Life Insurance Coverage
Paragraph 6 of this me orandum contains recommendations for
approval of the Acting Di ctor of Central Intelligence.
1. ISSUE. The Agents takesthe position that the
GEHA life insurance overage, including that with the
Omaha company, is av ilable to all employees of the Agency
no matter what hazards re involved in their assigned duties,.
The Board of Directors o GEHA takes the position th_ at
where the missions assigntd are extra-hazardousn their
nature the Agency should ta'e the burden of the insurance
coverage. While this issue rose in connection with one
particular project, its resoluiton is of general application
to the Agency's activities. Th Agencyrepoweentat s and
the Directors of GEHA have bee unable to resolve it, and
it is, therefore, referred to the sting Director of Central
Intelligence for decision.
2. HISTORY.
program for Agency employees which wo
was established by the Agency to develol
a. The Government Employees Health\l
Agency's requirements both for coverage
application. Ageny Notice 20-660-19 states in p
ship and the Board 's authorized to accept or re
its charter, any employee of CIA may become;a member,
asociation, Inc., , ~ lfA)
an insurance
Id meet the
'elsecarp was authorized to enter int
insurance of membership if._.G GL-MA as a
ragraph 2
- A
d for security.
contracts for
oup. Under
sect any such
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that GEHA announces that it is offering a new life
insurance policy which can be purchased by "all
Agency personnel.
b. The pr.scnt GEIIA insurance program is the result
of many, many months of study and consideration of all
the Agency's problems by Task Forces, appropriate
staffs, the Career Council, and the Director. One of
the crucial problems was that of compensating individuals
assigned to hazardous missions. A decision was made
that no additional compensation would be awarded for
such missions and that the most satisfactory solution
,would be appropriate insurance coverage.
c. Insurance is normally considered to be a matter for
each individual to solve. In our case, two circumstances
made it impossible to obtain satisfactory coverage through
normal private policies. First, there were serious security
problems in Agency employees obtaining private insurance,
and, secondly, the hazardous nature of the duties involved
might well void the ordinary private policy. During the
war this problem had been met in part by the formation of
the War Agencies Employees Protective Association for
those civilian employees of the Government who ran war
risks which might void their regular policies. WAEPA
continued after the war and provided a partial solution, but
the benefits were not satisfactory and.complete security,
.j.y1.7+1; ve ti-
was not achieved for all cases. After conside a I
W4 `C gTL~`C
gation, a contract wih United
Benefit Life Insurance Company of Omaha (UIIC),
although since negotiations were through the officials of
Mutual of Omaha this is normally called the Omaha policy.
Omaha was agreeable to two key serrity considerations.
First, all names of applicants would,,b'e filed with GEHA,
Inc. , with an identification number assigned to each
application so that only these identification numbers would
be reported to Omaha together with the age, color, sTAy,c,
and date of insurance, and the amount of insurance. Afn the
event of death, GEHA could certify to the death of a
protected person by the number assigned to the application
and to the circumstances of death, that is, whether accidental
or natural. Furthermore, upon request of GEP.A, Omaha
would pay claims to any legal entity upon certification by
the deceased's estate that payment had been duly made under
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the terms of the policy. GEI-A could retain such certi-
fication until it saw fit to release it to Omaha. This
appeared to satisfy our operational security problems, and
the terms of the contract appeared to be satisfactory for
our purposes. Paragraph 2 a. of Agency Notice 20-660-19,
which deals specifically with the new United Benefit Life
Insurance (Omaha), says "This new term life insurance . . .
may be purchased by members of GEHA who are Staff
Employees, Staff Agents, or Contract Employees, or who
are civilian or military personnel detailed to the Agency . . . . "
d. There were no exceptions except for the death of a
protected person who is a member of the military or the
naval service of this or any country resulting from an act
of war, whether declared or undeclared. Double indemnity
will be paid for accidental death except under certain- mr-
cumatances state in the contra' c , which in . tdedall members
uvl
ct. e_ i ai t a! i~
of aviation crews. Att&the time of negot~iatting the contract,
Omaha was on notice that from time to time certain individuals
'or groups of individuals who would be protected under the
policy would be engaged in unusually hazardous activities.
Omaha was assured that this would be a relatively small
portion of the total personnel to be covered, but no commit-
ments were made as to any exact portion. Omaha did not
request any exceptions in regard to such hazardous assi n-
ments, and none but the one concerning acts of war noted
above are written into the contract. Provision is made to
accumulate certain reserves out of premiums paid by GEHA
and for dividends to be paid to GEHA by Omaha after their
charges and deductions for reserves have been met. An
initial premium was established, but it was made clear
that premiums might vary upwards or downwards depending
on experience over the years.
3. EXPERIENCE.
a. The contract with Vhkitf-became effective the 29th
day of July 1954. In t Fiscal Year 1955 premiums
amounted to $78, 000 and there were two claims, one for
$9, 000 and one for $15, 000. In Fiscal Year 1956 contri-
butions amounted to approximately $131, 000 and there were
three claims, one for $15, 000, one for $18, 000 (a double
indemnity; ), and a third for $15, 000, which was the one
raising the question presented in this paper. In 1957
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.,'..t' ~ fl-A
1)"'OL4 "Ilk
cne creating the subject of this paper.
it is contem~-3lated that about $130, 000 will be contributed
and two claims have arisen of exactly the same nature as the
b. In passing on applications it has not been necessary for
the Board or officers of GEHA to know the nature ofAhv- a:-v--t1
project involved or the duties of the(individual. However,
the first of the three controversial deaths, because it was
an aviation pilot accident, came to the attention of the Board,
a few members of which were familiar with the project involved.
The Board thereupon expressed concern at coverage for
personnel of this project on the grounds (1) that they were
not "true" staff employees of the Agency and (2) that they
were engaged in very hazardous activities for which coverage
had not been contemplated in the GEHA program. The matter 25X1A9a
was taken to the Career Council, Which fustracTed r-rV--~ II
i
h
d
th
ano{
e
ea
occurred to return to the Career Council
for further consideration of the matter. The Board of GEHA
then asked for consideration of a suggestion that the Agency
pay to GEHA an amount equal to the claims paid for such
extra-hazardous activities.
On the two subsequent pilot deaths the Board of GEHA
stated it would not approve any more applications for this
project and took the position that the Agency should indemnify
GEHA by one means or another. Rather than return to the
Career Council, the Agency representa_tiv- believed it
appropriate to refer this matter to the Acting Director for
decision.
4. THE LEGAL QUUESTI?N.
a. One of the reasons for establishing the GEHA life
insurance program rather than establishing a system of death
benefits payable directly by the Agency arose out of the
impingement on benefits payable by the Bureau of Employees
Compensation. The Federal Employees Compensation Act
provides very valuable benefits to the spouse and children
of any employee killed in performance of duty. The Act
specifically provides, however, that individuals must elect
either the remedies available under the FEC Act or the x)av-
ments or benefits to which they may be entitled under any
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other act. In effect then, if the Agency were to set up a
system of death benefits directly payable by it to the
employee's beneficiaries, the question is raised to what
extent that would affect the benefits pal-able by EEC.
b. Several months earlier General Counsel had discussed a
number of similar questions with the BEC. It is now clearly
established that if the Agency pays the premiums for insurance
or employees their rights under BEC are not impaired.
The BEC has, however, officially advised the Agency that
it would be compelled to offset against its payments anything
received by the beneficiaries of an employee as a matter of
right from other Federal entities including CIA. In view of
the GEHA position, the General Counsel has asked the BEC
if their ruling would be the same and the beneficiaries'
rights would. be impaired if payments were made not as
a matter of right to the beneficiaries but were made on a.
determination after death that it would be i t the national
J a t e e t. y
interest to make such payments eitFier,,,to the beneficiaries
Ito GEHA to hold it harmless for payments already made
to the beneficiaries. BEC has stated that this is a new
question which they have referred to the Solicitor's Office
in the Department of Labor. No response has been received
up to this time. Since a possibility remains that bene-
ficiaries' rights under BEC might be impaired, General
Counsel has recommended against any commitment to
indemnify GEHA in cases arising under the project in
question, at least until a BEC ruling is received.
a. The Agency believe that for the life
insurance program to be responsive to the Agency's needs,
it must meet in all respects the requirements both for
coverage and security. As to coverage, it would seem
that the program would be incomplete if coverage were
not a matter for determination by the Agency rather than.
by the Board. Presumably the higher the proportion of
people engaged in hazardous activities, the higher the
mortality figures that can be expected, with a resulting pos-
sible increase in premium rates. Tinder these circumstances,
those engaged in departmental duties where no particular
security aspect arose could withdraw from GEHA's program
and take out commercial policies. Chances are, however,
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that GEHA will afford a cheaper coverage than the individual
can obtain commercially.
b. If the philosophy were adopted that the aim of GEHA. is
to obtain the lowest rates possible and the biggest dividends
by elimination of the so-called hazardous and extra-hazardous
categories, the logical result would be very cheap coverage
for permanent departmental personnel and no coverage what-
soever for those engaged in the more dangerous missions of
the Agency. This would appear to be a complete perversion
of the original aim of the GEHA program.
c. Possibly more serious in its consequences to Agency
operations is the security problem involved. If GEHA
coverage is to be general, as we believe the original and
proper concept to be, there is no need whatsoever for the
GEHA Board. or officers to be given any information pertaining
to the applicant's duties or the project with which he is
concerned. If, however, the Board is authorized, for the
protection of premiums and dividends, to eliminate or make
special arrangements for hazardous categories, it world
appear that they would have the right to request full informa-
tion on the nature of projects and the duties of employees
assigned to potentially dangerous missions. Even though
the officers and Directors concerned are senior responsible
officials of the Agency, such a revelation of covert operations
would appear to be in violation of all the Agency security
standards.
6. RECOMMENDATIONS.
a. That GEHA be instructed to accept on equal basis all
applications from employees of the Agency declared eligible
by formal Agency policy;
b. that trans
of the contract
with GEHA be c
ducted strictly in accordance with the terms
s with Omaha or other companies involved
or other factors ari
.e. that in the event of decease of a person protected under
the Omaha policy no information be given to Omaha by GEHA,
lved without discussion of any operational
g out of Agency activities;
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without written approval from the Office of Security and
any other Agency component directly involved in the
activity in which the deceased was engaged.
H. GATES LLOYD
Acting Deputy Director
(Support)
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