[Federal Register Volume 70, Number 102 (Friday, May 27, 2005)]
[Rules and Regulations]
[Pages 30605-30607]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-10642]



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  Federal Register / Vol. 70, No. 102 / Friday, May 27, 2005 / Rules 
and Regulations  

[[Page 30605]]


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OFFICE OF PERSONNEL MANAGEMENT

5 CFR Part 875

RIN 3206-AJ71


Federal Long Term Care Insurance Regulation

AGENCY: Office of Personnel Management.

ACTION: Final rule.

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SUMMARY: The Office of Personnel Management (OPM) is issuing the final 
regulations that set forth rules for the administration of the Federal 
Long Term Care Insurance Program (FLTCIP).

DATES: Effective Date: May 27, 2005.

FOR FURTHER INFORMATION CONTACT: Anne Easton, (202) 606-0770, or 
[email protected].

SUPPLEMENTARY INFORMATION: On February 4, 2003, interim regulations (68 
FR 5530) governing the Federal Long Term Care Insurance Program 
(FLTCIP) became effective. There was a 60-day comment period. Nine 
comments were received in all regarding the regulations.
    One commenter suggested that OPM revise its regulations to include 
information and procedures relating to other Federal statutes and 
regulations. OPM declines to do so. These regulations are for the 
purpose of providing information and guidance regarding the FLTCIP and 
do not purport to address the applicability or inapplicability of other 
Federal statutes or regulations to the FLTCIP.
    Two commenters suggested that we broaden the definition of 
``qualified relative'' to include domestic partners of Federal 
employees. We have determined that at this time we are not going to add 
any additional groups to those defined in statute.
    Five commenters requested that we delete or modify Sec.  875.407, 
which states that the Carrier determines the insurability of all 
applicants and that the Carrier's decision may not be appealed to OPM. 
They state that the insurance underwriting and the Carrier-determined 
criteria are not consistent with the intent of the FLTCIP statute. 
However, we believe that Congressional intent is clear upon reading of 
the statute. Section 9002(e)(3) of title 5, United States Code, 
specifically states that ``(n)othing in this chapter shall be 
considered to require that long-term care insurance coverage be 
guaranteed to an eligible individual.''
    Our intent in administering this Program is to offer coverage to 
eligible individuals but also to maintain competitive premiums. To 
guarantee coverage to all eligible individuals or all members of the 
workforce, regardless of their health, would require significantly 
higher premiums than are now being charged. This could jeopardize the 
viability of the Program as the more healthy individuals may choose to 
purchase their coverage elsewhere.
    Four commenters requested that OPM enact an appeal process for 
insurability decisions made by the Carrier. OPM believes the current 
process ensures that individuals with adequate training are able to 
conduct the proper review of appeals. In addition, appeals that go 
beyond the internal review processes of Long Term Care Partners are 
handled by an independent, third party vendor, approved by OPM. We 
believe it is in the best interest of the Federal Long Term Care 
Insurance Program to leave insurability decisions to trained 
underwriters, as we do with the Federal Employees' Group Life Insurance 
Program.
    One commenter suggested that we change Sec.  875.104(c) to clarify 
the enrollee's right to appeal, specifically clarifying that any appeal 
of the Carrier's reconsideration decision is to be made directly to the 
Carrier and not OPM. We agree that this clarification is helpful, and 
are making the change. The same commenter also suggested that we change 
the term ``misconduct'' in Sec.  875.210(b) (1) to ``gross 
misconduct.'' We decline to do so, since relevant Federal law and 
regulations refer to and describe ``misconduct,'' not ``gross 
misconduct.''
    We are also taking this opportunity to make several minor changes 
and clarifications to the regulation.
    We are clarifying in Sec.  875.101 the definition of ``Actively at 
Work.'' We are broadening paragraph (1)(i) of the definition in two 
areas. The interim regulations stated that to be considered actively at 
work, you must be reporting for work ``at your usual place of 
employment or other location to which Government business requires you 
to travel.'' We are clarifying the language to ensure that a day spent 
at a telecommuting location counts as reporting for work. Also, the 
interim regulations did not specifically state that the requirement to 
be reporting for work is met with one-half day of active work, although 
this is how the requirement has been administered. The new language 
makes this clear.
    In addition, we are removing paragraph (1)(iii), which stated that 
any type of leave or absence from work does not count as being actively 
at work (except that an alternative work schedule's scheduled day off 
does count as a day actively at work). This deletion means that an 
alternative work schedule's scheduled day off will not count as a day 
actively at work. It is treated just as a day on any other type of 
leave would be treated; that is, a day not actively at work. However, 
to offset this change we are liberalizing the actively at work 
requirement in Sec.  875.404(b)(2) to give employees an entire week, 
rather than one day, to meet the requirement. With that change, 
paragraph (b)(2)(iii) became redundant to paragraph (b)(2)(i); thus we 
deleted the entire paragraph for clarity's sake.
    When the interim regulations were published, the FLTCIP law 
specifically excluded all District of Columbia employees from 
participation, even though some are eligible for FEHB coverage. The 
regulations made this exclusion clear. However, since that time, Public 
Law 108-7 went into effect. Section 138(a) of the law makes employees 
and annuitants of the D.C. Courts (and their qualified relatives) 
eligible to apply for insurance under the Program and we held an Open 
Season for them. We would have changed Sec.  875.201(a)(1) to indicate 
that these groups became eligible to apply for insurance under the 
Program. However, later in 2003, Congress enacted Public Law 108-136, 
the National Defense Authorization Act, which included new provisions 
for the Federal Long Term

[[Page 30606]]

Care Insurance Program in section 561 of that law.
    Section 561 of that law amends Section 9001(2)(A) of title 5, 
United States Code. Three additional groups, and their qualified 
relatives, are now eligible to apply for insurance under the Program:
     DC Government employees and retirees who were first 
employed by the DC Government before October 1, 1987,
     Separated Federal employees with title to a deferred 
annuity, even if they aren't yet receiving that annuity, and
     Retired ``grey'' reservists, even if they are not 
receiving retirement pay.

The previous addition (employees and annuitants of the DC Courts) made 
by Public Law 108-7 was, in effect, superceded. (However, those DC 
Courts individuals hired before October 1, 1987 are added back to the 
eligible population by Public Law 108-136.)
    Another change occurred in legislation (Pub. L. 107-314) giving the 
Secretary of Defense the authority to determine that employees of a 
Non-Appropriated Fund (NAF) instrumentality are eligible to apply for 
insurance under the Federal Program. In Sec.  875.201(a) we are adding 
language to treat eligible NAF employees and retirees the same as 
Federal civilian employees or retirees, as the case may be, for this 
Part.
    Notwithstanding our ability to reflect the addition of groups that 
have been added by congressional action this past year, it has become 
clear that the regulations do not easily keep up with these legislative 
changes. Therefore, Sec.  101, ``workforce member'' is being amended to 
make it clear that when a new group is added by law it is not necessary 
to amend the regulations to reflect this change. We are changing 
applicable references to Federal civilian and Postal employees and 
members of the uniformed services throughout the regulations to 
``active workforce member.'' This is to reflect the likelihood in the 
future of the addition of other groups. The changes in the wording 
occur in the table of contents and in Sec. Sec.  101, 201, 204, 206, 
211, 404, 405, and 410.
    We are changing Sec.  875.208 pertaining to eligibility rules with 
respect to qualified relatives of deceased individuals. The adult child 
of a Federal civilian survivor annuitant is considered to be a 
qualified relative who can apply for coverage, as is the current spouse 
of that survivor. But this is not the case for qualified relatives of 
the surviving spouse of a deceased member or a deceased retired member 
of the uniformed services who is receiving a survivor annuity. Neither 
their adult children nor their current spouses are considered qualified 
relatives. We are changing the regulation to extend the same 
eligibility status to all adult children and current spouses of 
surviving spouses receiving an annuity, regardless of whether this is 
based on civilian or uniformed service status.
    We are also adding a subsection (c) to Sec.  402 to reflect that we 
provide an Open Season to employees of newly eligible groups that have 
been added to FLTCIP. Traditionally, this is a 60-day period where 
there is abbreviated underwriting (equivalent to what was done in 2002 
when the Program first became available) for those active workforce 
members of the new group.
    We are clarifying Sec.  875.403 to state that there are two 
exceptions to the requirement for full underwriting outside of an open 
season. Those exceptions are described in Sec.  875.206 and Sec.  
875.405 and are for new and newly eligible employees and their spouses, 
new and newly eligible active members of the uniformed services and 
their spouses, and the newly married spouses of eligible employees and 
active members of the uniformed services. They can apply with 
abbreviated underwriting within 60 days after becoming eligible.
    As mentioned previously, we are changing the actively at work 
requirement in Sec.  875.404(b) (2). An active workforce member who 
submits an abbreviated underwriting application must now be actively at 
work at least 1 day during the calendar week immediately before the 
week that contains the person's original effective date. Interim 
regulations required that the person be actively at work on the 
original effective date. If that date fell on a weekend or holiday, the 
person had to be actively at work on the last workday before that date 
for coverage to become effective. This change will make it easier for 
employees to meet the actively at work requirement and should result in 
fewer postponements of coverage effective dates.

E.O. 12866, Regulatory Review

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

Regulatory Flexibility Act

    I certify that this regulation will not have a significant economic 
impact on a substantial number of small entities because it affects 
only Federal, Postal and D.C. Government employees and annuitants, 
active members of the uniformed services, retired members of the 
uniformed services, their qualified relatives, and the FLTCIP 
carrier(s).

List of Subjects in 5 CFR Part 875

    Administrative practices and procedures, Employee benefit plans, 
Government contracts, Government employees, Health insurance, Military 
personnel, Organization and functions, Retirement.

U.S. Office of Personnel Management.
Dan G. Blair,
Acting Director.

0
Accordingly, the interim rule establishing 5 CFR part 875 which was 
published at 68 FR 5530 on February 4, 2003, is adopted as a final rule 
with the following changes:

PART 875--FEDERAL LONG TERM CARE INSURANCE PROGRAM

0
1. The authority citation for part 875 continues to read as follows:

    Authority: 5 U.S.C. 9008.


0
2. Amend Sec.  875.101 by:
0
a. Remove the words ``Federal civilian or Postal employee'' wherever 
they appear in the section and add, in their place, the words ``active 
workforce member''.
0
b. Revise the definition of Actively at work to read as follows; and
0
c. Revise the definition of Workforce member to read as follows:


Sec.  875.101  Definition.

* * * * *
    Actively at work means:
    (1) That as an active workforce member other than a member of the 
uniformed services you meet all of the following conditions:
    (i) You are reporting for work at an approved work location and you 
work at least one-half of your regularly scheduled hours for that day; 
and
    (ii) You are able to perform all the usual and customary duties of 
your employment on your regular work schedule.
    (2) For a member of the uniformed services, that you are on active 
duty and are physically able to perform the duties of your position.
* * * * *
    Workforce member means a Federal civilian or Postal employee, 
member of the uniformed services, Federal annuitant, retired member of 
the uniformed services, or member of any other eligible group, as 
defined in section 9001 of title 5, United States Code. An active 
workforce member is one who is currently employed or is on active duty.

[[Page 30607]]


0
3. Amend Sec.  875.104 by revising the first sentence of paragraph (c) 
to read as follows:


Sec.  875.104  What are the steps required to resolve a dispute 
involving benefit eligibility or payment of a claim?

* * * * *
    (c) If the Carrier upholds its denial (or does not respond within 
60 days), you have the right to appeal its reconsideration decision 
directly to the Carrier.* * *
* * * * *

0
4. Amend Sec.  875.201 by adding a new sentence at the end of paragraph 
(a)(1) and by adding a new paragraph (a)(3) to read as follows:


Sec.  875.201  Am I eligible as a Federal civilian or Postal Employee?

    (a) * * *
    (1) * * * There is a related exception, however: D.C. government 
employees and retirees who were first employed by the D.C. government 
before October 1, 1987 are eligible to apply for coverage.
* * * * *
    (3) If you are a Non-Appropriated Fund (NAF) employee or retiree 
you are eligible to apply when the Secretary of Defense determines such 
eligibility for the NAF instrumentality that employs you, and you will 
be treated the same as a Federal civilian employee or retiree (as 
applicable) under this Part.
* * * * *

0
5. Amend Sec.  875.202 by revising the last sentence to read as 
follows:


Sec.  875.202  Am I eligible as a Federal annuitant?

    * * * Separated Federal employees with title to a deferred annuity 
may apply for coverage, even if they are not yet receiving that 
annuity.

0
6. Amend Sec.  875.205 by adding a paragraph (c) to read as follows:


Sec.  875.205  Am I eligible as a retired member of the uniformed 
services?

* * * * *
    (c) You are eligible to apply for coverage as a retired (``grey'') 
reservist, even if not yet receiving retirement pay.

0
7. Amend Sec.  875.206 by:
0
a. Remove the words ``Federal civilian or Postal employee or member of 
the uniformed service'' wherever they appear in the section and add, in 
their place, ``active workforce member''; and
0
b. Revise the section title and paragraphs (a) and (c) to read as 
follows:


Sec.  875.206  As a new active workforce member when may I apply?

    (a) As a new, newly eligible, or returning active workforce member, 
you may apply as follows:
    (1) If you are a new active workforce member entering a position 
that conveys eligibility, you may apply for coverage within 60 days 
after becoming eligible.
    (2) If you are entering a position that conveys eligibility as an 
active workforce member from a position that did not convey 
eligibility, you may apply for coverage within 60 days after becoming 
eligible.
    (3) If you return to active service after a break in service of 180 
days or more to a position that conveys eligibility, you may apply for 
coverage within 60 days after becoming eligible.
* * * * *
    (c) The underwriting requirements that will be required will be 
those applicable to active workforce members and their spouses during 
the last open season for enrollment before the date of your 
application.
* * * * *

0
8. Amend Sec.  875.208 by adding a new sentence at the end of the 
paragraph to read as follows:


Sec.  875.208  May I apply as a qualified relative if the person on 
whom I am basing my eligibility status has died?

    * * * In this case, your adult children and your current spouse are 
also considered to be qualified relatives.

0
9. Revise Sec.  875.211 to read as follows:


Sec.  875.211  What happens if my eligibility status changes after I 
submit my application?

    (a) If you applied as an active workforce member, and separate from 
service under the MRA+10 provisions of 5 U.S.C. 8412(g), or retire 
after you submit an application for coverage, but before your coverage 
becomes effective, you must reapply as an annuitant and submit to full 
underwriting requirements.
    (b) If you applied as an active workforce member, and otherwise 
separate from service, but you are a qualified relative of another 
workforce member, you must reapply based on the additional underwriting 
requirements specified for that type of qualified relative.

0
10. Amend Sec.  875.402 by adding a new paragraph (c) to read as 
follows:


Sec.  875.402  When will open seasons be held?

* * * * *
    (c) In situations where new eligibility groups are added to the 
Program, and OPM determines that it is appropriate to have an open 
season, OPM will provide notice and set the requirements for a special 
open season limited to those eligible individuals.

0
11. Amend Sec.  875.403 by adding a new sentence at the end of the 
paragraph to read as follows:


Sec.  875.403  May I apply for coverage outside of an open season?

    * * * The only exceptions to the full underwriting requirements 
outside of an open season are described in Sec.  875.206 and Sec.  
875.405.

0
12. Amend Sec.  875.404 by revising paragraph (b) (2) to read as 
follows:


Sec.  875.404  What is the effective date of coverage?

* * * * *
    (b) * * *
    (2) If you are an active workforce member and you are applying for 
coverage under abbreviated underwriting, you also must be actively at 
work at least 1 day during the calendar week immediately before the 
week which contains your coverage effective date for your coverage to 
become effective. You must inform the Carrier if you do not meet this 
requirement. In the event you do not meet this requirement, the Carrier 
will issue you a revised effective date, which will be the 1st day of 
the next month. You also must meet the actively at work requirement for 
any revised effective date for coverage to become effective, or you 
will be issued another revised effective date in the same manner.

[FR Doc. 05-10642 Filed 5-26-05; 8:45 am]
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