Federal Employees Health Benefits Program: Miscellaneous Changes

SUMMARY: These regulations propose a number of changes to the Federal

Employees Health Benefits (FEHB) Program. The changes would improve the

administration of the FEHB Program and result in better service to

enrollees.

DATES: We must receive comments on or before July 11, 1994.

ADDRESSES: Send written comments to Lucretia F. Myers, Assistant

Director for Insurance Programs, Retirement and Insurance Group, Office

of Personnel Management, P.O. Box 707, Washington, DC 20044, or deliver

to OPM, room 3415, 1900 E Street NW., Washington, DC.

FOR FURTHER INFORMATION CONTACT:

Robert G. Iadicicco, (202) 606-0191.

SUPPLEMENTARY INFORMATION: These regulations would enhance the

administration of the Federal Employees Health Benefits (FEHB) Program

and improve service to enrollees by:

1. Clarifying that the last day of Open Season will be the Monday

of the second full workweek in December, instead of the Friday of the

first full workweek in December. This clarification is necessary

because the second full workweek in November includes the Veterans Day

holiday.

2. Giving retirement system staff the discretion to allow retirees

to make FEHB coverage changes by other methods, such as telephone

requests. Current policy requires retirees to fill out registration

forms to make coverage changes. Allowing retirees to request FEHB

coverage changes by telephone would result in the coverage changes

taking effect sooner by eliminating the time spent requesting,

completing, and returning a form. Retirees must still provide proof,

satisfactory to the retirement system staff, that they meet the

requirements to make the coverage change.

The ability to use methods other than a registration form to make

FEHB coverage changes is limited to retirees because of two significant

distinctions between retirees and employees. The first distinction is

that the vast majority of retirees cannot quickly obtain and then

submit registration forms because of the limited number of retirement

system worksites. For example, retirees in the Civil Service Retirement

System or the Federal Employees Retirement System who do not live near

worksites in either Washington, DC or Boyers, Pennsylvania must wait

for the registration form to be mailed to them and then wait for the

completed form to be returned to the retirement system staff before the

change in coverage can become effective. In comparison, most employees

can easily obtain and submit registration forms to the office

responsible for their health benefits actions because the office is

located near the employee's worksite.

The second distinction is that employees must complete and sign

registration forms to document their FEHB coverage during the course of

their Federal employment. Retirement systems staff use the completed

registration forms to determine whether the employee was covered by an

FEHB plan during his or her last 5 years of employment. The employee

must meet the 5 year requirement to continue his or her FEHB coverage

into retirement. In contrast, once the retirement system staff

determines a retiree meets the 5 year requirement and can continue his

or her FEHB coverage into retirement there is no longer a need to

document the retiree's FEHB coverage through signed registration forms.

3. Allowing a legally separated employee or annuitant covered as a

family member under his or her spouse's FEHB enrollment to enroll in

FEHB for self only or self and family coverage.

Current policy allows dual enrollment only to ensure all family

members have FEHB coverage. For example, if two employees who are

married to each other both have children from prior marriages who do

not live with them, then both employees need to enroll for self and

family coverage to provide FEHB coverage for all their children.

Under this regulation most couples who are legally separated will

decide not to have two self and family enrollments because one self and

family enrollment covers both spouses and all of their eligible

children and is less expensive. However, in a limited number of cases,

circumstances will lead the covered spouse to enroll for FEHB coverage

in his or here own right. One example is when separation resulted in

the covered spouse moving out of the service area of a comprehensive

medical plan and the spouse carrying the enrollment refused to switch

to a different plan. The covered spouse would find it very difficult to

obtain covered health care. Another example is when the spouse finds it

very difficult to obtain reimbursement for medical payments under a

fee-for-service plan, because reimbursements are sent to the spouse

carrying the enrollment.

The proposed regulations would not allow dual coverage. Each

enrollee would have to notify the insurance carrier of the names of

family members covered under his or her enrollment that are not covered

under the other enrollment.

4. Extending to certain employees the option of reinstating FEHB

coverage upon retirement. This option would be available to employees

whose employing office terminated their FEHB enrollment because they

entered on duty in a uniformed service, and who retire on an immediate

annuity from their Federal civilian position while on such duty. The

individual must make the request for reinstatement to the retirement

system within 60 days after his or her retirement. If the individual

does not exercise this option, the retirement system will automatically

reinstate the FEHB enrollment on the day the person separates from the

uniformed service. In either case, reinstatement will only take place

if the Federal retiree meets the 5-year requirement for continuing FEHB

coverage into retirement. Currently, retirement systems can reinstate

the FEHB enrollment only on the day the person separates from the

uniformed service.

5. Permitting retirees, whose entire annuity or compensation has

been waived or suspended, to pay FEHB premiums directly to the

retirement system or the Office of Workers' Compensation Programs

(OWCP) for any period of waiver or suspension which is 3 months or

more. Currently, a retiree's FEHB coverage terminates when the period

of the waiver or suspension exceeds 3 months. The retirement system or

OWCP automatically reinstates FEHB coverage on a prospective basis when

annuity or compensation payments resume. The proposed rule provides

better service to retirees by allowing them to continue their FEHB

coverage when their annuity or compensation is waived or suspended for

more than 3 months.

6. Establishing a requirement that agencies counsel employees

entering leave without pay status, or whose pay is insufficient to

cover their FEHB premium payments, of the options of continuing or

terminating their FEHB coverage, and if continuing, of paying premiums

directly on a current basis or incurring a debt to be withheld from

future salary. These regulations are intended to ensure employees are

fully aware of these alternatives. Furthermore, because the regulations

establish a procedure under which the employee voluntarily arranges to

have the debt recovered from salary in a specified amount after

returning to duty or after salary increases to cover the amount of the

health benefits contributions, the involuntary offset provisions of 5

U.S.C. 5514 and subpart K of 5 CFR part 550 do not apply.

7. Deleting the sentence in section 890.701 that lists the States

determined to be ``medically underserved areas'' effective January 1,

1988, because the list is out of date. Since 1988, the list of States

determined to be ``medically underserved areas'' for each contract year

have been published on an annual basis in a notice in the Federal

Register.

Regulatory Flexibility Act

I certify that these regulations will not have a significant

economic impact on a substantial number of small entities because they

primarily affect Federal employees, annuitants, and former spouses.

List of Subjects in 5 CFR Part 890

Administrative practice and procedure, Government employees, Health

facilities, Health insurance, Health professions, Reporting and

recordkeeping requirements, Retirement.

U.S. Office of Personnel Management.

Lorraine A. Green,

Deputy Director.

Accordingly, OPM proposes to amend 5 CFR part 890 as follows:

PART 890--FEDERAL EMPLOYEES HEALTH BENEFITS PROGRAM

1. The authority citation for part 890 is revised to read as

follows:

Authority: 5 U.S.C. 8913; sec. 890.803 also issued under 50

U.S.C. 403p, 22 U.S.C. 4069c and 4069c-1; subpart L also issued

under sec. 599C of Pub. L. 101-513, 104 Stat. 2064, as amended.

2. In Sec. 890.101, the definition of Register is revised to read

as follows:

Sec. 890.101 Definitions; time computations.

* * * * *

Register means to file with the employing office a properly

completed health benefits registration form, either electing to be

enrolled in a health benefits plan or electing not to be enrolled.

Retirement systems may accept alternative means, such as telephone

requests, in substitution of a properly completed health benefits

registration form. Register to enroll means to register an election to

be enrolled. Enrolled means a valid registration form has been accepted

by the employing office, or an alternative method has been accepted by

the retirement system, and the enrollment in a health benefits plan

approved by OPM under this part has not been terminated or cancelled.

Sec. 890.301 [Amended]

3. In Sec. 890.301, paragraph (c) is amended by removing

``Sec. 890.304(a)(4)'' and adding in its place ``Sec. 890.304(a)(5)'';

paragraph (d)(1) introductory text is amended by removing ``through the

Friday of the first full work-week in December'' and adding in its

place ``through the Monday of the second full workweek in December''.

4. In Sec. 890.302, paragraph (a)(2) is revised, and paragraph

(a)(3)(i) is amended by adding the words ``or legally separated'' after

the word ``divorced'', to read as follows:

Sec. 890.302 Coverage of family members.

(a) * * *

(2) Dual enrollment--spouse. (i) To protect the interests of the

children, an employee or annuitant may enroll in his or her own right

in a self and family enrollment even though is or her spouse also has a

self and family enrollment. Generally, such dual enrollments are

permitted only where two employees or annuitants are married, each with

children from prior marriages who do not live with them, or are legally

separated, with each spouse retaining custody of his or her own

children by a prior marriage. To ensure that no person receives

benefits under more than one enrollment, each enrollee must tell the

insurance carrier which family members are covered under his or her

enrollment. These individuals are not covered under the other

enrollment.

(ii) To protect the interests of legally separated Federal

employees, annuitants and their children, a legally separated employee

or annuitant may enroll in his or her own right in a self only or self

and family enrollment even though his or her spouse also has a self and

family enrollment. To ensure that no person receives benefits under

more than one enrollment, each enrollee must tell the insurance carrier

which family members are covered under his or her enrollment. These

individuals are not covered under the other enrollment.

* * * * *

5. In Sec. 890.305, paragraph (b) is revised to read as follows:

Sec. 890.305 Reinstatement of enrollment after military service.

* * * * *

(b) An employee whose employing office terminates his or her

enrollment because his or her order to enter on duty in a uniformed

service is for a period longer than 30 days, and who retires on an

immediate annuity from his or her Federal civilian position while on

such duty, may reinstate his or her enrollment by asking to do so

within 60 days after retirement. In the absence of such a request, the

retirement system automatically reinstates the enrollment on the day

the person separates from the uniformed service. For the retirement

system to reinstate the enrollment, the individual must have been

covered under this part since his or her first opportunity or for the 5

years of civilian service (excluding the period of uniformed service)

immediately preceding the civilian retirement, whichever is shorter.

6. Section 890.307 is revised to read as follows:

Sec. 890.307 Waiver or suspension of annuity or compensation.

(a) Except as provided in paragraphs (b) and (f) of this section,

when annuity or compensation is entirely waived or suspended, the

annuitant's enrollment continues for not more than 3 months (not more

than 12 weeks for annuitants whose compensation under subchapter I of

chapter 81 of title 5, United States Code, is paid each 4 weeks). If

the waiver or suspension continues beyond this period, the employing

office will notify the annuitant in writing that the employing office

will terminate the enrollment effective at the end of the period,

subject to the temporary extension of coverage for conversion, unless

the annuitant elects to make payment of the premium directly to the

employing office during the period of waiver. If the annuitant elects

to have the enrollment terminated, the employing office automatically

reinstates the enrollment on a prospective basis when the annuitant

again receives payment of annuity or compensation. The employing office

will make the withholding for the period of suspension or waiver during

which enrollment was continued (i.e., 3 months or less).

(b) If the annuitant elects to pay premiums directly, he or she

must send to the employing office his or her share of the subscription

charge for the enrollment for every pay period during which the

enrollment continues, exclusive of the 31-day temporary extension of

coverage for conversion provided in Sec. 890.401. The annuitant must

pay after each pay period he or she is covered in accordance with a

schedule established by the employing office. If the employing office

does not receive payment by the date due, the employing office will

notify the annuitant by certified mail return receipt requested that

coverage will continue only if payment is made within 15 days after

receipt of the notice. The employing office will terminate the

enrollment of an annuitant who fails to pay within the specified time

frame. The employing office will automatically reinstate the enrollment

on a prospective basis when payment of annuity or compensation resumes.

(c) If the annuitant is prevented by circumstances beyond his or

her control from paying within 15 days after receipt of the notice, he

or she may request reinstatement of coverage by writing to the

employing office. The annuitant must file the request within 30

calendar days from the date of termination, and must include supporting

documentation. The employing office will determine if the annuitant is

eligible for reinstatement of coverage; and, when the determination is

affirmative, reinstate the coverage of the annuitant retroactive to the

date of termination. If the determination is negative, the annuitant

may request a review of the decision as provided in Sec. 890.104.

(d) Termination of enrollment for failure to pay premiums within

the time frame established in accordance with paragraph (b) of this

section is retroactive to the end of the last period for which the

employing office timely received payment.

(e) The employing office will submit all direct premium payments

along with its regular health benefits premiums to OPM in accordance

with procedures established by that office.

(f) If suspension of annuity or compensation is because of

reemployment, the reemploying office must make the withholding

currently and enrollment continues during reemployment.

7. In Sec. 890.502, the heading, paragraphs (a), (b), (c), and (d)

are revised; paragraphs (e), (f), and (g) are removed; and paragraph

(h) is redesignated as paragraph (e), to read as follows:

Sec. 890.502 Employee withholdings and contributions and direct

payment of premiums.

(a) Employee and annuitant withholdings and contributions. (1)

Except as provided in paragraph (a)(2) of this section, an employee or

annuitant is responsible for payment of the employee share of the cost

of enrollment for every pay period during which the enrollment

continues. An employee or annuitant incurs an indebtedness due the

United States in the amount of the proper employee withholding required

for each pay period that health benefits withholdings or direct premium

payments are not made but during which the enrollment continues.

(2) An individual is not required to pay withholdings for the

period between the end of the pay period in which he or she separates

from service and the commencing date of an immediate annuity, if later.

(3) Temporary employees who are eligible to enroll under 5 U.S.C.

8906a must pay the full subscription charges including both the

employee share and the Government contribution. Employees with

provisional appointments under Sec. 316.403 are not considered eligible

for coverage under 5 U.S.C. 8906a for the purpose of this paragraph.

(4) The employing office must determine the withholding for

employees whose annual pay is paid during a period shorter than 52

workweeks on an annual basis and prorate the withholding over the

number of installments of pay regularly paid during the year.

(5) The employing office must make the withholding required from

enrolled survivor annuitants in the following order. First, withhold

from the annuity of a surviving spouse, if any. If that annuity is less

than the withholding required, the employing office must make the

withholding to the extent necessary from the annuity of the children,

if any, in the following order. First, withhold from the annuity of the

youngest child, and if necessary, then from the annuity of the next

older child, in succession, until the withholding is satisfied.

(6) Surviving spouses in receipt of a basic employee death benefit

under 5 U.S.C. 8442(b)(1)(A) and annuitants whose health benefits

premiums exceed the amount of their annuities may pay their portion of

the health benefits premium directly to the retirement system acting as

their employing office in accordance with procedures set out in

paragraph (d) of this section.

(b) Procedures when employee enters LWOP status or pay is

insufficient to cover premium. (1) The employing office must counsel

employees concerning the health benefits options available to them when

the premium payments cannot be made either because the employees will

be entering leave-without-pay status or because the employees' pay is

insufficient to cover the premiums.

(2) Employees must elect in writing either to continue health

benefits coverage or terminate it. If they elect to continue coverage,

they must--

(i) Agree to pay the premium directly to the agency on a current

basis, or

(ii) Agree to have the accrued premiums deducted from salary in a

specified amount upon returning to employment, or upon pay becoming

sufficient to cover the premiums.

(3) If an employee does not return to work or the employing office

cannot recover the debt in full from salary, it may recover the debt

from whatever other sources it normally has available for recovery of a

debt to the United States.

(c) Procedures when an agency under withholds. (1) An agency that

withholds less than or none of the proper health benefits contributions

from an individual's pay, annuity, or compensation must submit an

amount equal to the sum of the uncollected deductions and any

applicable agency contributions required under section 8906 of title 5,

United States Code, to OPM for deposit in the Employees Health Benefits

Fund.

(2) The agency must make the deposit to OPM described in paragraph

(c)(1) of this section as soon as possible, but no later than 60

calendar days after the date the employing office determines the amount

of the underdeduction that has occurred, regardless of whether or when

the agency recovers the underdeduction. A subsequent agency

determination whether to waive collection of the overpayment of pay

caused by failure to properly withhold employee health benefits

contributions shall be made in accordance with 5 U.S.C. 5584 as

implemented by 4 CFR chapter I, subchapter G, unless the agency

involved is excluded from application of 5 U.S.C. 5584, in which case

any applicable authority to waive the collection may be used.

(d) Direct premium payments for annuitants. (1) If an annuity,

excluding an annuity under Subchapter III of Chapter 84 (Thrift Savings

Plan), is too low to cover the health benefits premium due or if a

surviving spouse receives a basic employee death benefit, the

retirement system will provide information to the annuitant regarding

the available plans and notify him or her in writing of the opportunity

to either: register to be enrolled in any plan in which the enrollee's

share of the premium is not in excess of the annuity; or make payment

of the premium directly to the retirement system.

(2) The retirement system must establish a method for accepting

direct payment for health benefits premiums from surviving spouses who

have received or are currently receiving basic employee death benefits

as well as from annuitants whose annuities are too low to cover their

health premiums. The annuitant must continue to make direct payment of

the health benefits premium even if the annuity increases to the extent

that it covers the premium.

(3) The surviving spouse or annuitant must pay to the retirement

system his or her share of the premium for the enrollment for every pay

period during which the enrollment continues, exclusive of the 31-day

temporary extension of coverage for conversion provided in

Sec. 890.401. The surviving spouse or annuitant must pay after each pay

period in which he or she is covered in accordance with a schedule

established by the retirement system. If the retirement system does not

receive payment by the date due, the retirement system will notify the

surviving spouse or annuitant by certified mail return receipt

requested that coverage will continue only if payment is made within 15

days after receipt of the notice. The retirement system will terminate

the enrollment of a surviving spouse or annuitant who fails to pay

within the specified time frame. A surviving spouse or annuitant whose

enrollment is terminated because of nonpayment of premium may not

reenroll or reinstate coverage, except as provided in paragraph (d)(4)

of this section.

(4) If the surviving spouse or annuitant is prevented by

circumstances beyond his or her control from paying within 15 days

after receipt of the notice, he or she may request reinstatement of

coverage by writing to the retirement system. The surviving spouse or

annuitant must file the request within 30 calendar days from the date

of termination, and must include supporting documentation. The

retirement system will determine if the surviving spouse or annuitant

is eligible for reinstatement of coverage; and, when the determination

is affirmative, reinstate the coverage of the surviving spouse or

annuitant retroactive to the date of termination. If the determination

is negative, the individual may request a review of the decision as

provided in Sec. 890.104.

(5) Termination of enrollment for failure to pay premiums within

the time frame established in accordance with paragraph (d)(3) of this

section is retroactive to the end of the last pay period for which

payment has been timely received.

(6) The retirement system will submit all direct premium payments

along with its regular health benefits premiums to OPM in accordance

with procedures established by that office.

* * * * *

Sec. 890.701 [Amended]

8. Section 890.701 is amended by removing the last sentence of the

definition of Medically underserved area.

Sec. 890.808 [Amended]

9. In Sec. 890.808, paragraph (a) is amended by removing

``Sec. 890.805(d)'' and adding in its place ``Sec. 890.805(b)'' and by

removing ``Sec. 890.805(e)'' and adding in its place

``Sec. 890.805(c)''.

[FR Doc. 94-11165 Filed 5-9-94; 8:45 am]

BILLING CODE 6325-01-M