[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