[Federal Register Volume 69, Number 250 (Thursday, December 30, 2004)]
[Rules and Regulations]
[Pages 78295-78296]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-28545]



 ========================================================================
 Rules and Regulations
                                                 Federal Register
 ________________________________________________________________________
 
 This section of the FEDERAL REGISTER contains regulatory documents 
 having general applicability and legal effect, most of which are keyed 
 to and codified in the Code of Federal Regulations, which is published 
 under 50 titles pursuant to 44 U.S.C. 1510.
 
 The Code of Federal Regulations is sold by the Superintendent of Documents. 
 Prices of new books are listed in the first FEDERAL REGISTER issue of each 
 week.
 
 ========================================================================
 

  Federal Register / Vol. 69, No. 250 / Thursday, December 30, 2004 / 
Rules and Regulations  

[[Page 78295]]



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: Final rule.

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

SUMMARY: The Office of Personnel Management (OPM) is issuing a final 
rule modifying the prohibition against Federal Employees Health 
Benefits (FEHB) plans offering more than 2 options and 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 December 30, 2004.

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

SUPPLEMENTARY INFORMATION: On June 7, 2004, OPM published an interim 
rule in the Federal Register (69 FR 31721) modifying the 2-option 
limitation on health plans to allow FEHB plans to offer 2 options plus 
a high deductible plan. The regulation also modified what happens when 
an annuitant whose plan terminates an option doesn't make a health 
benefits change. Such an annuitant will only be transferred to the 
plan's remaining option if that option reasonably approximates the 
terminating option; otherwise, the annuitant will be transferred to the 
standard option of the Blue Cross and Blue Shield Service Benefit Plan.
    We received comments from 1 employee union, 1 Federal agency, and 1 
FEHB carrier.
    One commenter opposed allowing high deductible plans and health 
savings accounts (HSAs) in the FEHB Program. This commenter believes 
that a high deductible/HSA plan will attract younger healthier 
enrollees, leaving older, less healthy people in traditional health 
plans, which will drive up premiums. The commenter also believes that 
people will move back and forth, moving into traditional plans in years 
when they anticipate more medical expenses and moving back into the 
high deductible plan after they've had their treatment, again 
increasing premiums in the traditional plans. We believe that offering 
high deductible/HSA plans is consistent with OPM's overall goal of 
providing FEHB enrollees with benefit options that allow greater 
personal decision-making and flexibility when choosing health coverage 
for themselves and their families. OPM's experience with consumer-
driven health plans has not shown any negative impact on the FEHB 
premiums. We believe that people will use the coverage as intended: 
spending the accounts for routine health care costs, banking the 
difference for future needs, and relying on the insurance portion for a 
catastrophic event.
    One commenter said agencies would have problems programming their 
computer systems to accept an enrollment code ending in something other 
than a 1, 2, 4, or 5; the commenter suggested assigning a completely 
new enrollment code to any high deductible/HSA plans. The commenter 
also suggested that to avoid confusion these plans should be treated as 
separate plans, rather than options of existing plans, and should have 
separate brochures. These are operational issues outside the scope of 
the regulations. We have forwarded the suggestions to the contracting 
offices.
    One commenter expressed concern that the term ``reasonably 
approximate'' wasn't defined, in relation to determining whether an 
annuitant in a terminating option should be transferred into a plan's 
remaining option or transferred into the standard option of the Blue 
Cross and Blue Shield Service Benefit Plan. Whenever a plan 
terminates--whether it's the whole plan, an option, or a service area 
enrollment code--OPM notifies agencies and retirement systems of the 
actions they should take regarding the plan's enrollees. This 
regulatory change will not require retirement systems (or agencies) to 
make a determination on their own regarding whether a plan's remaining 
option reasonably approximates the terminating option. OPM will 
continue to provide specific instructions regarding terminations.
    One commenter requested that OPM make it clear whether the 
regulatory change applies to all plans, including the Blue Cross and 
Blue Shield Service Benefit Plan. The commenter believes that the 
Service Benefit should be allowed to offer more than 2 options. The 
regulation as written could indeed apply to all plans. However, OPM 
disagrees with the commenter's interpretation of the FEHB statute 
regarding the Service Benefit Plan. Our interpretation is that the 
statute limits the Service Benefit Plan to no more than 2 options; the 
regulatory change does not negate the statutory provision. If at some 
point the language in the law is changed to allow the Service Benefit 
Plan to offer more than 2 options, there would be nothing in the 
regulatory language to preclude them from doing so.

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 recordkeeping requirements, Retirement.

0
Accordingly, under the authority of 5 U.S.C. 8913, OPM is adopting its 
interim regulations under 5 CFR part 890 as published on June 7, 2004 
(69 FR 31721), as a final rule without change.


[[Page 78296]]


U.S. Office of Personnel Management.
Kay Coles James,
Director.
[FR Doc. 04-28545 Filed 12-29-04; 8:45 am]
BILLING CODE 6325-39-P