[Federal Register Volume 81, Number 168 (Tuesday, August 30, 2016)]
[Proposed Rules]
[Pages 59518-59521]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-20565]


 ========================================================================
 Proposed Rules
                                                 Federal Register
 ________________________________________________________________________
 
 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
 
 ========================================================================
 

  Federal Register / Vol. 81, No. 168 / Tuesday, August 30, 2016 / 
Proposed Rules  

[[Page 59518]]



OFFICE OF PERSONNEL MANAGEMENT

5 CFR Part 890

RIN 3206-AN33


Federal Employees Health Benefits (FEHB) Program: FEHB Employee 
Premium Contributions for Employees in Leave Without Pay or Other 
Nonpay Status

AGENCY: U.S. Office of Personnel Management.

ACTION: Notice of proposed rulemaking.

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

SUMMARY: The United States Office of Personnel Management (OPM) is 
issuing a proposed rule to provide flexibility to agencies regarding 
payment for Federal Employees Health Benefits (FEHB) coverage for 
employees entering leave without pay (LWOP) or any other type of nonpay 
status, except when nonpay is as a result of a lapse of appropriations. 
The regulation also affects employees who have insufficient pay to 
cover their premium contribution. Under current regulations, a Federal 
agency pays the employee's share and the Government's share of FEHB 
premiums if an employee in LWOP or other nonpay status elects to 
continue coverage while in LWOP or other nonpay status and agrees to 
repay the agency (referred to interchangeably as ``employing office'') 
for their employee share upon return to employment for up to 365 days. 
In other words, the agency must allow an employee to incur a debt for 
the employee contribution to premium. This outlay of funds may result 
in an agency incurring a significant amount of debt. This proposed rule 
would provide an agency with the flexibility to require that all of its 
employees in LWOP or other nonpay status, except as a result of lapse 
of appropriations, pay their employee share for FEHB coverage directly 
to the agency and keep the payments current, if those employees elect 
to continue FEHB enrollment. Under 5 U.S.C. 8906(e), if an employee in 
LWOP status chooses to continue FEHB enrollment, the employee and 
Government contributions shall be paid on a current basis; and, if 
necessary, the agency shall approve advance payment of a portion of 
basic pay sufficient to cover the employee contribution. The agency 
will then recover the amount that it advanced from the employee upon 
his or her return to employment.
    Under current regulations employees in LWOP or other nonpay status 
can elect to make premium payments directly to an agency and keep 
payments current. Alternatively, employees in these circumstances may 
elect not to pay premiums directly on a current basis and can incur a 
debt such that their employing office advances the payments to cover 
their premiums. The employee agrees that upon his or her return to 
employment, or upon pay becoming sufficient, the employing office will 
deduct, in addition to the current pay period's premium, the accrued 
unpaid premiums from the employee's salary until the debt is recovered. 
Under this proposed rule, an agency may choose to require that an 
employee pay premiums directly to the agency on a current basis if the 
agency makes a determination that all employees in non-pay or 
insufficient pay status must pay premiums currently. The proposed rule 
also specifies the procedures for disenrollment for nonpayment of 
premiums.

DATES: Comments are due on or before October 31, 2016.

ADDRESSES: Send written comments to Julia Elam, Planning and Policy 
Analysis, U.S. Office of Personnel Management, Room 4316, 1900 E Street 
NW., Washington, DC 20415. You may also submit comments using the 
Federal eRulemaking Portal: http://www.regulations.gov/. Follow the 
instructions for submitting comments.

FOR FURTHER INFORMATION CONTACT: Julia Elam at (202) 606-0004.

SUPPLEMENTARY INFORMATION: OPM is revising the options and procedures 
that employing offices may use when an employee elects to continue FEHB 
coverage in leave without pay (LWOP) or other nonpay status, except as 
a result of lapse of appropriations, when the employee's pay is 
insufficient to cover premiums. Under 5 U.S.C. 8906(e)(1)(a), an 
employee enrolled in a health benefits plan who is placed in a leave 
without pay or other nonpay status may have his coverage and the 
coverage of members of his family continued under the plan for not to 
exceed one year. According to the statute, the agency is responsible 
for ensuring the employee and Government contributions are paid to the 
Employees Health Benefits Fund on a current basis; and if necessary, 
the head of the agency may approve advance payment of employee 
premiums, which the agency can later recover from the employee. The 
employee may alternatively elect to terminate FEHB enrollment. This 
proposed rule does not affect agencies' advancing payment of health 
insurance premiums for employees with the following categories of 
qualifying LWOP, which includes the following: Family and Medical Leave 
Act, performance of duty in the uniformed services under the Uniformed 
Services Employment and Reemployment Rights Act of 1994, 38 U.S.C. 4301 
et seq., receiving medical treatment under Executive Order 5396 (Jul. 7 
1930), and periods during which workers compensation is received under 
the Federal Employees Compensation Act, 5 U.S.C. chapter 81. We solicit 
comments on the exemption of categories of employees in LWOP from this 
proposed rule.
    Under current regulations at 5 CFR 890.502(b), an employing office 
must inform the employee about available health benefits choices as 
soon as it becomes aware that an employee's premium payments cannot be 
made because he or she will be, or already is in a LWOP or other nonpay 
status, or the employee's pay is insufficient to cover premium. The 
employing office must give the employee written notice of the options 
to terminate coverage or continue coverage with either the direct pay 
or the advance payment option. The employee then must elect in writing 
to either continue health benefits coverage or terminate it, while in 
LWOP or other nonpay status or pay is insufficient to cover premiums. 
If the employee's coverage is continued, the employee may pay the 
employee share of the premium directly to the agency, or the employee 
may opt for the agency to advance payment of the employee portion of 
the premium and agree to repay the premiums to the agency upon 
returning to employment or upon pay

[[Page 59519]]

becoming sufficient. Accordingly, there is the possibility that the 
employee will incur a debt to the agency if the employee chooses to 
continue coverage and receive an advanced payment and does not return 
to work or is, for some reason, unable to repay the premium amount. 
Under Sec.  890.502(b)(2)(ii), the employing office can pay the 
employee's contributions and recover the amount of accrued unpaid 
premiums as a debt to the Federal Government upon the employee's return 
to employment or when the employee's pay becomes sufficient.
    Under this proposed regulation, each agency would make the 
determination of whether its employees in LWOP or other nonpay status 
would be required to pay the employee share of premiums directly to the 
agency on a current basis, or whether it is necessary, within the 
meaning of 5 U.S.C. 8906(e)(1)(B), for the agency to approve advance 
payment of the employee share of the premium. The agency would make the 
determination for all its affected employees at least once every 2 
years. OPM is proposing this change to complement the FEHB Modification 
of Eligibility final regulation (79 FR 62325, published on October 17, 
2014) which allows generally for certain temporary, intermittent and 
seasonal employees to enroll in the FEHB Program if they are expected 
to work at least 130 hours per month for at least 90 days. OPM 
recognizes that the recent expansion of eligibility for FEHB coverage 
may impact an agency's budget due to the required FEHB Government 
health benefit contributions for newly eligible employees who elect to 
participate in FEHB coverage and go into LWOP or other nonpay status 
based on the intermittent nature of the work performed.
    OPM proposes for Sec.  890.502(b) to establish that an agency have 
the discretion to determine whether it is necessary for employees in 
LWOP or other nonpay status to be advanced a portion of basic pay 
sufficient to pay current employee contribution to premium, or whether 
the employees must be required to pay the employee contribution of the 
FEHB premium currently to the agency. The determination made by the 
agency must apply to all employees in non-pay or insufficient pay 
status, and it cannot be made on a case-by-case basis. When assessing 
whether it is necessary to pay advanced employee contributions for 
premiums, the regulation provides that an agency shall balance the 
needs of the agency, including available financial resources and ease 
of operation, with those of its employees, including typical job series 
and pay grades and access to direct payment methods. Agencies should 
also consider that if they do advance employee contributions for 
premiums, these employees will incur a debt which may not occur if the 
employee had an option to pay premiums directly to the agency. We are 
seeking comment on these and other factors agencies should utilize to 
make this determination. The agency may reassess its determination 
every one or two years and provide notification to all employees. An 
agency may default to its original determination and is not required to 
make a new determination at the time of reassessment. If an agency 
chooses to require its employees in these circumstances to make direct 
premium contributions on a current basis, it must provide written 
notice to the affected employees. This section also explains that an 
agency may choose the other option to exercise its discretion to 
approve advance payment of the employee portion of the premium while 
its employees are in LWOP or other nonpay status. This would be a 
change to current regulations at Sec.  890.502(b)(2)(ii), which 
presently provides that an employee may choose this option if he or she 
does not does not wish to pay the premium directly to the agency and 
keep the payments current.
    OPM proposes for Sec.  890.502(c)(2) to establish procedures for 
terminating enrollment for employees in LWOP or nonpay status that fail 
to directly pay premiums currently. The regulation also proposes notice 
requirements for the employee to receive regarding termination of 
enrollment.
    Under this proposed regulation, an employee that is in LWOP or 
other nonpay status or has insufficient pay to cover his or her share 
of FEHB premiums will have his or her enrollment cancelled if he or she 
has signed an agreement to directly pay premiums on a current basis and 
fails to make these payments currently, or enrollment terminated if the 
employee does not return the written notice. The proposed regulation 
gives an employee the opportunity to seek reinstatement from the agency 
if he or she can show they were prevented from paying premiums, or from 
returning the written notice, by circumstances beyond their control. 
The employee must describe the circumstances that prevented him or her 
from making a payment or returning the notice within 31 days after 
receiving notice of disenrollment. Under this proposal, termination of 
an enrollment for failure to return a written notice entitles the 
employee to a 31-day temporary extension of coverage and opportunity to 
convert to an individual policy, while failure to pay premiums after 
electing to continue FEHB enrollment is considered a cancellation. OPM 
is seeking comments on the implementation of this proposed rule for 
employees currently on LWOP or other nonpay status in which pay is 
insufficient to cover the employee share of FEHB premiums. OPM proposes 
making the rule effective for employees who enter into LWOP or other 
nonpay status after the date of the rule and not affecting employees 
currently on LWOP or other nonpay status.

Regulatory Impact Analysis

    OPM has examined the impact of this proposed rule as required by 
Executive Order 12866 and Executive Order 13563, which directs agencies 
to assess all costs and benefits of available regulatory alternatives 
and, if regulation is necessary, to select regulatory approaches that 
maximize net benefits (including potential economic, environmental, 
public, health, and safety effects, distributive impacts, and equity). 
A regulatory impact analysis must be prepared for major rules with 
economically significant effects of $100 million or more in any one 
year. This rule is not considered a major rule because there will be a 
minimal impact on costs 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 the regulation 
only affects health insurance benefits of Federal employees and 
annuitants.

Regulatory Review

    This rule has been reviewed by the Office of Management and Budget 
in accordance with Executive Orders 13563 and 12866.

Federalism

    We have examined this rule in accordance with Executive Order 
13132, Federalism, and have determined that this rule restates existing 
rights, roles and responsibilities of State, local, or tribal 
governments.

List of Subjects on 5 CFR Part 890

    Administrative practice and procedure, Government employees, Health 
insurance.

U.S. Office of Personnel Management.
Beth F. Cobert,
Acting Director.

    For the reasons set forth in the preamble, the Office of Personnel 
Management proposes to amend 5 CFR part 890 as follows:

[[Page 59520]]

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. 890.301 also issued under sec. 
311 of Pub. L. 111-03, 123 Stat. 64; Sec. 890.111 also issued under 
section 1622(b) of Pub. L. 104-106, 110 Stat. 521; Sec. 890.112 also 
issued under section 1 of Pub. L. 110-279, 122 Stat. 2604; 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 101, 104 Stat. 
2064, as amended; Sec. 890.102 also issued under sections 
11202(f),11232(e), 11246(b) and (c) of Pub. L. 105-33, 111 Stat. 
251; and section 721 of Pub. L. 105-261, 112 Stat. 2061.

Subpart E--Contributions and Withholdings

0
2. In Sec.  890.502:
0
a. Redesignate paragraphs (b) through (f) as paragraphs (c) through 
(g).
0
b. Add new paragraph (b).
0
c. Revise newly redesignated paragraph (c).
    The addition and revision read as follows:


Sec.  890.502  Withholdings, contributions, LWOP, premiums, and direct 
premium payment.

* * * * *
    (b) Agency flexibility to require direct payment of employee 
premiums on a current basis. An agency may require all employees that 
enter leave without pay (LWOP) or other nonpay status except for as a 
result of lapse of appropriations, whose pay is insufficient to cover 
premium, pay their employee premium contributions directly to the 
agency on a current basis or; if necessary, the agency may elect to 
provide advance payment of the employee portion of premium for all 
employees in these circumstances. In determining whether it is 
necessary to pay employee contributions for premiums, an agency shall 
balance the needs of the agency, including available financial 
resources and ease of operation, with those of its employees, including 
typical job series and pay grades and access to direct payment methods. 
The agency may reassess its policy decision every one or two years and 
should provide notification to all its employees. An agency must choose 
one of these two options for all employees that enter non-pay status or 
whose pay is insufficient to cover premium, except for certain 
qualifying LWOP categories.
    (1) For purposes of this paragraph (b), qualifying LWOP categories 
are exempt from an agency determination. Regardless of the agency's 
determination under paragraph (b), an agency shall advance payment for 
employee premiums for employees utilizing the following categories of 
LWOP: For purposes of the Family and Medical Leave Act, for performance 
of duty in the uniformed services under the Uniformed Services 
Employment and Reemployment Rights Act of 1994, 38 U.S.C. 4301 et seq., 
for receiving medical treatment under Executive Order 5396 (Jul. 7 
1930), and for periods during which workers compensation is received 
under the Federal Employees Compensation Act, 5 U.S.C. chapter 81.
    (2) If an employing office requires an employee to pay the employee 
share of premium contributions directly to the agency on a current 
basis for the period during which an employee specifies he or she will 
be in LWOP or other nonpay status, the employing office must provide 
the employee written notice and an agreement that he or she will be 
required to pay premiums directly to the agency on a current basis by 
following the procedures as outlined in paragraphs (c)(2) of this 
section. The employee must sign the agreement if he or she chooses to 
continue coverage under an agency's election to require that payments 
be made directly on a current basis.
    (3) If necessary, an agency may elect to advance a portion of basic 
pay sufficient to pay current employee contributions to premium for 
employees entering LWOP or other nonpay status. If the agency so 
elects, the employing office must provide the employee written notice 
and an agreement that he or she will incur a debt to the extent of the 
advanced premiums, and will be required to repay the unpaid premiums 
from salary deduction, upon returning to pay status or upon payment 
becoming sufficient to cover premiums, until the debt is recovered in 
full, by following the procedures as outlined in paragraphs (c)(2) of 
this section.
* * * * *
    (c) Procedures when an employee enters a leave without pay (LWOP) 
or other nonpay status or pay is insufficient to cover premium. The 
employing office must tell the employee about available health benefits 
choices as soon as it becomes aware that an employee's premium payments 
cannot be made because he or she will be or is already in a leave 
without pay (LWOP) status or other type of nonpay status. (This does 
not apply when nonpay is as a result of a lapse of appropriations or 
employees have been furloughed. In these instances, the premiums will 
accumulate and be paid upon return to duty). The employing office must 
also tell the employee about the option available to them as determined 
by the agency or that the employee can elect to terminate enrollment 
when an employee's pay is not enough to cover the premiums.
    (1) The employing office must provide the employee written notice 
of the option available to them as determined by the agency and 
consequences as described in paragraphs (c) (2) (i) and (ii) of this 
section and will send a letter by first class mail if it cannot give it 
to the employee directly. If it mails the notice, it is deemed to be 
received within 5 days.
    (2) The employee must elect in writing to either continue their 
FEHB enrollment under the option that the employer has chosen or 
terminate it. (Exception: An employee who is subject to a court or 
administrative order as discussed in Sec.  890.301(g)(3) cannot elect 
to terminate his or her enrollment as long as the court or 
administrative order is still in effect and the employee has at least 
one child identified in the order who is still eligible under the FEHB 
Program, unless the employee provides documentation that he or she has 
other coverage for the child(ren).) The employee may continue 
enrollment by returning a signed form to the employing office within 31 
days after he or she receives the notice (45 days for an employee 
residing overseas). When an employee mails the signed form, its 
postmark will be used as the date the form is returned to the employing 
office. If an employee elects to continue their enrollment under the 
option that the employer has chosen, he or she must elect in writing 
the option that has been specified by the employing office for all 
employees as described in paragraph (b). The employee would agree to 
the following as specified by the employing office:
    (i) If the agency has elected to allow all employees to pay the 
premium directly to the agency and keep the payments current, the 
employee must agree to pay the premium directly, or;
    (ii) If the agency has elected to allow all employees to incur a 
debt as described in paragraph (b)(2) he or she must agree that 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 a leave without pay (LWOP) or other 
nonpay status, or pay was not enough to cover premiums. The employing 
office will continue using this method to deduct the accrued unpaid 
premiums from salary until the debt is recovered in full.

[[Page 59521]]

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 Federal 
Government.
    (iii) If an employee elects to terminate enrollment, the effective 
date of the termination is retroactive to the end of the last pay 
period in which the premium was withheld from pay.
    (3) If the employee does not return the signed form within the time 
period described in paragraph (c)(2) of this section, the employing 
office will terminate the enrollment and notify the employee in writing 
of the termination.
    (4) If an employee has not elected to terminate enrollment and is 
prevented by circumstances from returning a signed form indicating the 
employee elects to continue their enrollment under the option that the 
employer has chosen, the employee may request reinstatement.
    (i) If the employee is prevented by circumstances beyond his or her 
control from returning a signed form to the employing office within the 
time period described in paragraph (c)(2) of this section, he or she 
may write to the employing office and request reinstatement of the 
enrollment. The employee must describe the circumstances that prevented 
him or her from returning the form. The request for reinstatement must 
be made within 30 calendar days from the date the employing office 
gives the employee notice of the termination. The employing office will 
determine if the employee is eligible for reinstatement of coverage. 
When the determination is affirmative, the employing office will 
reinstate the enrollment 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 office (see Sec.  890.104).
    (ii) If the employee is subject to a court or administrative order 
as discussed in Sec.  890.301(g)(3), the coverage cannot terminate 
unless the employee has provided documentation to the employing office 
that he or she has other coverage for the child or children, and the 
employing office has determined the coverage is appropriate, as 
discussed in 5 CFR 890.301(g)(3). If the employee does not return the 
signed form, the coverage will continue and the employee will incur a 
debt to the Federal Government, and the employing office will recover 
the amount of accrued unpaid premium as a debt under as discussed in 
paragraph(c)(2)(ii) of this section.
    (5) Terminations of enrollment under paragraphs (c)(2) and (3) of 
this section are retroactive to the last day 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 31-day temporary extension 
of coverage and opportunity to convert to a non-group policy under 
Sec.  890.401. An employee whose coverage is terminated under this 
paragraph may re-enroll upon his or her return to duty in pay status in 
a position in which the employee is eligible for coverage under this 
part.
    (6) If an employee signs and returns a form to the employing office 
stating that he or she will make premium payments directly to the 
agency and keep the payments current in accordance with paragraph 
(c)(2)(i) but fails to pay currently, as soon as it becomes aware of 
the nonpayment of premium, the employing office shall notify the 
employee that he or she has 31 days to make payments current or she or 
he will have coverage terminated retroactively to the day that follows 
the last day of the last pay period for which a current employee 
contribution was received.
    (i) If the employee does not make a payment within the 31 days of 
the notification, the employing office must terminate the employee's 
enrollment retroactively to the day that follows the last day of the 
last pay period for which a current employee contribution was received.
    (ii) Termination of an enrollment for failure to pay premiums after 
the employee had elected to continue coverage and to pay premiums 
currently under (c)(2)(i) and (c)(6), is considered a cancellation as 
described in Sec.  890.401(a)(2) and the employee is not entitled to a 
31-day temporary extension of coverage or opportunity to convert to an 
individual policy.
    (iii) If an employee that has enrollment terminated under this part 
was prevented by circumstances beyond his or her control from making 
payment within 31 days after receipt of the notice of termination, he 
or she may request reinstatement of coverage by writing to the 
employing office. Such a request must be filed within 30 calendar days 
from the date of termination and must be accompanied by verification 
that the employee was prevented by circumstances beyond his or her 
control from paying within the time limit. The verification must 
describe the circumstances that prevented him or her from making a 
payment within 31 days after receipt of the notice of termination. The 
employing office will determine if the employee is eligible for 
reinstatement of coverage; and, when the determination is affirmative, 
notify the carrier of the decision. The notice must set forth the 
findings on which the decision was based. If the employing office 
determines that the employee was prevented from making payments current 
within the timeframe due to circumstances beyond his or her control, 
the employee's enrollment will be reinstated retroactive to the date of 
termination.
    (iv) An employee whose coverage is terminated under paragraph 
(c)(6) may enroll upon his or her return to duty in pay status in a 
position in which the employee is eligible for coverage.
* * * * *
[FR Doc. 2016-20565 Filed 8-29-16; 8:45 am]
 BILLING CODE 6325-63-P