[Federal Register Volume 61, Number 141 (Monday, July 22, 1996)]
[Rules and Regulations]
[Pages 37807-37810]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-18515]



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 Rules and Regulations
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  Federal Register / Vol. 61, No. 141 / Monday, July 22, 1996 / Rules 
and Regulations  

[[Page 37807]]



OFFICE OF PERSONNEL MANAGEMENT

5 CFR Part 890

RIN 3206-AG66


Federal Employees Health Benefits Program: Payment of Premiums 
for Periods of Leave Without Pay or Insufficient Pay

AGENCY: Office of Personnel Management.

ACTION: Interim rule with request for comments.

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SUMMARY: The Office of Personnel Management is issuing an interim 
regulation to require Federal agencies to provide employees entering 
leave without pay (LWOP) status, or whose pay is insufficient to cover 
their FEHB premium payments, written notice of their opportunity to 
continue their FEHB coverage. Employees who want to continue their 
enrollment must sign a form agreeing to pay their premiums directly to 
their agency on a current basis, or to incur a debt to be withheld from 
their future salary. The purpose of this interim regulation is to 
ensure that employees who are entering LWOP status, or whose pay is 
insufficient to pay their FEHB premiums, are fully informed when they 
decide whether or not to continue their FEHB coverage.

DATES: This interim regulation is effective August 21, 1996. We must 
receive comments on or before September 20, 1996.

ADDRESSES: Send written comments to Lucretia F. Myers, Assistant 
Director for Insurance Programs, Retirement and Insurance Service, 
Office of Personnel Management, P.O. Box 57, Washington, DC 20044; or 
deliver to OPM, Room 3451, 1900 E Street NW., Washington, DC; or FAX to 
(202) 606-0633.

FOR FURTHER INFORMATION CONTACT: Robert G. Iadicicco, (202) 606-0004.

SUPPLEMENTARY INFORMATION: On May 10, 1994, OPM issued a regulation in 
the Federal Register [59 FR 24062] that proposed a number of changes to 
the Federal Employees Health Benefits (FEHB) Program that would result 
in better service to enrollees. One of the changes proposed 
establishing a requirement that agencies inform employees entering 
leave without pay status (LWOP), (or any other type of nonpay status, 
except periods of nonpay resulting from a lapse of appropriations), or 
receiving pay insufficient to cover their FEHB premium payments, of the 
options of continuing or terminating their FEHB coverage, and if 
continuing, of paying premiums directly on a current basis or incurring 
a debt to be withheld from future salary. The proposal intended to 
ensure employees are fully aware of these alternatives. Furthermore, 
because the proposal would establish a procedure under which the 
employee voluntarily arranges to have the debt recovered from salary in 
a specified amount after returning to duty or after salary increases to 
cover the amount of the health benefits contributions, the involuntary 
offset provisions of 5 U.S.C. 5514 and subpart K of 5 CFR part 550 
would not apply.
    On November 23, 1994, OPM issued a regulation in the Federal 
Register (59 FR 60294) that put into effect all of the changes proposed 
in the May 10, 1994, regulation except the requirement that agencies 
inform employees entering LWOP status, or receiving pay insufficient to 
cover their FEHB premium payments, of the options of continuing or 
terminating their FEHB coverage. This interim regulation covers the 
requirement.
    We received comments from two Federal agencies and one retiree 
organization. One commenter agreed that employees need to be advised of 
the options they have to continue FEHB coverage while they are in LWOP 
status or when their pay is insufficient, but had a concern. Their 
concern was that the proposal did not clearly state what would happen 
to the FEHB enrollment of employees who go on LWOP status or whose pay 
is insufficient if they did not elect in writing to continue or 
terminate their FEHB enrollment.
    We have addressed this concern by amending the proposal to require 
employing offices to provide employees with a written notice of the 
options of continuing or terminating their FEHB coverage. The 
enrollments of employees who do not return a signed form to their 
employing office within 31 days after the day they receive the notice 
are terminated. The termination is retroactive to the end of the last 
pay period in which the premium was withheld from pay.
    The employees and covered family members, if any, are entitled to 
the 31-day temporary extension of coverage and may convert to an 
individual contract for health benefits. In addition, employees who are 
prevented by circumstances beyond their control from timely returning a 
signed form to the employing office may request the employing office to 
reinstate their coverage. Therefore, employees who through no fault of 
their own are not able to return a signed form to the employing office 
within 31 days are protected by the temporary extension of coverage and 
their right to request reinstatement of their coverage. Employees who 
terminate their enrollment may enroll upon their return to pay status.
    One commenter agreed that the change should resolve some of the 
past problems and clarify agency and employee responsibilities, but 
that continued monitoring by OPM and agency staff of operating 
personnel offices' administration of the FEHB enrollment procedures for 
employees in LWOP status will be required. We agree continued 
monitoring is still required, and note that it is the responsibility of 
agencies' staff to monitor their employing offices' procedures for 
employees who enter LWOP status to ensure employees receive the 
information required by this regulation.
    One commenter disagreed with OPM's statement that the involuntary 
offset provisions of 5 U.S.C. 5514 and subpart K of 5 CFR part 550 
would not apply under this regulation. The involuntary offset 
provisions require agencies to follow due process procedures such as 
giving employees written notice and an opportunity for a hearing before 
collecting debts from their pay. Section 550.1102(b) of subpart K of 5 
CFR part 550 states, ``This subpart and 5 U.S.C. 5514 apply in 
recovering certain debts by administrative offset, except where the 
employee consents to the recovery, from

[[Page 37808]]

the current pay account of an employee.'' (emphasis added). Because 
this regulation requires employees entering LWOP status or receiving 
pay insufficient to cover their FEHB premiums to consent in writing to 
the recovery of the debt they are incurring by continuing their FEHB 
coverage, the involuntary offset provisions of 5 U.S.C. 5514 and 
subpart K of 5 CFR part 550 do not apply.
    On December 30, 1994, and June 1, 1995, OPM issued interim and 
final regulations in the Federal Register (59 FR 67605 and 60 FR 
28511), respectively, that eliminated the requirement for the use of 
certified mail, return receipt requested, when notifying certain 
enrollees that their enrollment in the FEHB Program will be terminated 
due to nonpayment of premiums unless the payment is received within 15 
days. This interim regulation further amends 5 CFR 890.502 to eliminate 
the requirement for the use of certified mail, return receipt 
requested, for the following circumstances: (1) Annuitants whose FEHB 
premiums exceed the amount of their annuities; (2) surviving spouses in 
receipt of a lump-sum basic employee death benefit under the Federal 
Employees Retirement System; and (3) employees in LWOP status in excess 
of 365 days.
    On June 17, 1994, and December 27, 1994, OPM issued proposed and 
final regulations in the Federal Register (59 FR 31171 and 59 FR 66434) 
that delegated from OPM to Federal agencies the authority to reconsider 
disputes over coverage and enrollment issues in the Federal Employees' 
Group Life Insurance and the FEHB Programs and to make retroactive as 
well as prospective corrections of errors. This interim regulation 
amends 5 CFR 890.502, 890.808, and 890.1109 to conform with the 
delegation of authority to Federal agencies.

Regulatory Flexibility Act

    I certify that this regulation will not have a significant economic 
impact on a substantial number of small entities because it primarily 
affects Federal employees, annuitants, and former spouses.

List of Subjects in 5 CFR Part 890

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

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

    Accordingly, OPM is amending 5 CFR part 890 as follows:

PART 890--FEDERAL EMPLOYEES HEALTH BENEFITS PROGRAM

    1. The authority citation for part 890 continues to read as 
follows:

    Authority: 5 U.S.C. 8913; Sec. 890.803 also issued under 50 
U.S.C. 403p, 22 U.S.C. 4069c and 4069c-1; subpart L also issued 
under sec. 599C of Pub. L. 101-513, 104 Stat. 2064, as amended.


Sec. 890.301   [Amended]

    2. In Sec. 890.301, paragraph (c) is amended by removing 
``Sec. 890.304(a)(5)'' and adding in its place 
``Sec. 890.304(a)(1)(v)''.
    3. In Sec. 890.502, paragraphs (a), (b), (c), (d), and (e) are 
revised; paragraphs (f) and (h) are removed, and paragraph (g) is 
redesignated as paragraph (f), to read as follows:


Sec. 890.502   Employee and annuitant withholdings and contributions 
and direct payment of premiums.

    (a) Employee and annuitant withholdings and contributions. (1) 
Except as provided in paragraphs (a)(2) and (g) of this section, an 
employee or annuitant is responsible for payment of the employee or 
annuitant share of the cost of enrollment for every pay period during 
which the enrollment continues. An employee or annuitant incurs an 
indebtedness due the United States in the amount of the proper employee 
or annuitant withholding required for each pay period that health 
benefits withholdings or direct premium payments are not made but 
during which the enrollment continues.
    (2) An individual is not required to pay withholdings for the 
period between the end of the pay period in which he or she separates 
from service and the commencing date of an immediate annuity, if later.
    (3) Temporary employees who are eligible to enroll under 5 U.S.C. 
8906a must pay the full subscription charges including both the 
employee share and the Government contribution. Employees with 
provisional appointments under Sec. 316.403 are not considered eligible 
for coverage under 5 U.S.C. 8906a for the purpose of this paragraph 
(a)(3).
    (4) The employing office must determine the withholding for 
employees whose annual pay is paid during a period shorter than 52 
workweeks on an annual basis and prorate the withholding over the 
number of installments of pay regularly paid during the year.
    (5) The employing office must make the withholding required from 
enrolled survivor annuitants in the following order. First, withhold 
from the annuity of a surviving spouse, if any. If that annuity is less 
than the withholding required, the employing office must make the 
withholding to the extent necessary from the annuity of the children, 
if any, in the following order. First, withhold from the annuity of the 
youngest child, and if necessary, then from the annuity of the next 
older child, in succession, until the withholding is satisfied.
    (6) Surviving spouses in receipt of a basic employee death benefit 
under 5 U.S.C. 8442(b)(1)(A) and annuitants whose health benefits 
premiums exceed the amount of their annuities may pay their portion of 
the health benefits premium directly to the retirement system acting as 
their employing office in accordance with procedures set out in 
paragraph (d) of this section.
    (b) Procedures when employee enters LWOP status or pay is 
insufficient to cover premium. As soon as the employing office is aware 
of an employee whose premium payments cannot be made because the 
employee will be entering or has entered leave without pay status, (or 
any other type of nonpay status, except periods of nonpay resulting 
from a lapse of appropriations), or the employee's pay is insufficient 
to cover the premiums, the employing office must inform the employee of 
the available health benefits options.
    (1) The employing office must provide the employee written notice 
of the options and consequences as described in paragraphs (b)(2) (i) 
and (ii) of this section. If the employing office cannot give the 
notice required by this paragraph (b)(1) to the employee directly, it 
must send the notice by first class mail. A notice that is mailed is 
deemed to be received 5 days after the date of the notice.
    (2) The employee must elect in writing either to continue health 
benefits coverage or terminate it. The employee may continue his or her 
health benefits coverage by choosing one of the options listed in this 
paragraph (b)(2) and returning the signed form to the employing office 
within 31 days from the day he or she receives the notice (45 days for 
an employee residing overseas). When an employee mails the signed form, 
the date of the postmark is deemed to be the date the notice is 
returned to the employing office. If an employee elects

[[Page 37809]]

to continue coverage, he or she must elect in writing either to--
    (i) Agree to pay the premium directly to the agency on a current 
basis. The employee must agree that if he or she does not pay the 
premiums, upon returning to employment or upon pay becoming sufficient 
to cover the premiums, the employing office will deduct, in addition to 
the current pay period's premiums, an amount equal to the premiums for 
a pay period during which the employee was in LWOP status. The 
employing office will continue using this method to deduct the accrued 
unpaid premiums from salary until the debt is recovered in full. The 
employee must also agree that if he or she does not return to work or 
the employing office cannot recover the debt in full from salary, the 
employing office may recover the debt from whatever other sources it 
normally has available for recovery of a debt to the United States, or
    (ii) Agree upon returning to employment or upon pay becoming 
sufficient to cover the premiums, the employing office will deduct, in 
addition to the current pay period's premiums, an amount equal to the 
premiums for a pay period during which the employee was in LWOP status. 
The employing office will continue using this method to deduct the 
accrued unpaid premiums from salary until the debt is recovered in 
full. The employee must also agree that if he or she does not return to 
work or the employing office cannot recover the debt in full from 
salary, the employing office may recover the debt from whatever other 
sources it normally has available for recovery of a debt to the United 
States.
    (3) Except as provided under paragraph (b)(4) of this section, if 
the employee does not return the signed form within 31 days after the 
day he or she receives the notice (45 days for employees residing 
overseas) the employing office terminates the enrollment according to 
paragraph (b)(5) of this section. The employing office must give the 
employee written notification of the termination.
    (4) If the employee is prevented by circumstances beyond his or her 
control from returning a signed form to the employing office within the 
time frame under paragraph (b)(2) of this section, he or she may 
request reinstatement of coverage by writing to the employing office. 
The employee must describe the circumstances that prevented timely 
notice and file the request within 30 calendar days from the date the 
employing office gives the employee notification of the termination. 
The employing office determines if the employee is eligible for 
reinstatement of coverage. If the determination is affirmative, the 
employing office reinstates the coverage of the employee retroactive to 
the date of termination. If the determination is negative, the employee 
may request a review of the decision from the employing agency as 
provided under Sec. 890.104.
    (5) Terminations of enrollment under paragraphs (b)(2) and (3) of 
this section are retroactive to the end of the last pay period in which 
the premium was withheld from pay. The employee and covered family 
members, if any, are entitled to the temporary extension of coverage 
for conversion and may convert to an individual contract for health 
benefits. An employee whose coverage is terminated may enroll upon his 
or her return to duty in a pay status in a position in which the 
employee is eligible for coverage under this part.
    (c) Procedures when an agency underwithholds. (1) An agency that 
withholds less than the proper health benefits contributions from an 
individual's pay, annuity, or compensation must submit an amount equal 
to the sum of the uncollected contributions and any applicable agency 
contributions required under section 8906 of title 5, United States 
Code, to OPM for deposit in the Employees Health Benefits Fund.
    (2) The agency must make the deposit to OPM described in paragraph 
(c)(1) of this section as soon as possible, but no later than 60 
calendar days after the date the employing office determines the amount 
of the underdeduction that has occurred, regardless of whether or when 
the agency recovers the underdeduction. A subsequent agency 
determination whether to waive collection of the overpayment of pay 
caused by failure to properly withhold employee health benefits 
contributions shall be made in accordance with 5 U.S.C. 5584 as 
implemented by 4 CFR chapter I, subchapter G, unless the agency 
involved is excluded from application of 5 U.S.C. 5584, in which case 
any applicable authority to waive the collection may be used.
    (d) Direct premium payments for annuitants. (1) If an annuity, 
excluding an annuity under Subchapter III of Chapter 84 (Thrift Savings 
Plan), is too low to cover the health benefits premium due or if a 
surviving spouse receives a basic employee death benefit, the 
retirement system must provide information to the annuitant or 
surviving spouse regarding the available plans and notify him or her in 
writing of the opportunity to either: enroll in any plan in which the 
enrollee's share of the premium is not in excess of the annuity; or 
make payment of the premium directly to the retirement system.
    (2) The retirement system must establish a method for accepting 
direct payment for health benefits premiums from surviving spouses who 
have received or are currently receiving basic employee death benefits 
as well as from annuitants whose annuities are too low to cover their 
health premiums. The annuitant or surviving spouse must continue to 
make direct payment of the health benefits premium even if the annuity 
increases to the extent that it covers the premium.
    (3) The annuitant or surviving spouse must pay to the retirement 
system his or her share of the premium for the enrollment for every pay 
period during which the enrollment continues, exclusive of the 31-day 
temporary extension of coverage for conversion provided in 
Sec. 890.401. The annuitant or surviving spouse must pay after each pay 
period in which he or she is covered in accordance with a schedule 
established by the retirement system. If the retirement system does not 
receive payment by the date due, the retirement system must notify the 
annuitant or surviving spouse in writing that continuation of coverage 
depends upon payment being made within 15 days (45 days for annuitants 
or surviving spouses residing overseas) after receipt of the notice. If 
no subsequent payments are made, the retirement system terminates the 
enrollment 60 days (90 days for annuitants or surviving spouses 
residing overseas) after the date of the notice. An annuitant or 
surviving spouse whose enrollment terminates because of nonpayment of 
premium may not reenroll or reinstate coverage, except as provided in 
paragraph (d)(4) of this section.
    (4) If the annuitant or surviving spouse is prevented by 
circumstances beyond his or her control from paying within 15 days 
after receipt of the notice, he or she may request reinstatement of 
coverage by writing to the retirement system. The annuitant or 
surviving spouse must describe the circumstances that prevented timely 
notice and file the request within 30 calendar days from the date of 
termination. The retirement system determines whether the surviving 
spouse or annuitant is eligible for reinstatement of coverage. If the 
determination is affirmative, the retirement system reinstates the 
coverage of the surviving spouse or annuitant retroactive to the date 
of termination. If the determination is negative, the surviving spouse 
or

[[Page 37810]]

annuitant may request a review of the decision from the retirement 
system as provided under Sec. 890.104.
    (5) Termination of enrollment for failure to pay premiums within 
the time frame established in accordance with paragraph (d)(3) of this 
section is retroactive to the end of the last pay period for which 
payment has been timely received.
    (6) The retirement system will submit all direct premium payments 
along with its regular health benefits premiums to OPM in accordance 
with procedures established by that office.
    (e) Direct payment of premiums during periods of LWOP status in 
excess of 365 days. (1) An employee who is granted leave without pay 
under subpart L of part 630 of this chapter which exceeds the 365 days 
of continued coverage under Sec. 890.303(e) must pay the employee 
contributions directly to the employing office on a current basis.
    (2) Payment must be made after the pay period in which the employee 
is covered in accordance with a schedule established by the employing 
office. If the employing office does not receive the payment by the 
date due, the employing office must notify the employee in writing that 
continuation of coverage depends upon payment being made within 15 days 
(45 days for employees residing overseas) after receipt of the notice. 
If no subsequent payments are made, the employing office terminates the 
enrollment 60 days (90 days for enrollees residing overseas) after the 
date of the notice.
    (3) If the employee was prevented by circumstances beyond his or 
her control from making payment within the time frame specified in 
paragraph (e)(2) of this section, he or she may request reinstatement 
of the coverage by writing to the employing office. The employee must 
describe the circumstances that prevented timely notice and file the 
request within 30 calendar days from the date of termination.
    (4) The employing office determines whether the employee is 
eligible for reinstatement of coverage. If the determination is 
affirmative, the employing office reinstates the coverage of the 
employee retroactive to the date of termination. If the determination 
is negative, the employee may request a review of the decision from the 
employing agency as provided under Sec. 890.104.
    (5) An employee whose coverage is terminated under paragraph (e)(2) 
of this section may enroll upon his or her return to duty in a pay 
status in a position in which the employee is eligible for coverage 
under this part.
* * * * *
    4. In Sec. 890.808, the last sentence of paragraph (d)(2) is 
revised to read as follows:


Sec. 890.808  Employing office responsibilities.

* * * * *
    (d) * * *
    (2) * * * If the determination is negative, the individual may 
request a review of the decision from the employing agency as provided 
under Sec. 890.104.
* * * * *
    5. In Sec. 890.1109, the last sentence of paragraph (d)(2) is 
revised to read as follows:


Sec. 890.1109  Premium payments

* * * * *
    (d) * * *
    (2) * * * If the determination is negative, the individual may 
request a review of the decision from the employing agency as provided 
under Sec. 890.104.

[FR Doc. 96-18515 Filed 7-19-96; 8:45 am]
BILLING CODE 6325-01-P