[Federal Register Volume 63, Number 213 (Wednesday, November 4, 1998)]
[Rules and Regulations]
[Pages 59457-59460]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-29330]



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 Rules and Regulations
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  Federal Register / Vol. 63, No. 213 / Wednesday, November 4, 1998 / 
Rules and Regulations  

[[Page 59457]]


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OFFICE OF PERSONNEL MANAGEMENT

5 CFR Part 890

RIN 3206-AH61


Federal Employees Health Benefits Program: Disenrollment

AGENCY: Office of Personnel Management.

ACTION: Final rule.

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SUMMARY: The Office of Personnel Management (OPM) is issuing final 
regulations that are consistent with existing administrative procedures 
requiring employing offices to provide information about enrollees in 
the Federal Employees Health Benefits (FEHB) Program to the carriers of 
the FEHB plans in which they are enrolled. Carriers are also required 
to use the information provided by employing offices to reconcile their 
enrollment records. These regulations will regularize the conditions 
that would allow carriers to disenroll individuals when their employing 
office of record does not show them as enrolled in the carrier's plan 
and the carrier is otherwise unable to verify the enrollment. The 
purpose of these regulations is to facilitate reconciliation of carrier 
and employing office enrollment records, especially in cases where the 
carrier has not previously received a notice showing an enrollment no 
longer is valid.

EFFECTIVE DATE: December 4, 1998.

FOR FURTHER INFORMATION CONTACT: Jay D. Fritz (202) 606-0004.

SUPPLEMENTARY INFORMATION: On November 28, 1997, OPM issued proposed 
regulations in the Federal Register (62 FR 63282) that would amend part 
890 to allow carriers of FEHB plans to disenroll individuals when (1) 
the payroll office of record with the carrier is unable to provide 
information about the enrollment, (2) the carrier receives reliable 
information that an individual with a self only enrollment has died, 
(3) a child survivor annuitant becomes age 22, unless the carrier has 
information indicating that the child is eligible for continued 
coverage because the child is incapable of self support due to a 
physical or mental disability, and (4) a former employee notifies the 
carrier that he or she has separated from Federal employment under 
circumstances that do not entitle him or her to an immediate annuity.
    OPM received comments from six insurance carriers, one Government 
agency, and one health plan trade association. Seven of the commenters 
were in favor of the proposed regulations although each had specific 
areas of concern. One commenter was opposed to the proposed 
regulations. We will address the areas of concern below. We have tried 
to list these issues in the same order as the regulations to which they 
pertain.
    One commenter suggested that we modify 5 CFR 890.107(a) to indicate 
that lawsuits filed over disenrollments are to be filed against the 
employing office. We believe that lawsuits involving disenrollments are 
the equivalent of lawsuits to compel enrollments which are adequately 
addressed at Sec. 890.107(a).
    One commenter requested that carriers be allowed to cancel an 
inactive contract in a situation where two identification numbers 
belong to one individual, the carrier determines which coverage should 
be active, and information about the incorrect enrollment is not 
available from the employing office. We believe this is strictly an 
enrollment issue that needs to be resolved between the employing office 
and the carrier and is outside the scope of these regulations.
    Several commenters expressed concerns over the responsibilities of 
employing offices in responding to a carrier's request to provide 
documentation necessary to resolve enrollment discrepancies. Two 
commenters requested that employing offices be required to respond 
within a certain time frame to a carrier's request to provide 
documentation necessary to resolve an enrollment discrepancy. Two other 
commenters suggested the regulations indicate that if the employing 
office has not responded to a carrier's request for information within 
a set amount of time, the carrier may proceed with issuing a 
disenrollment notification. We are modifying the regulations to 
indicate that if a carrier has not received requested information from 
the employing office within 31 days of the request, they may proceed 
with issuing the disenrollment notice.
    One commenter suggested that we change Sec. 890.308(a)(1) to 
indicate that an enrollee will be disenrolled 31 ``calendar'' days 
after the date of the disenrollment notice since the term ``calendar'' 
is used elsewhere in the regulations. We are making this modification 
in the interest of clarity.
    Another commenter believes that 31 calendar days is not sufficient 
time for an enrollee to respond to a carrier's disenrollment notice. We 
feel that 31 days is enough time for an individual to either contact 
the employing office or supply the carrier with appropriate 
documentation to resolve an enrollment discrepancy. If for some reason 
an individual does not provide documentation within the 31 calendar day 
time frame and he or she is disenrolled, the disenrollment will be 
voided and coverage reinstated retroactively upon presentation of the 
documentation.
    Several commenters suggested that OPM and the carriers create a 
standard disenrollment notification letter and a standard letter 
advising individuals of conversion rights and TCC eligibility when 
applicable. OPM agrees and will work administratively with the carriers 
on creating these standard letters.
    Two commenters expressed concern that after an individual receives 
a disenrollment notice, the individual is to deliver appropriate 
documentation resolving the discrepancy to the carrier instead of the 
employing office. The commenters feel that if the employing office does 
not see the documentation, they will not correct their records and the 
discrepancy will arise again in the next reconciliation. OPM believes 
that appropriate documentation should be sent to the carrier instead of 
the employing office since the carrier is taking the action to 
disenroll the individual and can rescind that action. We also expect 
that in many cases the individual will contact the employing office for 
assistance upon receipt of the

[[Page 59458]]

disenrollment notice, resulting in correction of employing office 
records. In addition, the standard disenrollment letter will advise 
individuals to send appropriate documentation to both their carrier and 
their employing office.
    Two commenters inquired about the effective date of an individual's 
disenrollment. One questioned the disenrollment date when the carrier 
and the employing office are unable to reconcile the enrollment, and 
the other questioned the disenrollment date when the carrier receives 
reliable evidence that an enrollee with a self only enrollment has died 
but the date of death is unknown. In the first case, the disenrollment 
date will be 31 calendar days after the disenrollment notice is sent to 
the enrollee as the carrier would not have any knowledge as to when the 
employing office of record ceased forwarding premiums for that 
individual. In the second case, we are modifying the regulations to 
indicate that disenrollment would be effective the last day of the pay 
period in which the carrier received notice of the death.
    One commenter requested that OPM give carriers discretion to delay 
disenrollments in appropriate cases. It is our intention for carriers 
to use the disenrollment process with appropriate discretion in all 
cases, but especially in cases where the carrier believes an individual 
is eligible for coverage but needs time to forward documentation. We 
are modifying the regulations to allow carriers this discretion.
    One commenter asked if carriers should convey an individual's 
disenrollment date to the employing office when the individual is 
disenrolled 31 days after written notification is sent. We do not 
believe carriers should be required to make this notification. Since 
prior attempts at contact by the carrier have been ineffectual, it is 
unlikely they would know the office of record to which to send the 
notification.
    One commenter suggested that we clarify the procedures for an 
individual disputing a disenrollment notice from a carrier. We are 
modifying the regulations so that after a carrier receives information 
from an individual attempting to resolve an enrollment discrepancy, the 
carrier will communicate its decision on the information to both the 
employing office and the individual. Only at the point where the 
information is determined to be inadequate to resolve the enrollment 
discrepancy should the reconsideration process with the individual's 
employing office begin.
    One commenter suggested that employing offices be required to 
notify the carrier of a request made by an individual for 
reconsideration of a disenrollment decision. The commenter believes 
that the carrier may have information that bears on the enrollment 
issue. We are modifying the regulations to incorporate this 
requirement.
    One commenter suggested that we clarify the regulations to indicate 
that if an employing office overturns a carrier's disenrollment 
determination upon reconsideration, the enrollment will be reinstated 
retroactively. OPM agrees and we are modifying the regulations for 
clarity, as all reinstatements of enrollment under these regulations 
will be made retroactively.
    We are also revising the regulations to remove the requirement that 
reconsideration decisions be issued to the carriers in writing. After a 
reconsideration decision is made, agencies are still to issue a written 
notice of its final decision to the individual, however, agencies 
should contact the carrier by telephone with the reconsideration 
decision. We have made this change since currently much enrollment 
activity is handled between the agencies and carriers by telephone. In 
the case of reconsideration decisions to reinstate FEHB enrollment, we 
do not want individuals to remain disenrolled while a carrier waits for 
a written notice to be forwarded from the agency. Through use of the 
telephone, an individual that is eligible for FEHB coverage may be 
quickly reinstated.
    One commenter suggested the regulations require that employing 
offices issue reconsideration decisions within a set time frame. We 
believe reconsideration should be in accordance with the existing 
processes developed within each individual employing office to process 
reconsideration requests under 5 CFR 890.104(c).
    Two commenters expressed concern over retroactive enrollments in 
health maintenance organizations for individuals who received routine 
services from non-network providers during the period covered by the 
retroactive enrollment. When these situations arise, OPM requests that 
carriers review each occurrence on a case-by-case basis. In situations 
of true hardship, where services could not be deferred until the 
enrollment problem was resolved, we would expect the carriers to 
provide coverage for the non-network services in question.
    Several commenters were concerned about our proposal allowing 
carriers, upon receiving from a reliable source information of the 
death of an enrollee with a self only enrollment, to disenroll the 
individual. We are modifying the regulations to include certain 
examples of what OPM considers reliable information that an enrollee 
has died. We are also eliminating the requirement that carriers attempt 
to notify the affected individual or a family member of the 
disenrollment. Upon additional review, we have determined that an 
attempt to notify the affected individual or a member of their family 
is unnecessary. If, however, the enrollee is not deceased and attempts 
to receive services, we expect the carrier to cover the services, void 
the disenrollment and reinstate coverage retroactively.
    One commenter noted that a child survivor annuitant must be a full-
time student in order to continue their health benefits enrollment 
beyond age 18, while the regulations only address the disenrollment of 
child survivor annuitants who reach age 22. While we are aware of the 
possibility that some child survivor annuitants under age 22 would not 
be eligible for FEHB coverage, we do not want carriers attempting to 
disenroll them. Members of this segment of the population are 
frequently dropped from, and reinstated to, the annuity rolls. Each 
time they move on or off the annuity rolls, their eligibility for FEHB 
enrollment changes. It would be difficult, if not impossible, for 
carriers to determine when these individuals would lose entitlement to 
an annuity and, consequently, their FEHB coverage. We will rely on the 
retirement system to keep carriers apprised of the enrollment 
eligibility of members of this group.
    Two commenters suggested that we require the carriers to give 
notice of conversion rights when a child survivor annuitant covered 
under a self only enrollment loses entitlement to an annuity and is 
disenrolled. OPM agrees that notice of conversion rights be given to 
these individuals. However, the notice will be included in the written 
notice of disenrollment and specific regulatory language is not needed. 
Carriers must send the written notice of disenrollment to the 
individual prior to the individual's 22nd birthday.
    We are removing the specific regulatory requirement that an 
enrollee who notifies the carrier that he or she has separated from 
Federal employment be notified of their right to convert to a non-group 
contract and possible eligibility to enroll under temporary 
continuation of coverage. In its place, we are requiring that the 
carrier provide the enrollee with a written notice of disenrollment 
prescribed or approved by OPM. This notice will contain the information 
on conversion and temporary continuation of coverage.
    One commenter expressed concern that the regulations do not specify 
any

[[Page 59459]]

grounds under which a child survivor annuitant might request 
reconsideration of a carrier's decision to disenroll the individual. 
The grounds that an individual would have for requesting 
reconsideration would be that the person is over age 22, but is 
incapable of self-support. In cases where the retirement system is 
provided with evidence of the situation stated above, they would order 
the carrier to reinstate coverage retroactively.
    One commenter suggested that we change the regulations to allow 
child survivor annuitants 60 calendar days from the date of the 
carrier's disenrollment notice to file a request for reconsideration. 
To provide consistency among the time frames for filing reconsideration 
requests, we are modifying the regulations to allow 60 calendar days 
instead of the current 30 calendar days.
    One commenter asserted that by allowing carriers to disenroll 
individuals, OPM is relinquishing its responsibilities in administering 
the FEHB Program and increasing the workload burden on the employing 
offices. OPM disagrees. The regulations will facilitate reconciliation 
of carrier and employing office enrollment records. Under these 
regulations, carriers may disenroll individuals only if the carrier has 
not received a notice terminating the enrollment or the individual has 
died, lost eligibility, or left Federal employment. We are modifying 
the regulations to give the carriers more discretion so they are not 
forced to disenroll an individual if they feel it would not be 
appropriate. We expect that few individuals would either reach the end 
of the disenrollment process without their enrollment status becoming 
clear or be otherwise incorrectly disenrolled. As a result, there would 
be few reconsideration requests filed with employing offices. However, 
if an employing office should find that it is receiving a large number 
of reconsideration requests, it may find that its training and 
procedures on transmitting enrollment transactions and performing 
enrollment reconciliations need to be reviewed and strengthened.

Regulatory Flexibility Act

    I certify that these regulations will not have a significant 
economic impact on a substantial number of small entities because they 
primarily affect administrative procedures for Federal agencies and 
health benefit carriers that participate in the FEHB Program.

Executive Order 12866, Regulatory Review

    This rule has been reviewed by the Office of Management and Budget 
in accordance with Executive Order 12866.

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.

Office of Personnel Management.
Janice R. Lachance,
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. 890.102 also issued under sections 11202(f), 11232(e), and 
11246 (b) and (c) of Pub. L. 105-33, 111 Stat. 251.

    2. In subpart A, Sec. 890.110 is added to read as follows:


Sec. 890.110  Enrollment reconciliation.

    (a) Each employing office must report to each carrier or its 
surrogate on a quarterly basis the names of the individuals who are 
enrolled in the carrier's plan in a format and containing such 
information as required by OPM.
    (b) The carrier must compare the data provided with its own 
enrollment records. When the carrier finds in its aggregate enrollment 
records individuals whose names do not appear in the report from the 
employing office of record, the carrier must request the employing 
office to provide the documentation necessary to resolve the 
discrepancy.
    3. In subpart C, Sec. 890.308 is added to read as follows:


Sec. 890.308  Disenrollment.

    (a)(1) Except as otherwise provided in this section, a carrier that 
cannot reconcile its record of an individual's enrollment with agency 
enrollment records or does not receive documentation necessary to 
resolve the discrepancy from the employing office within 31 days of a 
request must provide written notice to the individual that the 
employing office of record does not show him or her as enrolled in the 
carrier's plan and that he or she will be disenrolled 31 calendar days 
after the date of the notice unless the enrollee provides appropriate 
documentation to resolve the discrepancy. Appropriate documentation 
includes, but is not limited to, a copy of the Standard Form 2809 
(basic enrollment document) (or a letter confirming an electronic 
transaction), the Standard Form 2810 transferring the enrollment into 
the gaining employing office (or the equivalent electronic submission), 
copies of earnings and leave statements or annuity statements showing 
withholdings for the health benefits plan, or a document or other 
credible information from the enrollee's employing office stating that 
the individual is entitled to continued enrollment in the plan and that 
the premiums are being paid. After receiving documentation from the 
enrollee, the carrier must notify both the enrollee and the employing 
office of record of their decision on the information.
    (2) If the carrier does not receive documentation required under 
paragraph (a)(1) of this section within the specified time frame, the 
carrier should disenroll the individual, without further notice.
    (3) The enrollee may request his or her employing office to 
reconsider the carrier's decision to disenroll the individual. The 
request for reconsideration must be made in writing and must include 
the enrollee's name, address, Social Security Number or other personal 
identification number, name of carrier, reason(s) for the request, and, 
if applicable, retirement claim number. The employing office must 
notify the carrier when a request for reconsideration of the decision 
to disenroll the individual is made.
    (4) A request for reconsideration of the carrier's decision must be 
filed within 60 calendar days after the date of the carrier's 
disenrollment notice. 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.
    (5) After reconsideration, the employing office must issue a 
written notice of its final decision to the individual and notify the 
carrier of the decision. The notice must fully set forth the findings 
and conclusions on which the decision was based. If upon 
reconsideration the employing office determines the individual is 
entitled to continued enrollment in the plan, the disenrollment under 
paragraph (a)(2) of

[[Page 59460]]

this section is void and coverage is reinstated retroactively.
    (6) If, at any time after the disenrollment has occurred, the 
employing office or OPM determines that another section of this part 
applies to the individual's enrollment or the carrier discovers or 
receives appropriate documentation showing that another section of this 
part applies to the individual's enrollment, the disenrollment under 
paragraph (a)(2) of this section is void and coverage is reinstated 
retroactively.
    (b) When a carrier receives, from any reliable source, information 
of the death of an enrollee with a self only enrollment, the carrier 
may take action to disenroll the individual on the date set forth in 
Sec. 890.304(a)(1)(iv) or Sec. 890.304(b)(4), as appropriate. When the 
date of death is unknown, the carrier may take action to disenroll the 
individual on the date which is the last day of the pay period in which 
information of the death is received. Reliable sources include, but are 
not limited to, claims for hospital or physician costs incurred at time 
of death and correspondence returned from the Postal Service noting 
that the addressee is deceased. If, at any time after the disenrollment 
has occurred, the employing office or OPM determines that another 
section of this part applies to the individual's enrollment or the 
carrier discovers or receives appropriate documentation showing that 
another section of this part applies to the individual's enrollment, 
the disenrollment under this paragraph (b) is void and coverage is 
reinstated retroactively.
    (c)(1) When a child survivor annuitant covered under a self only 
enrollment reaches age 22, the carrier may take action to disenroll the 
individual effective with the date set forth in Sec. 890.304(c)(1) 
unless records with the carrier indicate that the child is incapable of 
self support due to a physical or mental disability. The carrier must 
provide the enrollee with a written notice of disenrollment prescribed 
or approved by OPM prior to the date set forth in Sec. 890.304(c)(1).
    (2) The child survivor annuitant may request the retirement system 
to reconsider the carrier's decision to disenroll the individual. The 
request for reconsideration must be made in writing and include the 
enrollee's name, address, Social Security Number or other identifier, 
name of carrier, reason(s) for the request, and the survivor annuity 
claim number. The retirement system must notify the carrier when a 
request for reconsideration of the carrier's decision to disenroll the 
individual is made.
    (3) A request for reconsideration of the carrier's decision must be 
filed with the retirement system within 60 calendar days from the date 
of the carrier's disenrollment notice. 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.
    (4) After reconsideration, the retirement system must issue a 
written notice of its final decision to the child survivor annuitant 
and notify the carrier of the decision. The notice must fully set forth 
the findings and conclusions on which the decision was based. If upon 
reconsideration the retirement system determines that he or she is 
entitled to continued enrollment in the plan, the disenrollment under 
paragraph (c)(1) of this section is void and coverage is reinstated 
retroactively.
    (5) If, at any time after the disenrollment has occurred, the 
employing office or OPM determines that another provision of this part 
applies to the individual's enrollment or the carrier discovers or 
receives appropriate documentation showing that another section of this 
part applies to the individual's enrollment, the disenrollment under 
paragraph (c)(1) of this section is void and coverage is reinstated 
retroactively.
    (d) When an enrollee notifies the carrier that he or she has 
separated from Federal employment and is no longer eligible for 
enrollment, the carrier must disenroll the individual on the last day 
of the pay period in which the separation occurred, if known, otherwise 
the carrier must disenroll the employee on the date the employee 
provides as the date of separation. The carrier must provide the 
enrollee with a written notice of disenrollment prescribed or approved 
by OPM.

[FR Doc. 98-29330 Filed 11-3-98; 8:45 am]
BILLING CODE 6325-01-P