[Federal Register Volume 69, Number 109 (Monday, June 7, 2004)]
[Rules and Regulations]
[Pages 31721-31722]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-12799]



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  Federal Register / Vol. 69, No. 109 / Monday, June 7, 2004 / Rules 
and Regulations  

[[Page 31721]]



OFFICE OF PERSONNEL MANAGEMENT

5 CFR Part 890

RIN 3206-AK48


Federal Employees Health Benefits Program: Modification of Two-
Option Limitation for Health Benefits Plans and Continuation of 
Coverage for Annuitants Whose Plan Terminates an Option

AGENCY: Office of Personnel Management.

ACTION: Interim rule with request for comments.

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

SUMMARY: The Office of Personnel Management (OPM) is modifying the 
prohibition against Federal Employees Health Benefits (FEHB) plans 
offering more than 2 options, to allow FEHB plans to offer 2 options 
plus a high deductible plan. OPM is also modifying what happens when an 
annuitant's health plan terminates an option, and the annuitant doesn't 
make a health benefits change.

DATES: Effective June 7, 2004. OPM must receive comments by August 6, 
2004.

ADDRESSES: Send written comments to Abby L. Block, Deputy Associate 
Director for Employee and Family Support Policy, Strategic Human 
Resources Policy Division, Office of Personnel Management, 1900 E 
Street NW., Washington, DC 20415; or deliver to OPM, Room 3425, 1900 E 
Street NW., Washington, DC; or FAX to (202) 606-0633.

FOR FURTHER INFORMATION CONTACT: Karen Leibach, (202) 606-0004.

SUPPLEMENTARY INFORMATION: Pub. L. 108-173, Medicare Prescription Drug, 
Improvement, and Modernization Act of 2003 (the Medicare Modernization 
Act, 117 Stat. 2006), enacted December 8, 2003, contains a provision 
(section 1201) authorizing health savings accounts (HSAs) for 
individuals who are not eligible for Medicare and who are in a high 
deductible health benefits plan. A high deductible plan, as defined in 
U.S. Code 223(c)(2)(A) of the title 26, is a plan with a deductible of 
at least $1,000 for individual coverage or $2,000 for family coverage. 
Some FEHB plans may be interested in offering eligible enrollees such a 
high deductible plan product with an HSA or a health reimbursement 
account (HRA) if the enrollee is not eligible for an HSA. An HRA is an 
employer-provided accident or health plan, which reimburses employees 
for certain medical care expenses incurred by the employee, the 
employee's spouse, and dependents. However, many plans participating in 
the FEHB Program already offer 2 options, and current regulations do 
not permit FEHB plans to offer more than 2 options. Therefore, OPM is 
revising its regulations to allow plans participating in the FEHB 
Program to offer 2 options plus a high deductible plan.
    OPM is also changing slightly what happens when an annuitant's plan 
terminates an option, and the annuitant does not make a health benefits 
change. Currently, our regulations state that if a plan has 2 options, 
and one of the options is discontinued, an annuitant who does not 
change health plans is considered to be enrolled in the plan's 
remaining option. However, with the introduction of new products, such 
as consumer-driven plans and plans with high deductibles, it may not be 
in an annuitant's best interests to be ``deemed'' into a plan's 
remaining option. We are revising our regulation to state that an 
annuitant who doesn't make a health benefits change when his/her plan 
terminates an option will be moved into the plan's remaining option if 
that option reasonably approximates the terminating option. If the 
remaining option does not reasonably approximate the terminating 
option, such as the remaining option is a high deductible health plan 
or a consumer driven plan, and the annuitant doesn't make a health 
benefits change, he/she will be moved into the standard option of the 
Blue Cross and Blue Shield Service Benefit Plan.

Waiver of Notice of Proposed Rulemaking

    In accordance with Sec.  553(b)(3)(B) of title 5 of the U.S. Code, 
I find that good cause exists for waiving the general notice of 
proposed rulemaking and the 30-day delay in effectiveness for this 
rule. The HSA provision of Pub. L. 108-173 became effective January 1, 
2004.

Regulatory Flexibility Act

    I certify that this regulation will not have a significant economic 
impact on a substantial number of small entities because the regulation 
only affects health benefits plans and annuitants participating in the 
Federal Employees Health Benefits 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 professionals, Hostages, Iraq, 
Kuwait, Lebanon, Reporting and record keeping requirements, Retirement.

    U.S. Office of Personnel Management.
Kay Coles James,
Director.

0
Accordingly, OPM is amending 5 CFR part 890 as follows:

PART 890--FEDERAL EMPLOYEES HEALTH BENEFITS PROGRAM

0
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. 403(p), 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; and section 721 
of Pub. L. 105-261, 112 Stat. 2061 unless otherwise noted.

0
2. Revise paragraph (b)(3) of Sec.  890.201 to read as follows:


Sec.  890.201  Minimum standards for health benefits plans.

* * * * *
    (b) * * *
    (3) Have more than two options and a high deductible health plan 
(26 U.S.C. 223(c)(2)(A).

[[Page 31722]]


0
3. Revise paragraph (1)(4)(iii) of Sec.  890.306 to read as follows:


Sec.  890.306  When can annuitants or survivor annuitants change 
enrollment or reenroll and what are the effective dates?

* * * * *
    (1) * * *
    (4) * * *
    (iii) If a plan has more than one option, and one or more options 
of the plan is discontinued, an annuitant who does not change the 
enrollment is considered to be enrolled in a remaining option of the 
plan. However, if OPM determines that there is no remaining option that 
reasonably approximates the terminating option, the annuitant will be 
considered to be enrolled in the standard option of the Blue Cross and 
Blue Shield Service Benefit Plan.
* * * * *
[FR Doc. 04-12799 Filed 6-2-04; 3:28 pm]
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