[Federal Register Volume 59, Number 116 (Friday, June 17, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-14820]


[[Page Unknown]]

[Federal Register: June 17, 1994]


                                                   VOL. 59, NO. 116

                                              Friday, June 17, 1994

OFFICE OF PERSONNEL MANAGEMENT

5 CFR Parts 870, 871, 872, 873, 874, and 890

RIN 3206-AF94

 

Federal Employees' Group Life Insurance and Federal Employees 
Health Benefits Programs; Reconsideration of Employing Office 
Enrollment Decisions

AGENCY: Office of Personnel Management.

ACTION: Proposed regulations with request for comments.

-----------------------------------------------------------------------

SUMMARY: In keeping with the Administration's initiative to reinvent 
Government, the Office of Personnel Management (OPM) is issuing 
proposed regulations to improve the administrative process used by the 
Federal Employees' Group Life Insurance (FEGLI) and Federal Employees 
Health Benefits (FEHB) programs in resolving disputes between Federal 
employees and agencies over coverage and enrollment issues. The purpose 
of the proposed regulations is to improve the performance of the 
Government by delegating to Federal agencies the authority to 
reconsider disputes over coverage and enrollment issues in these two 
programs and to make retroactive as well as prospective corrections of 
errors. The proposed regulations would result in more efficient 
Government operations and improved service to individuals seeking 
benefits under the programs.

DATES: Comments must be received on or before August 16, 1994.

ADDRESSES: Written comments may be sent to Lucretia F. Myers, Assistant 
Director for Insurance Programs, Retirement and Insurance Group, Office 
of Personnel Management, P.O. Box 57, Washington, DC 20044, or 
delivered to OPM, Room 3415, 1900 E Street, NW., Washington, DC.

FOR FURTHER INFORMATION CONTACT: Margaret Sears, (202) 606-0191.

SUPPLEMENTARY INFORMATION: Under the FEGLI law, eligible employees are 
automatically insured under Basic Life insurance (generally equal to 
their annual pay, rounded to the next thousand, plus $2,000), unless 
they waive coverage. In addition, employees with Basic Life coverage 
may elect coverage under one or more of the 3 types of optional 
insurance available. (Standard Optional offers an additional $10,000 of 
insurance. Additional Optional offers insurance in an amount of one, 
two, three, four, or five times annual pay rounded to the next 
thousand. Family Optional offers $5,000 insurance for the spouse and 
$2,500 for each child.) OPM's regulations prescribe the circumstances 
under which employees cancel waivers of Basic Life, elect optional 
coverage, increase optional coverage, or drop coverage.
    Under the FEHB Program, eligible employees may enroll in FEHB when 
they are first hired. They may enroll or change enrollment during open 
season, when their family status changes, or at other times prescribed 
by OPM's regulations. The FEHB law also provides for enrollment by 
certain former employees, former spouses, and children when they lose 
regular FEHB coverage because of separation from service or loss of 
family member status. The specific conditions of their enrollment and 
opportunities to change enrollment are controlled by OPM's regulations.
    Employees (and family members who are eligible to enroll in FEHB) 
make changes in their life insurance coverage and health benefits 
enrollment through the employee's personnel office. These 
administrative actions are normally conducted entirely between the 
agency and the individual, based on FEGLI and FEHB law and regulations. 
However, occasions arise when individuals challenge the agency's denial 
of their request for coverage, to change their FEHB enrollment or FEGLI 
coverage, or to change their FEGB enrollment or FEGLI optional coverage 
retroactively. (Because Basic Life insurance coverage is mandatory 
under FEGLI law unless the employee waives it, an agency that 
erroneously denies Basic Life to an employee must restore it 
retroactively when the error is discovered.) Under OPM's regulations, 
elections of optional life insurance coverage and FEHB enrollment or 
enrollment changes are generally effective prospectively unless a 
specific statutory or regulatory provision requires or allows the 
agency to make a retroactive change. Errors that consist of allowing an 
employee to elect life insurance coverage under circumstances not 
prescribed by law or regulation are corrected retroactively, including 
errors that are not discovered until after the death of an insured 
employee.) The current process used to resolve disputes between 
individuals and agencies over coverage or enrollment determinations is 
described in 5 CFR Secs. 870.205, 871.206, 872.206, 873.206, 874.305, 
and 890.104.
    Under these current procedures, employees, children, or former 
spouses who are denied coverage or enrollment, the opportunity to 
change coverage or enrollment, or, in most cases, to have a change made 
retroactively by a Federal agency must write to the Office of Personnel 
Management within 30 days after the agency's written denial if they 
believe the agency's decision was incorrect and want to have it 
reviewed. OPM reviews the agency's denial to determine if it complies 
with the applicable law and regulations. Since agencies currently do 
not have the regulatory authority to make retroactive changes in most 
cases, they must deny most such requests. Therefore, most requests for 
a retroactive change must come to OPM for review before the retroactive 
change can be made. (Basic life insurance is an exception. Under the 
FEGLI law, employees are automatically covered for Basic Life 
insurance; therefore, agencies must correct failures to withhold 
retroactively.) In addition, OPM has the authority, by regulation, to 
order corrections of errors, mistakes, or omissions based on its 
determination that it would be against equity and good conscience not 
to do so.
    In 1992, OPM received 283 requests for reconsideration and upheld 
the agency's decision in 39 percent of the cases. OPM overturned 38 
percent of agency decisions and returned 23 percent to the agency 
because the individual failed to follow proper administrative 
procedures. As of August 30, 1993, there has been a 50 percent increase 
in requests for reconsideration over the 1992 figures.
    In many of these cases, the issue was (or included) a request that 
the coverage or change in coverage be made retroactive to some earlier 
date. Out of 94 requests from employees involving retroactive coverage, 
we allowed 70 and denied 24. Although an agency has all the necessary 
information at its disposal and knows whether a retroactive correction 
is appropriate, it lacks the authority under current regulations to 
make corrections retroactively. It can accept the employee's request to 
enroll or change enrollment, but only on a prospective basis. The 
agency must deny the employee's request for a retroactive change. 
Therefore, the employees write to OPM to have the decision reviewed. If 
appropriate, OPM can then order the agency to make the retroactive 
correction.
    As part of OPM's ongoing efforts to improve efficiency, and in 
keeping with the Administration's initiative to streamline Government 
operations, OPM is issuing proposed regulations that would delegate to 
Federal agencies the authority to correct coverage and enrollment 
errors retroactively. In addition, the proposed regulations would 
transfer the reconsideration (review) process for the FEGLI and FEHB 
programs from OPM to the agencies. Under the proposed regulations, 
Federal agencies (or retirement systems, if applicable) would make the 
initial decisions at the employing office level and would provide for 
reconsideration at a higher, or otherwise independent, level of review. 
The reconsideration could, at each agency's discretion, be made at a 
higher level within the employing office or at the same level elsewhere 
in the agency. The proposed regulations set forth only the most basic 
elements necessary to meet due process requirements. For the most part, 
agencies would be free to use existing administrative review procedures 
that include these basic elements or to create administrative 
procedures specific to this purpose. The agency's decision based on its 
reconsideration of the initial decision would be final. (FEGLI and FEHB 
decisions are not appealable to the Merit Systems Protection Board.)
    Current regulations regarding employee withholdings and Government 
contributions would continue to apply. That is, when agencies make 
retroactive changes, the agency must pay into the respective trust fund 
an amount equal to any withholdings and contributions due from the 
effective date of the change. The agency may collect the amount of the 
withholdings due from the employee or may waive collection under 
existing law and regulations.
    With the authority to make retroactive changes conferred by the 
proposed regulations, the agencies could correct errors promptly, 
review initial decisions on request, and give the individual a 
thorough, written explanation of the final decision. Thus, we believe 
that the Government would operate more efficiently and employees, their 
children, and their former spouses would be better served under these 
regulations.

Regulatory Flexibility Act

    I certify that this regulation will not have a significant economic 
impact on a substantial number of small entities because it merely 
amends administrative procedures currently performed by OPM and Federal 
agencies.

List of Subjects

5 CFR Part 870

    Administrative practice and procedure, Government employees, 
Hostages, Iraq, Kuwait, Lebanon, Life insurance, Retirement.

5 CFR Parts 871, 872, and 873

    Administrative practice and procedure, Government employees, Life 
insurance, Retirement.

5 CFR Part 874

    Government employees, Life insurance, Retirement.

5 CFR Part 890

    Administrative practice and procedure, Government employees, Health 
facilities, Health insurance, Health professions, Hostages, Iraq, 
Kuwait, Lebanon, Reports and recordkeeping requirements, Retirement.

U.S. Office of Personnel Management.
James B. King,
Director.

    Accordingly, OPM proposes to amend 5 CFR parts 870, 871, 872, 873, 
874, and 890 as follows:

PART 870--FEDERAL EMPLOYEES' GROUP LIFE INSURANCE PROGRAM

    1. The authority citation for part 870 continues to read as 
follows:

    Authority: 5 U.S.C. 8716; Sec. 870.202(c) also issued under 5 
U.S.C. 7701(b)(2); subpart J is also issued under section 599C of 
Pub. L. 101-513, 104 Stat. 2064, as amended.

    2. In subpart A, Sec. 870.102 is revised, Sec. 870.103 is 
redesignated as Sec. 870.104, a new Sec. 870.103 is added, and newly 
redesignated Sec. 870.104 is amended by revising the introductory test 
of the definition of Employing Office and by adding paragraph (d) to 
the definition of Employee Office to read as follows:


Sec. 870.102  Correction of errors.

    (a) The employing office may make corrections of administrative 
errors as to coverage or changes in coverage any time. Retroactive 
corrections of coverage are subject to the provisions of 
Sec. 870.401(h).
    (b) OPM may order correction of an error upon a showing 
satisfactory to OPM that it would be against equity and good conscience 
not to do so.


Sec. 870.103  Initial decision and reconsideration.

    (a) Who may file. (1) An employee may request his or her agency to 
reconsider an employing office's initial decision denying insurance 
coverage or the opportunity to change coverage.
    (2) An annuitant may request his or her retirement system to 
reconsider its initial decision affecting insurance coverage.
    (3) A judge may request his or her agency, or retirement system if 
applicable, to reconsider an employing office's initial decision that 
denies an entitlement related to assignments under 5 U.S.C. 8706(e) of 
this chapter.
    (b) Initial employing office decision. An employing office's 
decision is considered an initial decision as used in paragraph (a) of 
this section when rendered by the employing office in writing and 
stating the right to an independent level of review (reconsideration) 
by the appropriate agency or retirement system. However, an initial 
decision rendered at the highest level of review available within OPM 
is not subject to reconsideration.
    (c) Reconsideration. (1) A request for reconsideration must be made 
in writing, must include the claimant's name, address, date of birth, 
Social Security number, reasons for the request, and, if applicable, 
retirement claim number.
    (2) The reconsideration review must be made at or above the level 
at which the initial decision was rendered.
    (d) Time limit. A request for reconsideration of an initial 
decision must be filed within 30 calendar days from the date of the 
written decision stating the right to a reconsideration. 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. An agency or retirement 
system decision in response to a request for reconsideration of an 
employing office's decision is a final decision as described in 
paragraph (e) of this section.
    (e) Final decision. After reconsideration, the agency or retirement 
system must issue a final decision, which must be in writing and must 
fully set forth the findings and conclusions.


Sec. 870.104  Definitions.

* * * * *
    Employing office means the office of the agency or retirement 
system to which jurisdiction and responsibility for life insurance 
actions have been delegated.
* * * * *
    (d) For judges of the United States Court of Veterans Appeals, the 
employing office is the United States Court of Veterans Appeals.
* * * * *
    3. In supart B, Sec. 870.205 is moved.

PART 871--STANDARD OPTIONAL LIFE INSURANCE

    1. The authority citation for part 871 continues to read as 
follows:

    Authority: 5 U.S.C. 8716.

    2. In subpart A, Sec. 871.103 is revised to reads as follows:


Sec. 871.103   Correction of errors; initial decision and 
reconsideration.

    The rules and procedures under Secs. 870.102 and 870.103 are 
applicable in this part, subject to the provisions of Sec. 870.401(h) 
of this part.


871.104   [Amended]

    3. In Sec. 871.104 the reference to ``Sec. 870.103'' is removed and 
``Sec. 870.104'' is added in its place.


Sec. 871.206   [Removed]

    4. In subpart B, Sec. 871.206 is removed.

PART 872--ADDITIONAL OPTIONAL LIFE INSURANCE

    1. The authority citation for part 872 continues to read as 
follows:

    Authority: 5 U.S.C. 8716.

    2. In subpart A, Sec. 872.103 is revised to read as follows:


Sec. 872.103   Correction of errors; initial decision and 
reconsideration.

    The rules and procedures under Secs. 870.102 and 870.103 are 
applicable in this part, subject to the provisions of Sec. 870.401(h) 
of this part.


Sec. 872.104   [Amended]

    3. In Sec. 872.104 the reference to ``Sec. 870.103'' is removed and 
``Sec. 870.104'' is added in its place.


Sec. 872.206   [Removed]

    4. In subpart B, Sec. 872.206 is removed.

PART 873--FAMILY OPTIONAL LIFE INSURANCE

    1. The authority citation for part 873 continues to read as 
follows:

    Authority: 5 U.S.C. 8716.

    2. In subpart A, Sec. 871.103 is revised to reads as follows:


Sec. 873.103   Corrections of errors; initial decision and 
reconsideration.

    The rules and procedures under Secs. 870.102 and 870.103 are 
applicable in this part, subject to the provisions of Sec. 870.401(e) 
of this part.


Sec. 873.104   [Amended]

    3. In Sec. 873.104 the reference to ``Sec. 870.103'' is removed and 
``Sec. 870.104'' is added in its place.


Sec. 873.206  [Removed]

    4. In subpart B, Sec. 873.206 is removed.

PART 874--ASSIGNMENT OF LIFE INSURANCE

    1. The authority citation for part 874 continues to read as 
follows:

    Authority: 5 U.S.C. 8716.


Sec. 874.101  [Amended]

    2. In subpart A, Sec. 874.101, the reference to ``Sec. 870.103'' is 
removed and ``Sec. 870.104'' is added in its place.
    3. In subpart C, Sec. 874.305 is revised to read as follows:


Sec. 874.305   Correction of errors, initial decision and 
reconsideration.

    The rules and procedures under Secs. 870.102 and 870.103 are 
applicable in this part, subject to the provisions of Sec. 874.502 of 
this part.

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.

    2. In Sec. 890.103, paragraphs (a) and (b) are revised to read as 
follows:


Sec. 890.103  Correction of errors.

    (a) The employing office may make prospective and retroactive 
correction of administrative errors as to enrollment at any time. 
Retroactive corrections are subject to withholdings and contributions 
under the provisions of Sec. 890.502 of this part.
    (b) OPM may order correction of an error upon a showing 
satisfactory to OPM that it would be against equity and good conscience 
not to do so.
* * * * *
    3. Section 890.104 is revised to read as follows:


Sec. 890.104  Initial decision and reconsideration on enrollment.

    (a) Who may file. Except as provided under Sec. 890.1112, an 
individual may request an agency or retirement system to reconsider an 
initial decision of its employing office denying coverage or change of 
enrollment.
    (b) Initial employing office decision. An employing office's 
decision for an individual is considered an initial decision as used in 
paragraph (a) of this section when rendered by the employing office in 
writing and stating the right to an independent level of review 
(reconsideration) by the agency or retirement system. However, an 
initial decision rendered at the highest level of review available 
within OPM is not subject to reconsideration.
    (c) Reconsideration. (1) A request for reconsideration must be made 
in writing, must include the claimant's name, address, date of birth, 
Social Security number, name of carrier, reasons for the request, and, 
if applicable, retirement claim number.
    (2) The reconsideration review must be designated at or above the 
level at which the initial decision was rendered.
    (d) Time limit. A request for reconsideration of an initial 
decision must be filed within 30 calendar days from the date of the 
written decision stating the right to a reconsideration. 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. An agency or retirement 
system decision in response to a request for reconsideration of an 
employing office's decision is a final decision as described in 
paragraph (e) of this section.
    (e) Final decision. After reconsideration, the agency or retirement 
system must issue a final decision, which must be in writing and must 
fully set forth the findings and conclusions.

[FR Doc. 94-14820 Filed 6-16-94; 8:45 am]
BILLING CODE 6325-01-M