[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2675 Reported in Senate (RS)]

                                                       Calendar No. 590
105th CONGRESS
  2d Session
                                H. R. 2675

                          [Report No. 105-337]


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            November 5, 1997

  Received; read twice and referred to the Committee on Governmental 
                                Affairs

                           September 21, 1998

  Reported by Mr. Thompson, with an amendment and an amendment to the 
                                 title
 [Strike out all after the enacting clause and insert the part printed 
                               in italic]

_______________________________________________________________________

                                 AN ACT


 
  To require that the Office of Personnel Management submit proposed 
   legislation under which group universal life insurance and group 
 variable universal life insurance would be available under chapter 87 
        of title 5, United States Code, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

<DELETED>SECTION 1. SHORT TITLE.</DELETED>

<DELETED>    This Act may be cited as the ``Federal Employees Life 
Insurance Improvement Act''.</DELETED>

<DELETED>SEC. 2. REQUIREMENT THAT A LEGISLATIVE PROPOSAL BE 
              SUBMITTED.</DELETED>

<DELETED>    (a) In General.--Within 6 months after the date of 
enactment of this Act, the Office of Personnel Management shall submit 
to Congress proposed legislation under which there would be made 
available to Federal employees and annuitants the following:</DELETED>
        <DELETED>    (1) Group universal life insurance.</DELETED>
        <DELETED>    (2) Group variable universal life 
        insurance.</DELETED>
        <DELETED>    (3) Additional voluntary accidental death and 
        dismemberment insurance.</DELETED>
<DELETED>The proposal shall indicate whether any such insurance could 
be taken in addition to, in lieu of, or in combination with any 
insurance otherwise offered under chapter 87 of title 5, United States 
Code.</DELETED>
<DELETED>    (b) Description of Policies and Costs.--The proposed 
legislation shall be accompanied by a report which shall include a 
concise description of the policies proposed, an estimate of the cost 
to the Government anticipated with respect to each of those policies, 
and any other information which the Office of Personnel Management may 
consider appropriate.</DELETED>

<DELETED>SEC. 3. UNREDUCED ADDITIONAL OPTIONAL LIFE 
              INSURANCE.</DELETED>

<DELETED>    (a) In General.--Section 8714b of title 5, United States 
Code, is amended--</DELETED>
        <DELETED>    (1) in subsection (c)--</DELETED>
                <DELETED>    (A) by striking the last 2 sentences of 
                paragraph (2); and</DELETED>
                <DELETED>    (B) by adding at the end the 
                following:</DELETED>
<DELETED>    ``(3) The amount of additional optional insurance 
continued under paragraph (2) shall be continued, with or without 
reduction, in accordance with the employee's written election at the 
time eligibility to continue insurance during retirement or receipt of 
compensation arises, as follows:</DELETED>
        <DELETED>    ``(A) The employee may elect to have withholdings 
        cease in accordance with subsection (d), in which case--
        </DELETED>
                <DELETED>    ``(i) the amount of additional optional 
                insurance continued under paragraph (2) shall be 
                reduced each month by 2 percent effective at the 
                beginning of the second calendar month after the date 
                the employee becomes 65 years of age and is retired or 
                is in receipt of compensation; and</DELETED>
                <DELETED>    ``(ii) the reduction under clause (i) 
                shall continue for 50 months at which time the 
                insurance shall stop.</DELETED>
        <DELETED>    ``(B) The employee may, instead of the option 
        under subparagraph (A), elect to have the full cost of 
        additional optional insurance continue to be withheld from such 
        employee's annuity or compensation on and after the date such 
        withholdings would otherwise cease pursuant to an election 
        under subparagraph (A), in which case the amount of additional 
        optional insurance continued under paragraph (2) shall not be 
        reduced, subject to paragraph (4).</DELETED>
        <DELETED>    ``(C) An employee who does not make any election 
        under the preceding provisions of this paragraph shall be 
        treated as if such employee had made an election under 
        subparagraph (A).</DELETED>
<DELETED>    ``(4) If an employee makes an election under paragraph 
(3)(B), that individual may subsequently cancel such election, in which 
case additional optional insurance shall be determined as if the 
individual had originally made an election under paragraph (3)(A).''; 
and</DELETED>
        <DELETED>    (2) in the second sentence of subsection (d)(1) by 
        inserting ``if insurance is continued as provided in 
        subparagraph (A) of paragraph (3),'' after ``except 
        that,''.</DELETED>
<DELETED>    (b) Technical Amendment.--The last sentence of section 
8714b(d)(1) of title 5, United States Code, is amended by inserting 
``(and any amounts withheld as provided in subsection (c)(3)(B))'' 
after ``Amounts so withheld''.</DELETED>
<DELETED>    (c) Effective Date.--The amendments made by this section 
shall take effect on the 120th day after the date of enactment of this 
Act and shall apply with respect to employees who become eligible, on 
or after such 120th day, to continue additional optional insurance 
during retirement or receipt of compensation.</DELETED>

<DELETED>SEC. 4. IMPROVED OPTIONAL LIFE INSURANCE ON FAMILY 
              MEMBERS.</DELETED>

<DELETED>    (a) In General.--Subsection (b) of section 8714c of title 
5, United States Code, is amended to read as follows:</DELETED>
<DELETED>    ``(b) The optional life insurance on family members 
provided under this section shall be made available to each eligible 
employee who has elected coverage under this section, under conditions 
the Office shall prescribe, in multiples, at the employee's election, 
of 1, 2, 3, 4, or 5 times--</DELETED>
        <DELETED>    ``(1) $5,000 for a spouse; and</DELETED>
        <DELETED>    ``(2) $2,500 for each child described in section 
        8701(d).</DELETED>
<DELETED>An employee may reduce or stop coverage elected pursuant to 
this section at any time.''.</DELETED>
<DELETED>    (b) Technical and Conforming Amendments.--Section 8714c of 
title 5, United States Code, is amended--</DELETED>
        <DELETED>    (1) in subsection (c)(2) by striking ``section 
        8714b(c)(2) of this title'' and inserting ``section 
        8714b(c)(2)-(4)''; and</DELETED>
        <DELETED>    (2) in subsection (d)(1) by inserting before the 
        last sentence the following: ``Notwithstanding the preceding 
        sentence, the full cost shall be continued after the calendar 
        month in which the former employee becomes 65 years of age if, 
        and for so long as, an election under this section 
        corresponding to that described in section 8714b(c)(3)(B) 
        remains in effect with respect to such former 
        employee.''.</DELETED>
<DELETED>    (c) Effective Date; Open Enrollment Period.--</DELETED>
        <DELETED>    (1) Effective date.--The amendments made by this 
        section shall take effect on the first day of the first pay 
        period which begins on or after the 180th day following the 
        date of enactment of this Act or on any earlier date that the 
        Office of Personnel Management may prescribe.</DELETED>
        <DELETED>    (2) Open enrollment period.--</DELETED>
                <DELETED>    (A) In general.--Before the effective date 
                under paragraph (1), the Office shall afford eligible 
                employees a reasonable opportunity to elect to begin 
                coverage under section 8714c of title 5, United States 
                Code (as amended by this section), or to increase any 
                existing optional life insurance on family members to 
                any amount allowable under such section (as so 
                amended), beginning on such effective date.</DELETED>
                <DELETED>    (B) Definition of an eligible employee.--
                For purposes of subparagraph (A), the term ``eligible 
                employee'' means any employee (within the meaning of 
                section 8701 of title 5, United States Code) covered by 
                group life insurance under section 8704(a) of such 
                title.</DELETED>

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Federal Employees Life Insurance 
Improvement Act''.

SEC. 2. STUDY AND REPORT ON CERTAIN LIFE INSURANCE OPTIONS OFFERED TO 
              FEDERAL EMPLOYEES.

    (a) In General.--Not later than July 31, 1998, the Office of 
Personnel Management shall conduct a study on life insurance options 
for Federal employees described under subsection (b) and submit a 
report to Congress.
    (b) Study and Report.--The study and report referred to under 
subsection (a) shall--
            (1) survey and ascertain the interest of Federal employees 
        in an offering under chapter 87 of title 5, United States Code, 
        of insurance coverage options relating to--
                    (A) group universal life insurance;
                    (B) group variable universal life insurance; and
                    (C) additional voluntary accidental death and 
                dismemberment insurance; and
            (2) include any comments, analysis, and recommendations of 
        the Office of Personnel Management relating to such options.

SEC. 3. REPEAL OF MAXIMUM LIMITATION ON EMPLOYEE INSURANCE.

    Chapter 87 of title 5, United States Code, is amended--
            (1) in section 8701(c), in the first sentence, by striking 
        the comma immediately following ``$10,000'' and all that 
        follows and inserting a period; and
            (2) in section 8714b(b), in the first sentence, by striking 
        ``except'' and all that follows and inserting a period.

SEC. 4. FOSTER CHILD COVERAGE.

    Section 8701(d)(1)(B) of title 5, United States Code, is amended by 
inserting ``or foster child'' after ``stepchild'' both places it 
appears.

SEC. 5. INCONTESTABILITY OF ERRONEOUS COVERAGE.

    Section 8706 of title 5, United States Code, as amended by section 
5(2), is further amended by adding at the end the following new 
subsection:
    ``(g) The insurance of an employee under a policy purchased under 
section 8709 shall not be invalidated based on a finding that the 
employee erroneously became insured, or erroneously continued insurance 
upon retirement or entitlement to compensation under subchapter I of 
chapter 81 of this title, if such finding occurs after the erroneous 
insurance and applicable withholdings have been in force for 2 years 
during the employee's lifetime.''.

SEC. 6. DIRECT PAYMENT OF INSURANCE CONTRIBUTIONS.

    Chapter 87 of title 5, United States Code, is amended--
            (1) in section 8707--
                    (A) in subsection (a), by striking ``(a) During'' 
                and inserting ``(a) Subject to subsection (c)(2), 
                during'';
                    (B) in subsection (b), by striking ``(b)(1) 
                Whenever'' and inserting ``(b)(1) Subject to subsection 
                (c)(2), whenever''; and
                    (C) in subsection (c), by inserting ``(1)'' 
                immediately after ``(c)'' and by adding at the end the 
                following new paragraph:
    ``(2) An employee who is subject to withholdings under this section 
and whose pay, annuity, or compensation is insufficient to cover such 
withholdings may nevertheless continue insurance if the employee 
arranges to pay currently into the Employees' Life Insurance Fund, 
through the agency or retirement system that administers pay, annuity, 
or compensation, an amount equal to the withholdings that would 
otherwise be required under this section.'';
            (2) in section 8714a(d), by adding at the end the following 
        new paragraph:
    ``(3) Notwithstanding paragraph (1), an employee who is subject to 
withholdings under this subsection and whose pay, annuity, or 
compensation is insufficient to cover such withholdings may 
nevertheless continue optional insurance if the employee arranges to 
pay currently into the Employees' Life Insurance Fund, through the 
agency or retirement system which administers pay, annuity, or 
compensation, an amount equal to the withholdings that would otherwise 
be required under this subsection.'';
            (3) in section 8714b(d), by adding at the end the following 
        new paragraph:
    ``(3) Notwithstanding paragraph (1), an employee who is subject to 
withholdings under this subsection and whose pay, annuity, or 
compensation is insufficient to cover such withholdings may 
nevertheless continue additional optional insurance if the employee 
arranges to pay currently into the Employees' Life Insurance Fund, 
through the agency or retirement system which administers pay, annuity, 
or compensation, an amount equal to the withholdings that would 
otherwise be required under this subsection.''; and
            (4) in section 8714c(d), by adding at the end the following 
        new paragraph:
    ``(3) Notwithstanding paragraph (1), an employee who is subject to 
withholdings under this subsection and whose pay, annuity, or 
compensation is insufficient to cover such withholdings may 
nevertheless continue optional life insurance on family members if the 
employee arranges to pay currently into the Employees' Life Insurance 
Fund, through the agency or retirement system that administers pay, 
annuity, or compensation, an amount equal to the withholdings that 
would otherwise be required under this subsection.''.

SEC. 7. ADDITIONAL OPTIONAL LIFE INSURANCE CONTINUATION AND 
              PORTABILITY.

    (a) In General.--Section 8714b of title 5, United States Code, is 
amended--
            (1) in subsection (c)--
                    (A) by striking the last 2 sentences of paragraph 
                (2); and
                    (B) by adding at the end the following:
    ``(3) The amount of additional optional insurance continued under 
paragraph (2) shall be continued, with or without reduction, in 
accordance with the employee's written election at the time eligibility 
to continue insurance during retirement or receipt of compensation 
arises, as follows:
            ``(A) The employee may elect to have withholdings cease in 
        accordance with subsection (d), in which case--
                    ``(i) the amount of additional optional insurance 
                continued under paragraph (2) shall be reduced each 
                month by 2 percent effective at the beginning of the 
                second calendar month after the date the employee 
                becomes 65 years of age and is retired or is in receipt 
                of compensation; and
                    ``(ii) the reduction under clause (i) shall 
                continue for 50 months at which time the insurance 
                shall stop.
            ``(B) The employee may, instead of the option under 
        subparagraph (A), elect to have the full cost of additional 
        optional insurance continue to be withheld from such employee's 
        annuity or compensation on and after the date such withholdings 
        would otherwise cease pursuant to an election under 
        subparagraph (A), in which case the amount of additional 
        optional insurance continued under paragraph (2) shall not be 
        reduced, subject to paragraph (4).
            ``(C) An employee who does not make any election under the 
        preceding provisions of this paragraph shall be treated as if 
        such employee had made an election under subparagraph (A).
    ``(4) If an employee makes an election under paragraph (3)(B), that 
individual may subsequently cancel such election, in which case 
additional optional insurance shall be determined as if the individual 
had originally made an election under paragraph (3)(A).
    ``(5)(A) An employee whose additional optional insurance under this 
section would otherwise stop in accordance with paragraph (1) and who 
is not eligible to continue insurance under paragraph (2) may elect, 
under conditions prescribed by the Office of Personnel Management, to 
continue all or a portion of so much of the additional optional 
insurance as has been in force for not less than--
            ``(i) the 5 years of service immediately preceding the date 
        of the event which would cause insurance to stop under 
        paragraph (1); or
            ``(ii) the full period or periods of service during which 
        the insurance was available to the employee, if fewer than 5 
        years,
at group rates established for purposes of this section, in lieu of 
conversion to an individual policy. The amount of insurance continued 
under this paragraph shall be reduced by 50 percent effective at the 
beginning of the second calendar month after the date the employee or 
former employee attains age 70 and shall stop at the beginning of the 
second calendar month after attainment of age 80, subject to a 
provision for temporary extension of life insurance coverage and for 
conversion to an individual policy of life insurance under conditions 
approved by the Office. Alternatively, insurance continued under this 
paragraph may be reduced or stopped at any time the employee or former 
employee elects.
    ``(B) When an employee or former employee elects to continue 
additional optional insurance under this paragraph following separation 
from service or 12 months without pay, the insured individual shall 
submit timely payment of the full cost thereof, plus any amount the 
Office determines necessary to cover associated administrative 
expenses, in such manner as the Office shall prescribe by regulation. 
Amounts required under this subparagraph shall be deposited, used, and 
invested as provided under section 8714 and shall be reported and 
accounted for together with amounts withheld under section 8714a(d).
    ``(C)(i) Subject to clause (ii), no election to continue additional 
optional insurance may be made under this paragraph 3 years after the 
effective date of this paragraph.
    ``(ii) On and after the date on which an election may not be made 
under clause (i), all additional optional insurance under this 
paragraph for former employees shall terminate, subject to a provision 
for temporary extension of life insurance coverage and for conversion 
to an individual policy of life insurance under conditions approved by 
the Office.''; and
            (2) in the second sentence of subsection (d)(1) by 
        inserting ``if insurance is continued as provided under 
        subsection (c)(3)(A),'' after ``except that,''.
    (b) Report.--Not later than 3 years after the date of enactment of 
this Act, the Office of Personnel Management shall submit a report to 
Congress on additional optional insurance provided under section 
8714b(c)(5) of title 5, United States Code (as added by subsection (a) 
of this section). Such report shall include recommendations on whether 
continuation for such additional optional insurance should terminate as 
provided under such section, be extended, or be made permanent.
    (c) Technical Amendment.--The last sentence of section 8714b(d)(1) 
of title 5, United States Code, is amended by inserting ``(and any 
amounts withheld as provided in subsection (c)(3)(B))'' after ``Amounts 
so withheld''.

SEC. 8. IMPROVED OPTIONAL LIFE INSURANCE ON FAMILY MEMBERS.

    (a) In General.--Section 8714c(b) of title 5, United States Code, 
is amended to read as follows:
    ``(b)(1) The optional life insurance on family members provided 
under this section shall be made available to each eligible employee 
who has elected coverage under this section, under conditions the 
Office shall prescribe, in multiples, at the employee's election, of 1, 
2, 3, 4, or 5 times--
            ``(A) $5,000 for a spouse; and
            ``(B) $2,500 for each child described under section 
        8701(d).
    ``(2) An employee may reduce or stop coverage elected pursuant to 
this section at any time.''.
    (b) Technical and Conforming Amendments.--Section 8714c of title 5, 
United States Code, is amended--
            (1) in subsection (c)(2), by striking ``section 8714b(c)(2) 
        of this title'' and inserting ``section 8714b(c) (2) through 
        (4)''; and
            (2) in subsection (d)(1), by inserting before the last 
        sentence the following: ``Notwithstanding the preceding 
        sentence, the full cost shall be continued after the calendar 
        month in which the former employee becomes 65 years of age if, 
        and for so long as, an election under this section 
        corresponding to that described in section 8714b(c)(3)(B) 
        remains in effect with respect to such former employee.''.

SEC. 9. OPEN SEASON.

    Beginning not later than 180 days after the date of enactment of 
this Act, the Office of Personnel Management shall conduct an open 
enrollment opportunity for purposes of chapter 87 of title 5, United 
States Code, over a period of not less than 8 weeks. During this 
period, an employee (as defined under section 8701(a) of such title)--
            (1) may, if the employee previously declined or voluntarily 
        terminated any coverage under chapter 87 of such title, elect 
        to begin, resume, or increase group life insurance (and acquire 
        applicable accidental death and dismemberment insurance) under 
        all sections of such chapter without submitting evidence of 
        insurability; and
            (2) may, if currently insured for optional life insurance 
        on family members, elect an amount above the minimum insurance 
        on a spouse.

SEC. 10. MERIT SYSTEM JUDICIAL REVIEW.

    (a) In General.--Section 7703 of title 5, United States Code, is 
amended--
            (1) in subsection (b)(1) by striking ``within 30 days'' and 
        inserting ``within 60 days''; and
            (2) in subsection (d) in the first sentence, by inserting 
        after ``filing'' the following: ``, within 60 days after the 
        date the Director received notice of the final order or 
        decision of the Board,''.
    (b) Effective Date.--The amendments made by this section shall take 
effect on the date of enactment of this Act, and apply to any suit, 
action, or other administrative or judicial proceeding pending on such 
date or commenced on or after such date.

SEC. 11. EFFECTIVE DATES.

    (a) In General.--Except as otherwise provided in this Act, the 
amendments made by this Act shall take effect on the date of enactment 
of this Act.
    (b) Maximum Limitation on Employee Insurance.--Section 3 shall take 
effect on the first day of the first applicable pay period beginning on 
or after the date of enactment of this Act.
    (c) Erroneous Coverage.--Section 5 shall be effective in any case 
in which a finding of erroneous insurance coverage is made on or after 
the date of enactment of this Act.
    (d) Direct Payment of Insurance Contributions.--Section 6 shall 
take effect on the first day of the first applicable pay period 
beginning on or after the date of enactment of this Act.
    (e) Additional Optional Life Insurance.--
            (1) In general.--Section 7 shall take effect on the first 
        day of the first pay period that begins on or after the 180th 
        day following the date of enactment of this Act, or on any 
        earlier date that the Office of Personnel Management may 
        prescribe that is at least 60 days after the date of enactment 
        of this Act.
            (2) Regulations.--The Office shall prescribe regulations 
        under which an employee may elect to continue additional 
        optional insurance that remains in force on such effective date 
        without subsequent reduction and with the full cost withheld 
        from annuity or compensation on and after such effective date 
        if that employee--
                    (A) separated from service before such effective 
                date due to retirement or entitlement to compensation 
                under subchapter I of chapter 81 of title 5, United 
                States Code; and
                    (B) continued additional optional insurance 
                pursuant to section 8714b(c)(2) as in effect 
                immediately before such effective date.
    (f) Improved Optional Life Insurance on Family Members.--The 
amendments made by section 8 shall take effect on the first day of the 
first pay period which begins on or after the 180th day following the 
date of enactment of this Act or on any earlier date that the Office of 
Personnel Management may prescribe.
    (g) Open Season.--Any election made by an employee under section 9, 
and applicable withholdings, shall be effective on the first day of the 
first applicable pay period that--
            (1) begins on or after the date occurring 365 days after 
        the first day of the election period authorized under section 
        9; and
            (2) follows a pay period in which the employee was in a pay 
        and duty status.
            Amend the title so as to read: ``An Act to provide for the 
        Office of Personnel Management to conduct a study and submit a 
        report to Congress on the provision of certain options for 
        universal life insurance coverage and additional death and 
        dismemberment insurance under chapter 87 of title 5, United 
        States Code, to improve the administration of such chapter, and 
        for other purposes.''.
                                     





                                                       Calendar No. 590

105th CONGRESS

  2d Session

                               H. R. 2675

                          [Report No. 105-337]

_______________________________________________________________________

                                 AN ACT

  To require that the Office of Personnel Management submit proposed 
   legislation under which group universal life insurance and group 
 variable universal life insurance would be available under chapter 87 
        of title 5, United States Code, and for other purposes.

_______________________________________________________________________

                           September 21, 1998

        Reported with an amendment and an amendment to the title