Federal Employees Health Benefits Program: Payment of Premiums for Periods of Leave Without Pay or Insufficient Pay

SUMMARY: The Office of Personnel Management is issuing an interim

regulation to require Federal agencies to provide employees entering

leave without pay (LWOP) status, or whose pay is insufficient to cover

their FEHB premium payments, written notice of their opportunity to

continue their FEHB coverage. Employees who want to continue their

enrollment must sign a form agreeing to pay their premiums directly to

their agency on a current basis, or to incur a debt to be withheld from

their future salary. The purpose of this interim regulation is to

ensure that employees who are entering LWOP status, or whose pay is

insufficient to pay their FEHB premiums, are fully informed when they

decide whether or not to continue their FEHB coverage.

DATES: This interim regulation is effective August 21, 1996. We must

receive comments on or before September 20, 1996.

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

Director for Insurance Programs, Retirement and Insurance Service,

Office of Personnel Management, P.O. Box 57, Washington, DC 20044; or

deliver to OPM, Room 3451, 1900 E Street NW., Washington, DC; or FAX to

(202) 606-0633.

FOR FURTHER INFORMATION CONTACT: Robert G. Iadicicco, (202) 606-0004.

SUPPLEMENTARY INFORMATION: On May 10, 1994, OPM issued a regulation in

the Federal Register [59 FR 24062] that proposed a number of changes to

the Federal Employees Health Benefits (FEHB) Program that would result

in better service to enrollees. One of the changes proposed

establishing a requirement that agencies inform employees entering

leave without pay status (LWOP), (or any other type of nonpay status,

except periods of nonpay resulting from a lapse of appropriations), or

receiving pay 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. The proposal intended to

ensure employees are fully aware of these alternatives. Furthermore,

because the proposal would 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

would not apply.

On November 23, 1994, OPM issued a regulation in the Federal

Register (59 FR 60294) that put into effect all of the changes proposed

in the May 10, 1994, regulation except the requirement that agencies

inform employees entering LWOP status, or receiving pay insufficient to

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

terminating their FEHB coverage. This interim regulation covers the

requirement.

We received comments from two Federal agencies and one retiree

organization. One commenter agreed that employees need to be advised of

the options they have to continue FEHB coverage while they are in LWOP

status or when their pay is insufficient, but had a concern. Their

concern was that the proposal did not clearly state what would happen

to the FEHB enrollment of employees who go on LWOP status or whose pay

is insufficient if they did not elect in writing to continue or

terminate their FEHB enrollment.

We have addressed this concern by amending the proposal to require

employing offices to provide employees with a written notice of the

options of continuing or terminating their FEHB coverage. The

enrollments of employees who do not return a signed form to their

employing office within 31 days after the day they receive the notice

are terminated. The termination is retroactive to the end of the last

pay period in which the premium was withheld from pay.

The employees and covered family members, if any, are entitled to

the 31-day temporary extension of coverage and may convert to an

individual contract for health benefits. In addition, employees who are

prevented by circumstances beyond their control from timely returning a

signed form to the employing office may request the employing office to

reinstate their coverage. Therefore, employees who through no fault of

their own are not able to return a signed form to the employing office

within 31 days are protected by the temporary extension of coverage and

their right to request reinstatement of their coverage. Employees who

terminate their enrollment may enroll upon their return to pay status.

One commenter agreed that the change should resolve some of the

past problems and clarify agency and employee responsibilities, but

that continued monitoring by OPM and agency staff of operating

personnel offices' administration of the FEHB enrollment procedures for

employees in LWOP status will be required. We agree continued

monitoring is still required, and note that it is the responsibility of

agencies' staff to monitor their employing offices' procedures for

employees who enter LWOP status to ensure employees receive the

information required by this regulation.

One commenter disagreed with OPM's statement that the involuntary

offset provisions of 5 U.S.C. 5514 and subpart K of 5 CFR part 550

would not apply under this regulation. The involuntary offset

provisions require agencies to follow due process procedures such as

giving employees written notice and an opportunity for a hearing before

collecting debts from their pay. Section 550.1102(b) of subpart K of 5

CFR part 550 states, ``This subpart and 5 U.S.C. 5514 apply in

recovering certain debts by administrative offset, except where the

employee consents to the recovery, from

[[Page 37808]]

the current pay account of an employee.'' (emphasis added). Because

this regulation requires employees entering LWOP status or receiving

pay insufficient to cover their FEHB premiums to consent in writing to

the recovery of the debt they are incurring by continuing their FEHB

coverage, the involuntary offset provisions of 5 U.S.C. 5514 and

subpart K of 5 CFR part 550 do not apply.

On December 30, 1994, and June 1, 1995, OPM issued interim and

final regulations in the Federal Register (59 FR 67605 and 60 FR

28511), respectively, that eliminated the requirement for the use of

certified mail, return receipt requested, when notifying certain

enrollees that their enrollment in the FEHB Program will be terminated

due to nonpayment of premiums unless the payment is received within 15

days. This interim regulation further amends 5 CFR 890.502 to eliminate

the requirement for the use of certified mail, return receipt

requested, for the following circumstances: (1) Annuitants whose FEHB

premiums exceed the amount of their annuities; (2) surviving spouses in

receipt of a lump-sum basic employee death benefit under the Federal

Employees Retirement System; and (3) employees in LWOP status in excess

of 365 days.

On June 17, 1994, and December 27, 1994, OPM issued proposed and

final regulations in the Federal Register (59 FR 31171 and 59 FR 66434)

that delegated from OPM to Federal agencies the authority to reconsider

disputes over coverage and enrollment issues in the Federal Employees'

Group Life Insurance and the FEHB Programs and to make retroactive as

well as prospective corrections of errors. This interim regulation

amends 5 CFR 890.502, 890.808, and 890.1109 to conform with the

delegation of authority to Federal agencies.

Regulatory Flexibility Act

I certify that this regulation will not have a significant economic

impact on a substantial number of small entities because it primarily

affects 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, Hostages, Iraq,

Kuwait, Lebanon, Reporting and recordkeeping requirements, Retirement.

U.S. Office of Personnel Management.

James B. King,

Director.

Accordingly, OPM is amending 5 CFR part 890 as follows:

PART 890--FEDERAL EMPLOYEES HEALTH BENEFITS PROGRAM

1. The authority citation for part 890 continues 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.

Sec. 890.301 [Amended]

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

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

``Sec. 890.304(a)(1)(v)''.

3. In Sec. 890.502, paragraphs (a), (b), (c), (d), and (e) are

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

redesignated as paragraph (f), to read as follows:

Sec. 890.502 Employee and annuitant withholdings and contributions

and direct payment of premiums.

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

Except as provided in paragraphs (a)(2) and (g) of this section, an

employee or annuitant is responsible for payment of the employee or

annuitant 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

or annuitant 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

(a)(3).

(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. As soon as the employing office is aware

of an employee whose premium payments cannot be made because the

employee will be entering or has entered leave without pay status, (or

any other type of nonpay status, except periods of nonpay resulting

from a lapse of appropriations), or the employee's pay is insufficient

to cover the premiums, the employing office must inform the employee of

the available health benefits options.

(1) The employing office must provide the employee written notice

of the options and consequences as described in paragraphs (b)(2) (i)

and (ii) of this section. If the employing office cannot give the

notice required by this paragraph (b)(1) to the employee directly, it

must send the notice by first class mail. A notice that is mailed is

deemed to be received 5 days after the date of the notice.

(2) The employee must elect in writing either to continue health

benefits coverage or terminate it. The employee may continue his or her

health benefits coverage by choosing one of the options listed in this

paragraph (b)(2) and returning the signed form to the employing office

within 31 days from the day he or she receives the notice (45 days for

an employee residing overseas). When an employee mails the signed form,

the date of the postmark is deemed to be the date the notice is

returned to the employing office. If an employee elects

[[Page 37809]]

to continue coverage, he or she must elect in writing either to--

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

basis. The employee must agree that if he or she does not pay the

premiums, upon returning to employment or upon pay becoming sufficient

to cover the premiums, the employing office will deduct, in addition to

the current pay period's premiums, an amount equal to the premiums for

a pay period during which the employee was in LWOP status. The

employing office will continue using this method to deduct the accrued

unpaid premiums from salary until the debt is recovered in full. The

employee must also agree that if he or she does not return to work or

the employing office cannot recover the debt in full from salary, the

employing office may recover the debt from whatever other sources it

normally has available for recovery of a debt to the United States, or

(ii) Agree upon returning to employment or upon pay becoming

sufficient to cover the premiums, the employing office will deduct, in

addition to the current pay period's premiums, an amount equal to the

premiums for a pay period during which the employee was in LWOP status.

The employing office will continue using this method to deduct the

accrued unpaid premiums from salary until the debt is recovered in

full. The employee must also agree that if he or she does not return to

work or the employing office cannot recover the debt in full from

salary, the employing office may recover the debt from whatever other

sources it normally has available for recovery of a debt to the United

States.

(3) Except as provided under paragraph (b)(4) of this section, if

the employee does not return the signed form within 31 days after the

day he or she receives the notice (45 days for employees residing

overseas) the employing office terminates the enrollment according to

paragraph (b)(5) of this section. The employing office must give the

employee written notification of the termination.

(4) If the employee is prevented by circumstances beyond his or her

control from returning a signed form to the employing office within the

time frame under paragraph (b)(2) of this section, he or she may

request reinstatement of coverage by writing to the employing office.

The employee must describe the circumstances that prevented timely

notice and file the request within 30 calendar days from the date the

employing office gives the employee notification of the termination.

The employing office determines if the employee is eligible for

reinstatement of coverage. If the determination is affirmative, the

employing office reinstates the coverage of the employee retroactive to

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

may request a review of the decision from the employing agency as

provided under Sec. 890.104.

(5) Terminations of enrollment under paragraphs (b)(2) and (3) of

this section are retroactive to the end of the last pay period in which

the premium was withheld from pay. The employee and covered family

members, if any, are entitled to the temporary extension of coverage

for conversion and may convert to an individual contract for health

benefits. An employee whose coverage is terminated may enroll upon his

or her return to duty in a pay status in a position in which the

employee is eligible for coverage under this part.

(c) Procedures when an agency underwithholds. (1) An agency that

withholds less than the proper health benefits contributions from an

individual's pay, annuity, or compensation must submit an amount equal

to the sum of the uncollected contributions 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 must provide information to the annuitant or

surviving spouse regarding the available plans and notify him or her in

writing of the opportunity to either: enroll 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 or surviving spouse 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 annuitant or surviving spouse 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 annuitant or surviving spouse 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 must notify the

annuitant or surviving spouse in writing that continuation of coverage

depends upon payment being made within 15 days (45 days for annuitants

or surviving spouses residing overseas) after receipt of the notice. If

no subsequent payments are made, the retirement system terminates the

enrollment 60 days (90 days for annuitants or surviving spouses

residing overseas) after the date of the notice. An annuitant or

surviving spouse whose enrollment terminates because of nonpayment of

premium may not reenroll or reinstate coverage, except as provided in

paragraph (d)(4) of this section.

(4) If the annuitant or surviving spouse 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 annuitant or

surviving spouse must describe the circumstances that prevented timely

notice and file the request within 30 calendar days from the date of

termination. The retirement system determines whether the surviving

spouse or annuitant is eligible for reinstatement of coverage. If the

determination is affirmative, the retirement system reinstates the

coverage of the surviving spouse or annuitant retroactive to the date

of termination. If the determination is negative, the surviving spouse

or

[[Page 37810]]

annuitant may request a review of the decision from the retirement

system as provided under 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.

(e) Direct payment of premiums during periods of LWOP status in

excess of 365 days. (1) An employee who is granted leave without pay

under subpart L of part 630 of this chapter which exceeds the 365 days

of continued coverage under Sec. 890.303(e) must pay the employee

contributions directly to the employing office on a current basis.

(2) Payment must be made after the pay period in which the employee

is covered in accordance with a schedule established by the employing

office. If the employing office does not receive the payment by the

date due, the employing office must notify the employee in writing that

continuation of coverage depends upon payment being made within 15 days

(45 days for employees residing overseas) after receipt of the notice.

If no subsequent payments are made, the employing office terminates the

enrollment 60 days (90 days for enrollees residing overseas) after the

date of the notice.

(3) If the employee was prevented by circumstances beyond his or

her control from making payment within the time frame specified in

paragraph (e)(2) of this section, he or she may request reinstatement

of the coverage by writing to the employing office. The employee must

describe the circumstances that prevented timely notice and file the

request within 30 calendar days from the date of termination.

(4) The employing office determines whether the employee is

eligible for reinstatement of coverage. If the determination is

affirmative, the employing office reinstates the coverage of the

employee retroactive to the date of termination. If the determination

is negative, the employee may request a review of the decision from the

employing agency as provided under Sec. 890.104.

(5) An employee whose coverage is terminated under paragraph (e)(2)

of this section may enroll upon his or her return to duty in a pay

status in a position in which the employee is eligible for coverage

under this part.

* * * * *

4. In Sec. 890.808, the last sentence of paragraph (d)(2) is

revised to read as follows:

Sec. 890.808 Employing office responsibilities.

* * * * *

(d) * * *

(2) * * * If the determination is negative, the individual may

request a review of the decision from the employing agency as provided

under Sec. 890.104.

* * * * *

5. In Sec. 890.1109, the last sentence of paragraph (d)(2) is

revised to read as follows:

Sec. 890.1109 Premium payments

* * * * *

(d) * * *

(2) * * * If the determination is negative, the individual may

request a review of the decision from the employing agency as provided

under Sec. 890.104.

[FR Doc. 96-18515 Filed 7-19-96; 8:45 am]

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