[Federal Register Volume 83, Number 35 (Wednesday, February 21, 2018)]
[Proposed Rules]
[Pages 7411-7413]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-03510]

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. 83, No. 35 / Wednesday, February 21, 2018 / 
Proposed Rules

[[Page 7411]]


5 CFR Part 890

RIN 3206-AN51

Federal Employees Health Benefits Program Regulations: Revised 
Guaranteed Issue Conversion Requirements and Technical Updates

AGENCY: Office of Personnel Management.

ACTION: Proposed rule.


SUMMARY: The Office of Personnel Management proposes to amend the 
guaranteed issue conversion requirements for the Federal Employees 
Health Benefits (FEHB) Program. Guaranteed issue insurance policies are 
available in all 50 states and the District of Columbia. These rules 
update the requirements and timeframes for FEHB Carriers to offer 
assistance to enrollees who may wish to enroll in guaranteed issue 
conversion contracts and ensure that terminating enrollees are able to 
receive assistance from FEHB Carriers if they choose to enroll in 
guaranteed issue non-group policies. This rule also updates the title 
of the Director for Retirement and Insurance.

DATES: Comments are due on or before April 23, 2018.

ADDRESSES: You may submit comments, identified by docket number and/or 
Regulatory Information Number (RIN) and title, by any of the following 
     Federal Rulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Mail: Delon Pinto, Senior Policy Analyst, Planning and 
Policy Analysis, U.S. Office of Personnel Management, Room 4312, 1900 E 
Street NW, Washington, DC 20415.
    All submissions received must include the agency name and docket 
number or RIN for this document. The general policy for comments and 
other submissions from members of the public is to make these 
submissions available for public viewing at http://www.regulations.gov 
as they are received without change, including any personal identifiers 
or contact information.

FOR FURTHER INFORMATION CONTACT: Delon Pinto, Senior Policy Analyst, at 
[email protected] or (202) 606-0004.


Authority for This Rulemaking

    The Federal Employees Health Benefits (FEHB) Program is 
administered by the Office of Personnel Management (OPM) in accordance 
with Chapter 89 of Title 5 of the U.S. Code and our implementing 
regulations (title 5, part 890 and title 48, chapter 16). The statute 
establishes the basic rules for benefits, enrollment, and 
participation. OPM is authorized to contract with health insurance 
Carriers; approve health plans for participation in the program; 
negotiate with Carriers about benefit and premium levels; determine the 
times and conditions for an annual open enrollment period known as 
``open season'' during which eligible individuals may elect coverage or 
change plans; make information available to employees concerning plan 
options; evaluate health plans on key parameters of clinical quality, 
customer service, resource use in comparison with national benchmarks 
and contract oversight requirements; apply administrative sanctions to 
health care providers that have committed certain violations; and 
administer the program's financing.
    OPM is also responsible for maintaining the funds that hold 
contingency reserves for the plans and the fund that receives premium 
payments from enrollees and Federal agencies, from which premiums are 
disbursed to participating plans. OPM determines whether retiring 
employees or survivor annuitants meet the requirements to continue 
health insurance coverage; takes the action necessary to terminate, 
accept, or continue enrollment; oversees the automatic deduction of 
premiums from monthly annuity checks and credits the premiums, along 
with the applicable Government contribution, to the proper account; 
processes all enrollment changes; notifies affected Carriers of 
enrollment changes; and keeps enrolled retirees advised of rate and 
benefit changes within their plan.


    Under Section 8902 of Title 5 of the U.S. Code, OPM may only 
contract with health insurance Carriers who offer terminating enrollees 
the opportunity to convert to a non-group policy without restrictions 
on pre-existing conditions. This was an additional protection to ensure 
that individuals could receive health insurance coverage if they no 
longer had access to group or non-group coverage. Currently, Carriers 
must offer a non-group policy to terminating enrollees. Subject to 
certain exceptions, all non-grandfathered health insurance policies 
offered in the individual market must be sold to individuals on a 
guaranteed issue basis.

Discussion of Proposed Changes

    OPM has determined that the existing FEHB Program requirement that 
health insurance Carriers offer the option to convert to a non-group 
contract providing health benefits to FEHB enrollees and covered family 
members upon termination of their FEHB coverage can be revised to allow 
more flexibility to enrollees or covered family members and Carriers. 
As a result, in addition to or as an alternative to enrollment in a 
conversion plan offered by the Carrier when an enrollee's or covered 
family member's FEHB coverage is terminated, the enrollee or covered 
family member can enroll in a guaranteed issue non-group policy. OPM 
will continue to offer enrollees and covered family members a 31-day 
extension of coverage, which may be extended to 60 days if the enrollee 
or covered family member can prove that the 31-day extension did not 
provide sufficient opportunity to convert to a non-group contract.
    Additionally, the timeframe in which an agency must notify a 
terminating enrollee of his or her right to convert has been decreased 
from 60 days to 15 days to minimize the risk of a gap in coverage for 
the enrollee. OPM arrived at 15 days by reviewing the enrollment 
deadlines for non-group coverage options available to enrollees and 
calculating a reasonable time frame for notice that would allow 
terminating enrollees to subsequently enroll in coverage before the 30 
day temporary extension of coverage expired.

[[Page 7412]]

Expected Impact of Proposed Changes

    OPM expects the proposed deregulatory changes to increase the 
flexibility for Carriers to assist terminating enrollees in finding 
health insurance coverage and to reduce the costs for Carriers who will 
have additional options to assist enrollees with finding conversion 
coverage. Because are proposing to decrease the timeline for 
notification by employing agencies, we expect individuals to expedite 
their transition from FEHB coverage to a conversion plan should they 
choose to enroll in conversion coverage. This increased flexibility 
will reduce the administrative costs for Carriers. Currently, Carriers 
must contract with a third party or provide an internal organization to 
accept any enrollees who may elect conversion coverage offered by the 
plan. This is a sunk cost regardless of whether enrollees actually 
elect conversion coverage. This can be a significant expense, 
particularly if the FEHBP is the only program for which the Carrier 
must provide this service. If the Carrier has additional flexibility 
regarding conversion coverage, the Carrier will no longer bear this 
expense. Depending on how the plan is rated, a portion of this cost 
will be passed on to the Government and will proportionally reduce 
premiums. OPM expects these proposed changes to increase the 
flexibility for Carriers to assist terminating enrollees in finding 
appropriate health insurance coverage.
    OPM does not believe that this regulation will have a large impact 
on the broader health insurance market since FEHB generally constitutes 
a smaller percentage of the overall health insurance carrier's book of 
business. OPM also believes that employees and annuitants make their 
health care decisions based on a variety of factors, including 
networks, premiums, etc., so changes in plan enrollments will be 
determined by individual choice. However, because OPM does not have 
extensive data to determine the impact of this regulation, we are 
seeking comments on the following:
    1. How will the changes made by this regulation impact the non-
group health insurance market?
    2. How will the changes made by this regulation impact the choices 
available to terminating FEHB enrollees?
    3. How will the changes made by this regulation impact the 
administration of conversion coverage by FEHB Carriers?

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 has been designated as a ``significant regulatory 
action,'' under Executive Order 12866.

E.O. 13771: Reducing Regulation and Controlling Regulatory Costs

    This proposed rule is expected to be an E.O. 13771 deregulatory 
action. Details can be found in the ``Expected Impact of the Proposed 
Changes'' section of the rule.

Regulatory Flexibility Act

    I certify that this regulation will not have a significant economic 
impact on a substantial number of small entities.


    We have examined this rule in accordance with Executive Order 
13132, Federalism, and have determined that this rule will not have any 
negative impact on the rights, roles and responsibilities of State, 
local, or tribal governments.

List of Subjects in 5 CFR Part 890

    Administration and general provisions, Administrative practice and 
procedure, Administrative sanctions imposed against health care 
providers, Benefits for former spouses, Benefits for United States 
hostages in Iraq and Kuwait and United States hostages captured in 
Lebanon, Benefits in medically underserved areas, Contributions and 
withholdings, Department of Defense Federal Employees Health Benefits 
Program demonstration project, Employee benefit plans, Enrollment, 
Government employees, Health benefits plans, Limit on inpatient 
hospital charges, physician charges, and FEHB benefit payments, 
Reporting and recordkeeping requirements, Retirement, Temporary 
continuation of coverage, Temporary extension of coverage and 
conversion, Transfers from retired FEHB Program.

U.S. Office of Personnel Management.
Kathleen M. McGettigan,
Acting Director.
    Accordingly, OPM proposes to amend title 5, Code of Federal 
Regulations as follows:


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 Pub. L. 101-
513, 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; 
Pub. L. 111-148, as amended by Pub. L. 111-152.

2. Amend Sec.  890.401 by revising paragraphs (a)(1), (b)(2), and (c) 
to read as follows:

Sec.  890.401  Temporary extension of coverage and conversion.

    (a) * * *
    (1) An enrollee whose enrollment is terminated other than by 
cancellation of the enrollment or discontinuance of the plan, in whole 
or part, and a covered family member whose coverage is terminated other 
than by cancellation of the enrollment or discontinuance of the plan, 
in whole or in part, is entitled to a 31-day extension of coverage for 
self only, self plus one, or self and family, as the case may be, 
without contributions by the enrollee or the Government, during which 
period he or she is entitled to exercise the right of conversion 
provided for by this part. The 31-day extension of coverage and the 
right of conversion for any person ends on the effective date of a new 
enrollment under this part covering the person. In the event this 31-
day temporary extension period provides insufficient opportunity for 
the enrollee to exercise his or her right to convert to a non-group 
contract with an effective date commencing before or immediately upon 
the end of the 31-day temporary extension of coverage, the Carrier may, 
on a case-by-case basis, provide an additional extension of coverage 
not to exceed a total of 60 days as appropriate to avoid an 
interruption in coverage. The enrollee or covered family member must 
explain to the Carrier in writing the circumstances for seeking 
additional extension, and the Carrier must notify the OPM Contracting 
Officer of any extension granted, or obtain prior approval of any 
extension request that is proposed for denial.
* * * * *
    (b) * * *
    (2) Except when a plan is discontinued in whole or in part or the

[[Page 7413]]

Director orders an enrollment change, a person whose enrollment has 
been changed from one plan to another, or from one option of a plan to 
the other option of that plan, and who is confined to a hospital or 
other institution for care or treatment on the last day of enrollment 
under the prior plan or option, is entitled to continuation of the 
benefits of the prior plan or option during the continuance of the 
confinement. Continuation of benefits shall not extend beyond the 91st 
day after the last day of enrollment in the prior plan or option. The 
plan or option to which enrollment has been changed shall not pay 
benefits with respect to that person while he or she is entitled to any 
inpatient benefits under the prior plan or option. The gaining plan or 
option shall begin coverage according to the limits of its FEHB Program 
contract on the day after the day all inpatient benefits have been 
exhausted under the prior plan or option or the 92nd day after the last 
day of enrollment in the prior plan or option, whichever is earlier. 
For the purposes of this paragraph (b)(2), ``exhausted'' means paid or 
provided to the maximum benefit available under the contract.
* * * * *
    (c)(1) The employing agency must notify the enrollee of the 
termination of the enrollment and of the right to convert to a non-
group contract within 15 days after the date the enrollment terminates.
    (2) The individual whose enrollment terminates must request 
conversion information from the losing Carrier within 15 days of the 
date of the agency notice of the termination of the enrollment and of 
the right to convert. The losing Carrier must provide information to 
the individual that will assist the individual in enrolling in a non-
group contract for which the individual is eligible.
    (3) When an agency fails to provide the notification required in 
paragraph (c)(1) of this section within 15 days of the date the 
enrollment terminates, or the individual fails for other reasons beyond 
his or her control to request conversion as required in paragraph 
(c)(2) of this section, he or she may request assistance with 
conversion to a non-group contract by writing directly to the Carrier. 
Such a request must be filed within 6 months after the individual 
became eligible to convert his or her group coverage and must be 
accompanied by verification of termination of the enrollment; e.g., an 
SF 50, showing the individual's separation from the service. In 
addition, the individual must show that he or she was not notified of 
the termination of the enrollment and of the right to convert, and was 
not otherwise aware of it, or that he or she was unable, for cause 
beyond his or her control, to convert. The Carrier will determine if 
the individual is eligible to convert; and when the determination is 
affirmative, the individual may convert within 31 days of the 
determination. If the determination by the Carrier is negative, the 
individual may request a review of the Carrier's determination from 
    (4) When an individual converts his or her coverage any time after 
the group coverage has ended, the non-group plan coverage is effective 
on the date governed by the rules applicable to the non-group plan.
    (5) An individual who fails to exercise his or her rights to 
convert to non-group plan during the extension period is deemed to have 
declined the right to convert unless the Carrier, or, upon review, OPM 
determines the failure was for cause beyond his or her control.

[FR Doc. 2018-03510 Filed 2-20-18; 8:45 am]