Federal Employees Health Benefits Program: Disenrollment

OFFICE OF PERSONNEL MANAGEMENT

5 CFR Part 890

RIN 3206-AH61

Federal Employees Health Benefits Program: Disenrollment

AGENCY: Office of Personnel Management.

ACTION: Final rule.

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SUMMARY: The Office of Personnel Management (OPM) is issuing final

regulations that are consistent with existing administrative procedures

requiring employing offices to provide information about enrollees in

the Federal Employees Health Benefits (FEHB) Program to the carriers of

the FEHB plans in which they are enrolled. Carriers are also required

to use the information provided by employing offices to reconcile their

enrollment records. These regulations will regularize the conditions

that would allow carriers to disenroll individuals when their employing

office of record does not show them as enrolled in the carrier's plan

and the carrier is otherwise unable to verify the enrollment. The

purpose of these regulations is to facilitate reconciliation of carrier

and employing office enrollment records, especially in cases where the

carrier has not previously received a notice showing an enrollment no

longer is valid.

EFFECTIVE DATE: December 4, 1998.

FOR FURTHER INFORMATION CONTACT: Jay D. Fritz (202) 606-0004.

SUPPLEMENTARY INFORMATION: On November 28, 1997, OPM issued proposed

regulations in the Federal Register (62 FR 63282) that would amend part

890 to allow carriers of FEHB plans to disenroll individuals when (1)

the payroll office of record with the carrier is unable to provide

information about the enrollment, (2) the carrier receives reliable

information that an individual with a self only enrollment has died,

(3) a child survivor annuitant becomes age 22, unless the carrier has

information indicating that the child is eligible for continued

coverage because the child is incapable of self support due to a

physical or mental disability, and (4) a former employee notifies the

carrier that he or she has separated from Federal employment under

circumstances that do not entitle him or her to an immediate annuity.

OPM received comments from six insurance carriers, one Government

agency, and one health plan trade association. Seven of the commenters

were in favor of the proposed regulations although each had specific

areas of concern. One commenter was opposed to the proposed

regulations. We will address the areas of concern below. We have tried

to list these issues in the same order as the regulations to which they

pertain.

One commenter suggested that we modify 5 CFR 890.107(a) to indicate

that lawsuits filed over disenrollments are to be filed against the

employing office. We believe that lawsuits involving disenrollments are

the equivalent of lawsuits to compel enrollments which are adequately

addressed at Sec. 890.107(a).

One commenter requested that carriers be allowed to cancel an

inactive contract in a situation where two identification numbers

belong to one individual, the carrier determines which coverage should

be active, and information about the incorrect enrollment is not

available from the employing office. We believe this is strictly an

enrollment issue that needs to be resolved between the employing office

and the carrier and is outside the scope of these regulations.

Several commenters expressed concerns over the responsibilities of

employing offices in responding to a carrier's request to provide

documentation necessary to resolve enrollment discrepancies. Two

commenters requested that employing offices be required to respond

within a certain time frame to a carrier's request to provide

documentation necessary to resolve an enrollment discrepancy. Two other

commenters suggested the regulations indicate that if the employing

office has not responded to a carrier's request for information within

a set amount of time, the carrier may proceed with issuing a

disenrollment notification. We are modifying the regulations to

indicate that if a carrier has not received requested information from

the employing office within 31 days of the request, they may proceed

with issuing the disenrollment notice.

One commenter suggested that we change Sec. 890.308(a)(1) to

indicate that an enrollee will be disenrolled 31 ``calendar'' days

after the date of the disenrollment notice since the term ``calendar''

is used elsewhere in the regulations. We are making this modification

in the interest of clarity.

Another commenter believes that 31 calendar days is not sufficient

time for an enrollee to respond to a carrier's disenrollment notice. We

feel that 31 days is enough time for an individual to either contact

the employing office or supply the carrier with appropriate

documentation to resolve an enrollment discrepancy. If for some reason

an individual does not provide documentation within the 31 calendar day

time frame and he or she is disenrolled, the disenrollment will be

voided and coverage reinstated retroactively upon presentation of the

documentation.

Several commenters suggested that OPM and the carriers create a

standard disenrollment notification letter and a standard letter

advising individuals of conversion rights and TCC eligibility when

applicable. OPM agrees and will work administratively with the carriers

on creating these standard letters.

Two commenters expressed concern that after an individual receives

a disenrollment notice, the individual is to deliver appropriate

documentation resolving the discrepancy to the carrier instead of the

employing office. The commenters feel that if the employing office does

not see the documentation, they will not correct their records and the

discrepancy will arise again in the next reconciliation. OPM believes

that appropriate documentation should be sent to the carrier instead of

the employing office since the carrier is taking the action to

disenroll the individual and can rescind that action. We also expect

that in many cases the individual will contact the employing office for

assistance upon receipt of the

[[Page 59458]]

disenrollment notice, resulting in correction of employing office

records. In addition, the standard disenrollment letter will advise

individuals to send appropriate documentation to both their carrier and

their employing office.

Two commenters inquired about the effective date of an individual's

disenrollment. One questioned the disenrollment date when the carrier

and the employing office are unable to reconcile the enrollment, and

the other questioned the disenrollment date when the carrier receives

reliable evidence that an enrollee with a self only enrollment has died

but the date of death is unknown. In the first case, the disenrollment

date will be 31 calendar days after the disenrollment notice is sent to

the enrollee as the carrier would not have any knowledge as to when the

employing office of record ceased forwarding premiums for that

individual. In the second case, we are modifying the regulations to

indicate that disenrollment would be effective the last day of the pay

period in which the carrier received notice of the death.

One commenter requested that OPM give carriers discretion to delay

disenrollments in appropriate cases. It is our intention for carriers

to use the disenrollment process with appropriate discretion in all

cases, but especially in cases where the carrier believes an individual

is eligible for coverage but needs time to forward documentation. We

are modifying the regulations to allow carriers this discretion.

One commenter asked if carriers should convey an individual's

disenrollment date to the employing office when the individual is

disenrolled 31 days after written notification is sent. We do not

believe carriers should be required to make this notification. Since

prior attempts at contact by the carrier have been ineffectual, it is

unlikely they would know the office of record to which to send the

notification.

One commenter suggested that we clarify the procedures for an

individual disputing a disenrollment notice from a carrier. We are

modifying the regulations so that after a carrier receives information

from an individual attempting to resolve an enrollment discrepancy, the

carrier will communicate its decision on the information to both the

employing office and the individual. Only at the point where the

information is determined to be inadequate to resolve the enrollment

discrepancy should the reconsideration process with the individual's

employing office begin.

One commenter suggested that employing offices be required to

notify the carrier of a request made by an individual for

reconsideration of a disenrollment decision. The commenter believes

that the carrier may have information that bears on the enrollment

issue. We are modifying the regulations to incorporate this

requirement.

One commenter suggested that we clarify the regulations to indicate

that if an employing office overturns a carrier's disenrollment

determination upon reconsideration, the enrollment will be reinstated

retroactively. OPM agrees and we are modifying the regulations for

clarity, as all reinstatements of enrollment under these regulations

will be made retroactively.

We are also revising the regulations to remove the requirement that

reconsideration decisions be issued to the carriers in writing. After a

reconsideration decision is made, agencies are still to issue a written

notice of its final decision to the individual, however, agencies

should contact the carrier by telephone with the reconsideration

decision. We have made this change since currently much enrollment

activity is handled between the agencies and carriers by telephone. In

the case of reconsideration decisions to reinstate FEHB enrollment, we

do not want individuals to remain disenrolled while a carrier waits for

a written notice to be forwarded from the agency. Through use of the

telephone, an individual that is eligible for FEHB coverage may be

quickly reinstated.

One commenter suggested the regulations require that employing

offices issue reconsideration decisions within a set time frame. We

believe reconsideration should be in accordance with the existing

processes developed within each individual employing office to process

reconsideration requests under 5 CFR 890.104(c).

Two commenters expressed concern over retroactive enrollments in

health maintenance organizations for individuals who received routine

services from non-network providers during the period covered by the

retroactive enrollment. When these situations arise, OPM requests that

carriers review each occurrence on a case-by-case basis. In situations

of true hardship, where services could not be deferred until the

enrollment problem was resolved, we would expect the carriers to

provide coverage for the non-network services in question.

Several commenters were concerned about our proposal allowing

carriers, upon receiving from a reliable source information of the

death of an enrollee with a self only enrollment, to disenroll the

individual. We are modifying the regulations to include certain

examples of what OPM considers reliable information that an enrollee

has died. We are also eliminating the requirement that carriers attempt

to notify the affected individual or a family member of the

disenrollment. Upon additional review, we have determined that an

attempt to notify the affected individual or a member of their family

is unnecessary. If, however, the enrollee is not deceased and attempts

to receive services, we expect the carrier to cover the services, void

the disenrollment and reinstate coverage retroactively.

One commenter noted that a child survivor annuitant must be a full-

time student in order to continue their health benefits enrollment

beyond age 18, while the regulations only address the disenrollment of

child survivor annuitants who reach age 22. While we are aware of the

possibility that some child survivor annuitants under age 22 would not

be eligible for FEHB coverage, we do not want carriers attempting to

disenroll them. Members of this segment of the population are

frequently dropped from, and reinstated to, the annuity rolls. Each

time they move on or off the annuity rolls, their eligibility for FEHB

enrollment changes. It would be difficult, if not impossible, for

carriers to determine when these individuals would lose entitlement to

an annuity and, consequently, their FEHB coverage. We will rely on the

retirement system to keep carriers apprised of the enrollment

eligibility of members of this group.

Two commenters suggested that we require the carriers to give

notice of conversion rights when a child survivor annuitant covered

under a self only enrollment loses entitlement to an annuity and is

disenrolled. OPM agrees that notice of conversion rights be given to

these individuals. However, the notice will be included in the written

notice of disenrollment and specific regulatory language is not needed.

Carriers must send the written notice of disenrollment to the

individual prior to the individual's 22nd birthday.

We are removing the specific regulatory requirement that an

enrollee who notifies the carrier that he or she has separated from

Federal employment be notified of their right to convert to a non-group

contract and possible eligibility to enroll under temporary

continuation of coverage. In its place, we are requiring that the

carrier provide the enrollee with a written notice of disenrollment

prescribed or approved by OPM. This notice will contain the information

on conversion and temporary continuation of coverage.

One commenter expressed concern that the regulations do not specify

any

[[Page 59459]]

grounds under which a child survivor annuitant might request

reconsideration of a carrier's decision to disenroll the individual.

The grounds that an individual would have for requesting

reconsideration would be that the person is over age 22, but is

incapable of self-support. In cases where the retirement system is

provided with evidence of the situation stated above, they would order

the carrier to reinstate coverage retroactively.

One commenter suggested that we change the regulations to allow

child survivor annuitants 60 calendar days from the date of the

carrier's disenrollment notice to file a request for reconsideration.

To provide consistency among the time frames for filing reconsideration

requests, we are modifying the regulations to allow 60 calendar days

instead of the current 30 calendar days.

One commenter asserted that by allowing carriers to disenroll

individuals, OPM is relinquishing its responsibilities in administering

the FEHB Program and increasing the workload burden on the employing

offices. OPM disagrees. The regulations will facilitate reconciliation

of carrier and employing office enrollment records. Under these

regulations, carriers may disenroll individuals only if the carrier has

not received a notice terminating the enrollment or the individual has

died, lost eligibility, or left Federal employment. We are modifying

the regulations to give the carriers more discretion so they are not

forced to disenroll an individual if they feel it would not be

appropriate. We expect that few individuals would either reach the end

of the disenrollment process without their enrollment status becoming

clear or be otherwise incorrectly disenrolled. As a result, there would

be few reconsideration requests filed with employing offices. However,

if an employing office should find that it is receiving a large number

of reconsideration requests, it may find that its training and

procedures on transmitting enrollment transactions and performing

enrollment reconciliations need to be reviewed and strengthened.

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 administrative procedures for Federal agencies and

health benefit carriers that participate in the FEHB Program.

Executive Order 12866, Regulatory Review

This rule has been reviewed by the Office of Management and Budget

in accordance with Executive Order 12866.

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.

Office of Personnel Management.

Janice R. Lachance,

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. 890.102 also issued under sections 11202(f), 11232(e), and

11246 (b) and (c) of Pub. L. 105-33, 111 Stat. 251.

2. In subpart A, Sec. 890.110 is added to read as follows:

Sec. 890.110 Enrollment reconciliation.

(a) Each employing office must report to each carrier or its

surrogate on a quarterly basis the names of the individuals who are

enrolled in the carrier's plan in a format and containing such

information as required by OPM.

(b) The carrier must compare the data provided with its own

enrollment records. When the carrier finds in its aggregate enrollment

records individuals whose names do not appear in the report from the

employing office of record, the carrier must request the employing

office to provide the documentation necessary to resolve the

discrepancy.

3. In subpart C, Sec. 890.308 is added to read as follows:

Sec. 890.308 Disenrollment.

(a)(1) Except as otherwise provided in this section, a carrier that

cannot reconcile its record of an individual's enrollment with agency

enrollment records or does not receive documentation necessary to

resolve the discrepancy from the employing office within 31 days of a

request must provide written notice to the individual that the

employing office of record does not show him or her as enrolled in the

carrier's plan and that he or she will be disenrolled 31 calendar days

after the date of the notice unless the enrollee provides appropriate

documentation to resolve the discrepancy. Appropriate documentation

includes, but is not limited to, a copy of the Standard Form 2809

(basic enrollment document) (or a letter confirming an electronic

transaction), the Standard Form 2810 transferring the enrollment into

the gaining employing office (or the equivalent electronic submission),

copies of earnings and leave statements or annuity statements showing

withholdings for the health benefits plan, or a document or other

credible information from the enrollee's employing office stating that

the individual is entitled to continued enrollment in the plan and that

the premiums are being paid. After receiving documentation from the

enrollee, the carrier must notify both the enrollee and the employing

office of record of their decision on the information.

(2) If the carrier does not receive documentation required under

paragraph (a)(1) of this section within the specified time frame, the

carrier should disenroll the individual, without further notice.

(3) The enrollee may request his or her employing office to

reconsider the carrier's decision to disenroll the individual. The

request for reconsideration must be made in writing and must include

the enrollee's name, address, Social Security Number or other personal

identification number, name of carrier, reason(s) for the request, and,

if applicable, retirement claim number. The employing office must

notify the carrier when a request for reconsideration of the decision

to disenroll the individual is made.

(4) A request for reconsideration of the carrier's decision must be

filed within 60 calendar days after the date of the carrier's

disenrollment notice. The time limit on filing may be extended when the

individual shows that he or she was not notified of the time limit and

was not otherwise aware of it, or that he or she was prevented by

circumstances beyond his or her control from making the request within

the time limit.

(5) After reconsideration, the employing office must issue a

written notice of its final decision to the individual and notify the

carrier of the decision. The notice must fully set forth the findings

and conclusions on which the decision was based. If upon

reconsideration the employing office determines the individual is

entitled to continued enrollment in the plan, the disenrollment under

paragraph (a)(2) of

[[Page 59460]]

this section is void and coverage is reinstated retroactively.

(6) If, at any time after the disenrollment has occurred, the

employing office or OPM determines that another section of this part

applies to the individual's enrollment or the carrier discovers or

receives appropriate documentation showing that another section of this

part applies to the individual's enrollment, the disenrollment under

paragraph (a)(2) of this section is void and coverage is reinstated

retroactively.

(b) When a carrier receives, from any reliable source, information

of the death of an enrollee with a self only enrollment, the carrier

may take action to disenroll the individual on the date set forth in

Sec. 890.304(a)(1)(iv) or Sec. 890.304(b)(4), as appropriate. When the

date of death is unknown, the carrier may take action to disenroll the

individual on the date which is the last day of the pay period in which

information of the death is received. Reliable sources include, but are

not limited to, claims for hospital or physician costs incurred at time

of death and correspondence returned from the Postal Service noting

that the addressee is deceased. If, at any time after the disenrollment

has occurred, the employing office or OPM determines that another

section of this part applies to the individual's enrollment or the

carrier discovers or receives appropriate documentation showing that

another section of this part applies to the individual's enrollment,

the disenrollment under this paragraph (b) is void and coverage is

reinstated retroactively.

(c)(1) When a child survivor annuitant covered under a self only

enrollment reaches age 22, the carrier may take action to disenroll the

individual effective with the date set forth in Sec. 890.304(c)(1)

unless records with the carrier indicate that the child is incapable of

self support due to a physical or mental disability. The carrier must

provide the enrollee with a written notice of disenrollment prescribed

or approved by OPM prior to the date set forth in Sec. 890.304(c)(1).

(2) The child survivor annuitant may request the retirement system

to reconsider the carrier's decision to disenroll the individual. The

request for reconsideration must be made in writing and include the

enrollee's name, address, Social Security Number or other identifier,

name of carrier, reason(s) for the request, and the survivor annuity

claim number. The retirement system must notify the carrier when a

request for reconsideration of the carrier's decision to disenroll the

individual is made.

(3) A request for reconsideration of the carrier's decision must be

filed with the retirement system within 60 calendar days from the date

of the carrier's disenrollment notice. The time limit on filing may be

extended when the individual shows that he or she was not notified of

the time limit and was not otherwise aware of it, or that he or she was

prevented by circumstances beyond his or her control from making the

request within the time limit.

(4) After reconsideration, the retirement system must issue a

written notice of its final decision to the child survivor annuitant

and notify the carrier of the decision. The notice must fully set forth

the findings and conclusions on which the decision was based. If upon

reconsideration the retirement system determines that he or she is

entitled to continued enrollment in the plan, the disenrollment under

paragraph (c)(1) of this section is void and coverage is reinstated

retroactively.

(5) If, at any time after the disenrollment has occurred, the

employing office or OPM determines that another provision of this part

applies to the individual's enrollment or the carrier discovers or

receives appropriate documentation showing that another section of this

part applies to the individual's enrollment, the disenrollment under

paragraph (c)(1) of this section is void and coverage is reinstated

retroactively.

(d) When an enrollee notifies the carrier that he or she has

separated from Federal employment and is no longer eligible for

enrollment, the carrier must disenroll the individual on the last day

of the pay period in which the separation occurred, if known, otherwise

the carrier must disenroll the employee on the date the employee

provides as the date of separation. The carrier must provide the

enrollee with a written notice of disenrollment prescribed or approved

by OPM.

[FR Doc. 98-29330 Filed 11-3-98; 8:45 am]

BILLING CODE 6325-01-P