[House Report 105-373]
[From the U.S. Government Publishing Office]



105th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES

 1st Session                                                    105-373
_______________________________________________________________________


 
            FEDERAL EMPLOYEES LIFE INSURANCE IMPROVEMENT ACT

                                _______
                                

November 4, 1997.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

  Mr. Burton of Indiana, from the Committee on Government Reform and 
                   Oversight, submitted the following

                              R E P O R T

                        [To accompany H.R. 2675]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Government Reform and Oversight, to whom 
was referred the bill (H.R. 2675) 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, having considered 
the same, report favorably thereon with an amendment and 
recommend that the bill as amended do pass.

                                CONTENTS

                                                                   Page
  I. Summary of Legislation...........................................3
 II. Background and Need for the Legislation..........................4
III. Legislative Hearings and Committee Actions.......................5
 IV. Committee Hearings and Written Testimony.........................5
  V. Explanation of the Bill..........................................7
 VI. Compliance With Rule XI..........................................7
VII. Budget Analysis and Projections..................................7
VIII.Cost Estimate of the Congressional Budget Office.................8

 IX. Specific Constitutional Authority for this Legislation..........11
  X. Committee Recommendation........................................11
 XI. Congressional Accountability Act; Public Law 104-1..............11
XII. Federal Advisory Committee Act (5 U.S.C. APP.) Section 5(b).....11
XIII.Unfunded Mandates Reform Act; P.L. 104-4, Section 423...........11

XIV. Changes in Existing Law.........................................11

    The amendment is as follows:
    Strike out all after the enacting clause and insert in lieu 
thereof the following:

SECTION 1. SHORT TITLE.

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

SEC. 2. REQUIREMENT THAT A LEGISLATIVE PROPOSAL BE SUBMITTED.

    (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:
                (1) Group universal life insurance.
                (2) Group variable universal life insurance.
                (3) Additional voluntary accidental death and 
                dismemberment insurance.
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.
    (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.

SEC. 3. UNREDUCED ADDITIONAL OPTIONAL LIFE INSURANCE.

    (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).''; and
          (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,''.
    (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''.
    (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.

SEC. 4. IMPROVED OPTIONAL LIFE INSURANCE ON FAMILY MEMBERS.

    (a) In General.--Subsection (b) of section 8714c of title 5, United 
States Code, is amended to read as follows:
    ``(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--
          ``(1) $5,000 for a spouse; and
          ``(2) $2,500 for each child described in section 8701(d).
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)-(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.''.
    (c) Effective Date; Open Enrollment Period.--
          (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.
          (2) Open enrollment period.--
                  (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.
                  (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.

                       I. Summary of Legislation

    H.R. 2675, as amended, will improve the life insurance 
benefits available to Federal employees under the Federal 
Employees Group Life Insurance program (FEGLI). It directs the 
Office of Personnel Management (OPM) to submit a legislative 
proposal for offering Federal employees group universal life 
insurance, group variable universal life insurance, and 
additional voluntary accidental death and dismemberment 
policies. In addition, it permits employees to continue 
unreduced additional optional life insurance coverage beyond 
their 65th birthday at their own expense and to purchase larger 
amounts of optional life insurance on family members.

              II. Background and Need for the Legislation

    H.R. 2675 was introduced by Mr. Mica to improve the 
benefits available to Federal employees under FEGLI and 
implement several recommendations received by the civil service 
subcommittee in connection with an April 30, 1997 oversight 
hearing it held on the FEGLI program. A recurrent theme at that 
hearing was that Federal employees should have more choices. To 
expand the choices available, witnesses recommended that 
Congress consider providing group universal life insurance, 
group variable life insurance, and additional voluntary 
accidental death and dismemberment policies to Federal 
employees.
    This bill, therefore, directs OPM to submit a legislative 
proposal for offering these options six months after the date 
of enactment. It provides OPM with maximum flexibility to 
expand employee choices. OPM may propose that employees be 
permitted to choose such insurance in addition to the term 
policies already available under the program. Or OPM may 
recommend that employees be given the opportunity to choose 
those policies instead of the options already available.
    Another recommendation received as a result of the hearing 
was that employees should be able to purchase higher amounts of 
optional life insurance on family members. Accordingly, at Mr. 
Cummings's recommendation the bill was amended to increase the 
amount of optional life insurance that employees may purchase 
on spouses from $5,000 to $25,000 and from $2,500 to $12,500 
per child. Employees may purchase coverage on spouses in $5,000 
increments and in $2,500 increments on dependent children. 
According to information received by the subcommittee, these 
increases will not affect the current rate per $1,000 of 
coverage. OPM must establish an open season providing eligible 
employees a reasonable opportunity to elect optional insurance 
coverage on family members or to increase existing coverage.
    The bill also incorporates a provision that was included in 
H.R. 3841, the Omnibus Civil Service Reform Act of 1996, which 
passed the House last year, but was not considered by the 
Senate. Here, too, the bill provides additional options. Under 
existing law, employees may retain unreduced additional 
optional life insurance coverage at their own expense until age 
65. At age 65 employees are no longer required to pay for the 
insurance, but its face value declines at the rate of 2% per 
month until there is no insurance left. This may be fine for 
some employees. But others may want more protection for their 
families. To accommodate their needs, the bill permits 
employees to continue carrying additional optional insurance at 
full face value beyond age 65 at their own expense.

            III. Legislative Hearings and Committee Actions

    H.R. 2675 was introduced on October 21, 1997 by the 
Honorable John L. Mica (R-FL). The bill was referred to the 
Committee on Government Reform and Oversight on October 22, 
1997, and it was referred to the Subcommittee on Civil Service 
on the same day. The subcommittee held a mark up on October 22, 
1997. Representative Cummings offered an amendment that was 
adopted by voice vote. On October 31, 1997, the Committee on 
Government Reform and Oversight met to consider the bill as 
amended. Chairman Burton offered an amendment in the nature of 
a substitute that incorporated the subcommittee's amendments. 
The amendment in the nature of a substitute was adopted by 
voice vote. The Committee favorably reported the bill, as 
amended by the subcommittee, to the full House by voice vote.

              IV. Committee Hearings and Written Testimony

    The committee held no hearings and received no written 
testimony on H.R. 2675. However, on April 30, 1997, the Civil 
Service Subcommittee held an oversight hearing on FEGLI. 
Witnesses were Margery Brittain, Vice President, Group National 
Accounts, MetLife; G. Scott Cahill, CLU, Chief Executive 
Officer, James B. Greene & Associates, Inc.; Barnett I. 
Chepenik, President, Lincoln Financial Group, Inc. and Chepenik 
& Associates; and William E. Flynn, III, Associate Director, 
Retirement and Insurance Services, OPM.
    Ms. Brittain testified that MetLife has been the primary 
insurance carrier for the FEGLI program since its inception in 
1954. The existing contract was negotiated in 1954, and has 
been modified over 70 times since then to reflect the evolution 
of the program and incorporate changes in applicable laws and 
regulations. MetLife is paid a monthly premium from the 
Employees' Life Insurance Fund (a fund within the Treasury of 
the United States). Each year OPM and MetLife agree upon a 
premium ($1.74 billion for FY 97), which is intended to cover 
the estimated claims expense for the program, MetLife's 
allowable administrative expenses, the service charge to which 
MetLife is entitled, an investment management fee, and 
applicable Federal income taxes.
    According to Ms. Brittain, FEGLI is administratively unique 
and complex in several ways. Its benefits are determined by 
law; the customers are millions of individuals in hundreds of 
locations affiliated with multiple Federal agencies, some in 
remote locations of the world; and the size of the program is 
unique--MetLife adjudicates approximately 85,000 claims per 
year, significantly more than it does for any other group 
contract. Approximately $1.6 billion in claims are paid per 
year.
    In comparing benefits available under FEGLI with those 
provided by other large employers, Ms. Brittain noted that in 
the private sector most employers offer supplemental life 
benefits, which include optional term insurance, group 
universal life, group variable universallife, or, in some 
cases, a combination of the latter two. She found no notable 
differences between public and private sector employers with respect to 
dependent life benefits.
    Ms. Brittain also identified both group universal and group 
variable life insurance policies as financially feasible 
alternative insurance options for Federal employees. These 
plans, which are increasingly being offered in the private 
sector, permit the insured to accumulate a cash value in the 
policy by making contributions in excess of the level required 
to provide the term insurance death benefit. They can provide 
permanent insurance that is portable and can be converted to 
``paid up'' insurance that will not reduce or cancel. She also 
identified voluntary accidental death and dismemberment 
insurance as an alternative. This coverage has become 
increasingly popular in recent years because of its low cost 
and the protection it affords against one of the leading causes 
of death for younger segments of the workforce.
    Mr. Cahill and Mr. Chepenik noted several differences 
between FEGLI benefits and insurance coverage provided in the 
private sector. Under the FEGLI basic life program, he pointed 
out, employees under age 45 receive a greater benefit than 1 x 
salary, which is uncommon in the private sector. In the private 
sector, he noted, employers typically pay 100% of the basic 
term cost, but under FEGLI the Federal Government pays 33% and 
the employee 67%. Mr. Cahill also observed that in the private 
sector there is often an annual open enrollment period during 
which employees may increase or decrease their optional 
insurance, which is not true under FEGLI. He found the FEGLI 
dependent insurance coverage competitive with private sector 
plans, but suggested there is an opportunity for Congress to 
tailor a program to offer additional competitive life insurance 
benefits.
    According to Mr. Cahill, the trend in the private sector is 
to move away from providing traditional post-retirement life 
insurance benefits. Instead, private employers have been 
addressing the need for post-retirement insurance by offering 
group universal and group variable universal life insurance 
policies. These are 100% employee-funded and can be tailored to 
each individual employee's needs. He explained that the 
policies are often fully funded during the employee's working 
life so the employee can retire with a cash value policy that 
would potentially require no future premiums. In addition, Mr. 
Cahill observed that these policies permit employees to receive 
an annuity upon retirement instead of providing death benefits 
to beneficiaries.
    Mr. Flynn testified that although the FEGLI program began 
as a one-size-fits-all approach, it has evolved to offer a 
``considerable array'' of options to address each enrollee's 
individual circumstances, pointing out that they may choose: 
basic life insurance, six levels of additional life insurance, 
family insurance, and three options with respect to post-
retirement basic insurance, plus accelerated payment options 
for the terminally ill. He noted that close to 90% of the 
eligible Federal workforce has consistently participated in the 
FEGLI program, attesting to its popularity. OPM has held only 
six open enrollment periods in the history of FEGLI, two of 
which have been held since 1993. These open seasons were 
offered in response to significant program developments, 
according to Mr. Flynn.
    Mr. Flynn indicated that in light of the extremely high 
participation rate and the number of options and benefit levels 
currently available, OPM did not see a need for any basic 
restructuring of the program.

  V. Explanation of the Bill as Reported: Section-by-Section Analysis

    Sec. 1.--The short title is ``The Federal Employees Life 
Insurance Improvement Act.''
    Sec. 2.--This section directs OPM to submit a legislative 
proposal under which Federal employees would be offered the 
opportunity to purchase group universal life insurance, group 
variable universal life insurance, and additional voluntary 
accidental death and dismemberment insurance under FEGLI. OPM 
is to recommend whether such insurance should be offered in 
addition to, or in lieu of, insurance already offered under 
FEGLI. OPM's proposal is to be submitted within 6 months after 
enactment, and it must include a concise description of the 
policies proposed and the cost to the Government.
    Sec. 3.--This section amends 5 U.S.C. Sec. 8714b to allow 
employees to carry additional optional life insurance at full 
face value beyond age 65 at their own expense. Under current 
law, employees stop paying for this insurance at the end of the 
month in which they turn 65. However, the face value of the 
insurance is reduced by 2% per month for 50 months, at which 
point the insurance stops. The amendments made by this section 
allow employees to elect to continue paying for the insurance 
beyond age 65, in which case the face value of the insurance is 
not reduced.
    Sec. 4.--This section amends 5 U.S.C. Sec. 8714c to 
increase the amount of optional life insurance on family 
members that employees may purchase. Maximum coverage on 
spouses is increased from $5,000 to $25,000 and from $2,500 to 
$12,500 per child. The employee may purchase coverage on 
spouses in $5,000 increments and in $2,500 increments on 
children. It also requires OPM to establish an open season 
providing Federal employees covered by group insurance a 
reasonable opportunity to elect to begin or increase optional 
insurance coverage on family members. Technical and conforming 
amendments are included to reflect the amendments made by this 
section. The amendments made by this section shall take effect 
on the first day of the first pay period beginning 180 days 
after the date of enactment, unless OPM establishes an earlier 
date.

                      VI. Compliance With Rule XI

    Pursuant to rule XI, clause 2(l)(3)(A), of the Rules of the 
House of Representatives, under the authority of rule X, clause 
2(b)(1) and clause 3(f), the results and findings for those 
oversight activities are incorporated in the recommendations 
found in the bill and in this report.

                  VII. Budget Analysis and Projections

    H.R. 2675, as amended, provides for no new authorization, 
budget authority, or tax expenditures. Consequently, the 
provisions of section 308(a) of the Congressional Budget Act 
are not applicable.

         VIII. Cost Estimate of the Congressional Budget Office

                                     U.S. Congress,
                               Congressional Budget Office,
                                  Washington, DC, November 4, 1997.
Hon. Dan Burton,
Chairman, Committee on Government Reform and Oversight,
House of Representatives, Washington, DC.
    Dear Mr. Chairman. The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 2675, the Federal 
Employees' Life Insurance Improvement Act of 1997.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Eric Rollins.
            Sincerely,
                                         June E. O'Neill, Director.
    Enclosure.

H.R. 2675--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.

    Summary: H.R. 2675 would require the Office of Personnel 
Management (OPM) to submit legislation that would make group 
universal life insurance and group variable universal life 
insurance available through the Federal Employees' Group Life 
Insurance (FEGLI) program. In addition, H.R. 2675 would change 
FEGLI in two ways. First the bill would increase the amount of 
optional life insurance for spouses and children that federal 
employees may purchase through FEGLI. Second, the bill would 
allow retired federal employees who have optional FEGLI life 
insurance for themselves, their spouses, or their children to 
continue paying premiums after turning 65 and avoid having 
their coverage phased out. This bill would affect direct 
spending and would therefore be subject to pay-as-you-go 
procedures.
    CBO estimates that this bill would reduce direct spending 
by $72 million over the FY 1998-2002 period. Direct spending 
would decrease because additional premiums would be larger than 
additional claims. CBO estimates that employee premium payments 
to FEGLI, which are treated as offsetting collections, would 
rise by $287 million over the 1998-2002 period, and FEGLI 
claims payments would increase by $215 million.
    H.R. 2675 contains no intergovernmental mandates as defined 
in the Unfunded Mandates Reform Act of 1995 (UMRA) and would 
have no impact on the budgets of state, local, or tribal 
governments. H.R. 2675 also contains no private-sector mandates 
as defined in UMRA.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 2675 is shown in the table below.

                                    [By fiscal year, in millions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                                                  1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Increased FEGLI premium payments..............................       -23       -58       -63       -68       -75
Increased FEGLI claims payments...............................        18        44        47        51        55
                                                               -------------------------------------------------
      Total direct spending...................................        -6       -14       -16       -18       -20
----------------------------------------------------------------------------------------------------------------
 Note.--Numbers may not sum to totals due to rounding. This estimate assumes that HR 2675 is enacted by November
  15, 1997.                                                                                                     

    The costs of this legislation fall within budget function 
600, Income Security.
    Basis of estimate: Federal employees are currently allowed 
to purchase term life insurance through the Federal Employees' 
Group Life Insurance (FEGLI) program. In addition, employees 
may supplement their basic life insurance with three forms of 
optional insurance. Option A allows employees to buy $10,000 of 
additional life insurance as well as additional accidental 
death and dismemberment insurance. Under Option B, federal 
employees may buy additional life insurance worth 1, 2, 3, 4, 
or 5 times their annual basic pay. Under Option C, employees 
may purchase life insurance for their family members at the 
fixed amount of $5,000 (for a spouse) or $2,500 (for each 
dependent child).
    H.R. 2675 would require the Office of Personnel Management 
(OPM) to submit proposed legislation to Congress that would 
expand the types of insurance available through FEGLI to 
include group universal life insurance and group variable 
universal life insurance. OPM is required to submit its 
proposals within six months of the bill's enactment. CBO 
estimates that this provision would not have a significant cost 
impact.
    Unlike basic FEGLI life insurance, which requires a 
matching employer contribution, employees pay the full cost of 
any optional FEGLI insurance. If an employee has Option B or C 
coverage for the entire five years prior to retiring or going 
on worker's compensation, he may keep the optional insurance 
after he retires. However, once the retiree reaches age 65, he 
no longer pays premiums, and the amount of coverage decreases 
by 2 percentage points a month over 50 months until no coverage 
is left.
    H.R. 2675 would amend Options B and C in two ways. First, 
employees would be allowed to select 1, 2, 3, 4, or 5 times the 
current $5,000 and $2,500 amounts under Option C. In addition, 
federal employees who continue their Option B or C coverage 
during retirement would be able to continue paying premiums 
after age 65 and avoid having their coverage phased out. The 
changes to Option B would take effect 120 days after enactment 
and would affect only those employees who retire on or after 
the effective date. The changes to Option C would take effect 
180 days after enactment and would affect all current 
enrollees.
    Increased FEGLI Premium Payments.--A significant number of 
current and retired federal employees have Option B or C 
coverage. Approximately 126,000 retirees carry Option B 
coverage, and 1 million current workers and 314,000 retirees 
have Option C coverage. CBO used data from OPM to project the 
number of people who would enroll in Options B and C over the 
next five years. These projections included the number of 
retirees with Option B or C coverage, the number of retirees 
over age 65, and the average amount of coverage.
    CBO assumed that Option C enrollees would increase their 
coverage to an average of 2.5 times the current level. This 
amount is the midpoint of the new coverage amounts that would 
be available. Employees currently pay a fixed premium for 
Option C coverage, and OPM has indicated that Option C premiums 
would increase to reflect the increase in available coverage 
envisioned under H.R. 2675. CBO assumed that premiums for 
Option C would rise in proportion to the amount of coverage 
selected. For example, an employee who currently pays $18.20 
for $5,000 of coverage for a spouse would pay $54.60 for 
$15,000 of coverage. Finally, CBO assumed that half of the 
retirees with Option B or C coverage would decide to keep their 
coverage after turning 65.
    Given these assumptions, CBO estimated that additional 
premium payments from retirees with Option B coverage would 
rise by $50 million between 1998 and 2002. Premiums from 
current employees with Option C coverage would increase by $83 
million during this period. Finally, premiums from retirees 
with Option C coverage would increase $155 million. The 
increase in the premium payments for Option C retirees would be 
relatively large since they would be able both to select more 
coverage and keep that coverage past age 65.
    Increased FEGLI Claims Payments.--Because federal employees 
and retirees would purchase more FEGLI coverage, claims 
payments would increase under H.R. 2675. Using data from OPM, 
CBO estimated the number of claims that would be made under 
Options B and C and the average amount of each claim. Separate 
projections were made for current employees and retirees.
    Claims payments to retirees with Option B coverage would 
rise by $34 million between 1998 and 2002 as some future 
retirees keep their coverage past age 65. Claims payments to 
current employees with Option C coverage would increase by the 
same proportion as the assumed increase in coverage, and would 
total $98 million over the 1998-2002 period. As with premium 
payments, claims payments to retirees with Option C coverage 
would be relatively larger, totaling $82 million between FY 
1998 and FY 2002.
    Pay-as-you-go considerations: The provisions of this bill 
would affect direct spending and would therefore be subject to 
pay-as-you-go procedures.

                                        SUMMARY OF PAY-AS-YOU-GO EFFECTS                                        
                                    [By fiscal year, in millions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                                                  1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
Change in outlays.............................................        -6       -14       -16       -18       -20
Change in receipts............................................         0         0         0         0         0
----------------------------------------------------------------------------------------------------------------

    Estimated impact on State, local, and tribal governments: 
H.R. 2675 contains no intergovernmental mandates as defined in 
the Unfunded Mandates Reform Act of 1995 (UMRA) and would have 
no impact on the budgets of state, local, or tribal 
governments.
    Estimated impact on the private sector: H.R. 2675 contains 
no private-sector mandates as defined in UMRA.
    Estimate prepared by: Federal cost: Eric Rollins; Impact on 
State, local, and tribal governments: Leo Lex; Impact on the 
private sector: Matthew Eyles.
    Estimate approved by: Paul N. Van de Water, Assistant 
Director for Budget Analysis.

       IX. Specific Constitutional Authority for This Legislation

    Pursuant to rule XI, clauses 1 and 18 of Article 1, Sec. 8 
of the Constitution grants Congress the power to enact this 
law.

                      X. Committee Recommendation

    On October 31, 1997, a quorum being present, the Committee 
ordered the bill, as amended, favorably reported to the House 
for consideration.

 Committee on Government Reform and Oversight--105th Congress Rollcall

    Date: October 31, 1997.
    Amendment No. 1.
    Description: Amendment in the nature of a substitute.
    Offered By: Mr. Dan Burton, (R-IN).
    Adopted by voice vote.
    Final Passage of H.R. 2675, as amended.
    Offered by: Hon. John L. Mica (R-FL).
    Adopted by voice vote.

    XI. Congressional Accountability Act; Public Law 104-1; Section 
                               102(B)(3)

    The amendments made by H.R. 2675 will apply to employees 
and former employees of the legislative branch who participate 
in the Federal Employees Group Life Insurance program to the 
same extent as it applies to other participating employees.

    XII. Federal Advisory Committee Act (5 U.S.C. App.) Section 5(b)

    The Committee finds that the legislation does not establish 
or authorize establishment of an advisory committee within the 
definition of 5 U.S.C. App., Section 5(b).

   XIII. Unfunded Mandates Reform Act; Public Law 104-4; Section 423

    H.R. 2675, as amended, does not impose any Federal mandates 
on State, local, and tribal governments, or the private sector 
or pre-empt any State and local law.

                      XIV. Changes in Existing Law

    In compliance with clause 3 of rule XIII, of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

                      TITLE 5, UNITED STATES CODE

          * * * * * * *

                       CHAPTER 87--LIFE INSURANCE

          * * * * * * *

Sec. 8714b. Additional optional life insurance

    (a) * * *
          * * * * * * *
    (c)(1) Except as otherwise provided in this subsection, the 
additional optional insurance elected by an employee pursuant 
to this section shall stop on separation for service or 12 
months after discontinuance of his pay, whichever is earlier, 
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. 
Justices and judges of the United States described in section 
8701(a)(5) (ii) and (iii) of this chapter are deemed to 
continue in active employment for purposes of this chapter. A 
justice or judge of the United States as defined by section 
8701(a)(5) of this title who resigns his office without meeting 
the requirements of section 371(a) of title 28, United States 
Code, for continuation of the judicial salary shall have the 
right to convert additional optional life insurance coverage 
issued under this section during his judicial service to an 
individual policy of life insurance under the same conditions 
approved by the Office governing conversion of basic life 
insurance coverage for employees eligible as provided in 
section 8706(a) of this title.
    (2) In the case of any employee who retires on an immediate 
annuity or who becomes entitled to receive compensation under 
subchapter I of chapter 81 of this title because of disease or 
injury to the employee, so much of the additional optional 
insurance as has been in force for not less than--
          (A) the 5 years of service immediately preceding the 
        date of retirement or entitlement to compensation, or
          (B) the full period or periods of service during 
        which the insurance was available to the employee, if 
        fewer than 5 years,
may be continued under conditions determined by the Office 
after retirement or while the employee is receiving 
compensation under subchapter I of chapter 81 of this title and 
is held by the Secretary of Labor (or the Secretary's delegate) 
to be unable to return to duty. [The amount of insurance 
continued under this paragraph 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. The reduction shall 
continue for 50 months at which time the insurance stops.]
    (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).
    (d)(1) During each period in which the additional optional 
insurance is in force on an employee the full cost thereof 
shall be withheld from the employee's pay. During each period 
in which an employee continues additional optional insurance 
after retirement or while in receipt of compensation under 
subchapter I of chapter 81 of this title because of disease or 
injury to the employee, as provided in subsection (c) of this 
section, the full cost thereof shall be withheld from the 
former employee's annuity or compensation, except that, if 
insurance is continued as provided in subparagraph (A) of 
paragraph (3), beginning at the end of the calendar month in 
which the former employee becomes 65 years of age, the 
additional optional life insurance shall be without cost to the 
former employee. Amounts so withheld (and any amounts withheld 
as provided in subsection (c)(3)(B)) shall be deposited, used, 
and invested as provided in section 8714 of this title and 
shall be reported and accounted for together with amounts 
withheld under section 8714a(d) of this title.
          * * * * * * *

Sec. 8714c. Optional life insurance on family members

    (a) * * *
    [(b) The optional life insurance on family members provided 
under this section shall be made available to each eligible 
employee who elects coverage under this section, under 
conditions the Office shall prescribe, in the amount of $5,000 
for a spouse and $2,500 for each child described in section 
8701(d). The employee may stop coverage elected under this 
section at any time.]
    (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--
          (1) $5,000 for a spouse; and
          (2) $2,500 for each child described in section 
        8701(d).
An employee may reduce or stop coverage elected pursuant to 
this section at any time.
    (c)(1) Except as otherwise provided in this subsection, the 
optional life insurance on family members shall stop at the 
earlier of the employee's death, the employee's separation from 
the service, for temporary extension of life insurance coverage 
and for conversion to individual policies of life insurance 
under conditions approved by the Office.
    (2) In the case of any employee who retires on an immediate 
annuity or who becomes entitled to receive compensation under 
subchapter I of chapter 81 of this title because of disease or 
injury to the employee and who has had in force insurance under 
this section for no less than--
          (A) the 5 years of service immediately preceding the 
        date of retirement or entitlement to compensation, or
          (B) the full period or periods of service during 
        which the insurance was available to the employee, if 
        fewer than 5 years,
optional life insurance on family members may be continued 
under the same conditions as provided in [section 8714b(c)(2) 
of this title] section 8714b(c)(2)-(4).
    (d)(1) During each period in which the optional life 
insurance on family members is in force the full cost thereof 
shall be withheld from the employee's pay. During each period 
in which an employee continues optional life insurance on 
family members after retirement or while in receipt of 
compensation under subchapter I of chapter 81 of this title 
because of disease or injury to the employee, as provided in 
subsection (c) of this section, the full cost shall be withheld 
from the annuity or compensation, except that, beginning at the 
end of the calendar month in which the former employee becomes 
65 years of age, the optional life insurance on family members 
shall be without cost to the employee. 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. Amounts 
so withheld shall be deposited, used, and invested as provided 
in section 8714 of this title and shall be reported and 
accounted for together with amounts withheld under section 
8714a(d) of this title.
          * * * * * * *

                                
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